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2015 (10) TMI 2406 - BOMBAY HIGH COURT

2015 (10) TMI 2406 - BOMBAY HIGH COURT - [2016] 89 VST 460 (Bom) - Back to Back transactions - exemption of sales of motor spirit made at the retail outlet. - The shipping vessel places an enquiry for required quantity of HSD with the Petitioner - Petitioner in turn places a back to back purchase order/nomination of the same quantity on any of the Oil Marketing Companies - After the delivery of the HSD to the nominated vessel is complete, the Petitioner raises an invoice on the shipping line, ba .....

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are drawn from their storage tanks in fixed quantity that are supplied on demand to the Petitioner. The manufacturers as also the refineries are very much within the State of Maharashtra viz. at Mumbai. The Petitioners are at Mumbai. Meaning thereby, their place of business is at Mumbai. It is from that place that the Petitioner requests the oil companies to supply to it the high speed diesel. It is received by the Petitioner from the oil companies at Mumbai. It may be that the Petitioner treat .....

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lue Added Tax Act to apply and to be invoked to the later sale by the Petitioner of the same goods to M/s. Leighton and other entities similarly placed. We do not see how the Petitioner can escape compliance with this legislation and by contending that the contract of M/s. Leighton being a distinct contract, the sale taking place in territorial waters that the sales tax legislation or the VAT legislation of the Maharashtra State would be applicable. Its applicability has to be tested by applying .....

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in these petitions. Rule in each of these petitions is discharged, but without any order as to costs. - Decided against assessee. - WRIT PETITION NO. 4552 OF 2015, WRIT PETITION NO. 4553 OF 2015, WRIT PETITION NO. 4554 OF 2015, WRIT PETITION NO. 4555 OF 2015, WRIT PETITION NO. 5798 OF 2015, WRIT PETITION NO. 5799 OF 2015 - Dated:- 19-10-2015 - S.C. DHARMADHIKARI AND G. S. KULKARNI, JJ. For The Petitioner : Mr. V. Sridharan senior counsel with Mr. Prakash Shah, Mr. Puneeth Ganapathy, Mr. Rahul Th .....

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e Added Tax Act, 2002 (for short the MVAT Act ) and therefore the action of the Respondents treating it as such can be said to be exfacie illegal. Since the point involved and summed up above is common to all the Petitions, for the purpose of the present Judgment, we take the facts from Writ Petition No. 4552 of 2015. It is undisputed that since the controversy involved in these Writ Petitions is similar, common arguments have been canvassed. Hence, we dispose of all the Writ Petitions by this c .....

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urns filed by the Petitioner. 4) The Petitioner submits that it has already filed Writ Petition No. 4057 of 2015 in this Court challenging the legality and validity of recovery notices issued by Respondent No. 4 to the bankers and debtors of the petitioner on account of alleged tax liability on sales of motor spirits by the Petitioner during the years 200708 to 201415. The Court, vide order dated 21st April, 2015 has directed the parties to maintain status quo. 5) Respondent No. 4 has also issue .....

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of petroleum products such as High Speed Diesel Oil (HSD), Light Diesel Oil (LDO), and Furnace Oil (FO) to various incoming and outgoing vessels within or beyond the port limits of Mumbai Port. 7) The shipping vessel places an enquiry for required quantity of HSD with the Petitioner. Pursuant to the enquiry made by the customer, the Petitioner gives a quote for their supplies. On approval of quote, the shipping vessel places a Purchase order/nomination with the Petitioner for the required quant .....

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rketing Company informs their appointed Custom House Agent (CHA) to prepare a shipping bill to effect the supplies. In the shipping bill filed under the provisions of Customs Act, 1962, the supply of HSD to the nominated vessel is cleared as Ship Stores as the said HSD is for the consumption by the vessel. 9) Once the shipping bill is ready, the Oil Marketing Company loads the required quantity of HSD into tank lorries which then come to the barge loading point at Mallet Bunder along with the in .....

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o tanks of the barges owned by the Petitioner. The entire activity of decanting is done under the supervision of a Customs Officer. 12) After taking delivery of the HSD from the Oil Marketing Company, the barges sail to the anchorage point of the nominated vessel. 13) After reaching the anchorage point of the nominated vessel, the HSD is pumped out of the barge into the fuel tank or bunker of the nominated vessel. Once the supply is complete, master or the authorised officer of the vessel acknow .....

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tion and use. This is further fortified by the fact that the said bunker supplies are cleared under the Customs Act, 1962 under a bona fide shipping bill for supply of ship stores. 17) The Petitioner has regularly filed returns and paid taxes under the MVAT Act and complied with all the provisions of MVAT Act. The Petitioner has discharged the tax liability due under the MVAT Act after claiming available exemptions under the Act read with the notifications issued under the MVAT Act. 18) The Resp .....

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41 of the MVAT Act, 2002. 19) Hence, while filing the returns, the Petitioner had claimed the turnover of sales pertaining to sale of HSD as exempted turnover and not paid MVAT on the said turnover. 20) However, the Deputy Commissioner of Sales Tax, Investigation - DivisionB, Mazgaon, Mumbai conducted a search at the registered premises of the Petitioner from 17th December 2014 to 31st December 2014 under Section 64 of the MVAT Act, 2002. The investigation team had seized all the documents and b .....

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g the additional tax liability. The officers alleged an estimated additional tax liability to the tune of ₹ 23.36 crores on account of VAT on HSD sold by the Petitioner to its various customers. They also imposed interest u/s 30(2) and u/s 30(4) of the MVAT Act, 2002. The investigating officers had alleged that under the MVAT Act, 2002 the sale of HSD made by the Petitioner shall not be covered under the exemption Notification No. VAT.1506/ CR135B/ Taxation1 dated 30.11.2006. 22) Due to im .....

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/12/2014 20 (4) (b) Under Protest 6 20122013 30/12/2014 20 (4) (c) Under Protest 7 20132014 30/12/2014 20 (4) (a) Under Protest 8 April 2014 - September 2014 30/12/2014 20 (4) (a) Under Protest 23) It is to be noted that even in the remarks column of the revised returns filed by the petitioner, the petitioner has categorically mentioned that the said returns are being filed under protest . 24) After filing the revised returns, the petitioner once again, vide letter dated 31st December 2014, had .....

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he Respondent No. 4 issued Notice in Form 213 under Section 20 of the MVAT Act demanding the additional tax liability shown as payable to the State Government in the revised returns filed under protest. 26) On closing of the investigation, the Petitioner was further coerced to make up the payment of the balance amount of additional tax liability without passing any assessment order as required under the law. Since the petitioner could not pay the large amount of sums as allegedly determined by t .....

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the Overdraft account with Kotak Mahindra Bank. 27) Since, the attachments made by the officers were disrupting the day to day business of the Petitioner, the Petitioner met the investigating officers and asked them to lift the attachment. Further, at the insistence of the investigating officers, the Petitioner pleaded for lifting of attachment and asked to give installment system to make payment of the alleged additional tax liability. Subsequent to this the investigating officers revoked the n .....

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oner dated 11th February 2015, the Petitioner received an installment order dated 4th March 2015 to pay the balance, alleged tax dues. Again the Petitioner received the Form 318 for Kotak Mahindra Bank Account for the period April - September 2014. 30) Again the petitioner paid a sum of ₹ 2,00,00,000 on 10th March 2015 to show its good conduct and cooperation. They also requested to lift the above attachment for Kotak Mahindra Bank Account. The investigating officers then revoked their not .....

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r also made detailed submissions as to how it was exempt and not liable for the demand being alleged by Respondent No. 3. The Petitioner also apprised the respondent of the fact that the limitation period for passing an assessment order for the financial years 200809 and 200910 had already expired and the latter would be time barred as per law. Therefore, the Petitioner was entitled to the refund, since it has not admitted any liability, as evidenced by its original and rerevised returns. 32) Th .....

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M/s GOL Offshore Limited and M/s Seven Islands Shipping Limited for the recovery of alleged tax dues for the period from April, 2011 to September, 2014. 34) In response to the above allegations and issue of recovery notices by the Respondent No. 4, the petitioner filed Writ Petition No.4057 of 2015 before the Hon ble High Court of Bombay challenging the legality and validity of the recovery notices issued to the debtors and bankers of the petitioner in order to recover the alleged tax dues as st .....

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of Bombay has passed the order dated 21st April 2015 directing the parties to maintain the status quo. Subsequently, the Respondent No. 4 served the Petitioners with Assessment Order No.ASO/MUM/INVD039/ 1415/7443308 for the period 200708 under section 23(4) of the MVAT Act which was received by the petitioner on 30 April 2015. The Assessment Order also imposed interest under section 30(3) of the MVAT Act and penalty u/s 29(3) of the MVAT Act, 2002 which has resulted in the tax dues to the tune .....

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e Petitioner has divided his submissions into three parts. 38) Firstly, our attention is invited to the grounds in the Writ Petition, particularly under the head that the assessment order which is claimed to have been made is illegal, arbitrary and without jurisdiction. It is submitted that the subject order has been claimed to be passed by the fourth Respondent on 30th March, 2015, but the same was served on the Petitioner on 30th April, 2015. Mr. Sridharan submits that there is undue haste in .....

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ve to be followed. A reasonable opportunity has to be given to the Petitioner and parties like it to make submissions and place relevant documents and materials. 39) Therefore, it is submitted that the impugned assessment order cannot be sustained because it is contrary to the requirement prescribed under section 23 of the MVAT Act. The assessment order is therefore illegal and it is arbitrary as well, as the principles of natural justice have been contravened. The impugned order therefore must .....

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ot been passed on 30th March, 2015 but it is antedated. In these circumstances, such an order cannot be sustained. From grounds at page 23 to 27, these submissions are culled out. 41) The next part of his submissions is on the footing that the impugned transactions of the Petitioner are exempt from Sale Tax under Notification No. VAT/1506/CR135B/ Taxation1. Our attention is invited to the said Notification in great details and it is submitted that the Petitioners are not liable to pay any additi .....

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s was introduced by Maharashtra Act No. 32 of 2006 with retrospective effect from 1st April, 2005 with an intention to levy VAT on sale of motor spirit at a single stage. Reliance is placed on the statement of objects and reasons for the amendment of section 41. Therefore, read with the substantive provision, the statement of objects and reasons so also the Notification in question, it is apparent that there is an exemption with regard to sales at retail outlets of motor spirit. This exemption i .....

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d part of Mr. Sridharan s submissions concern the legality of the levy. 43) Elaborating this submission and in great details, Mr.Sridharan was at pains to submit that The State legislature of Maharashtra has consciously chosen to confine the levy under MVAT Act only to sale made within the State of Maharashtra. 43.1) Sections 2(24) and 2(28) of the Maharashtra Value Added Tax Act read as follows: (24) sale means a sale of goods made within the State for cash or deferred payment or other valuable .....

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s 1. There shall be levied a sales tax on the turnover of sales of goods specified in column (2) in the Schedule B, C, D or, as the case may be E, at the rates set out against each of them in column (3) of the respective schedule. 2. Notwithstanding anything contained in subsection (1) there shall be levied a sales tax, in addition to the sales tax leviable under subsection (1), on the sales of any motor spirits specified in Schedule D at such rate per litre, if any, as may be set out from time .....

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hase of any goods, where such sale or purchase takes place, (a) (i) outside the State ; … and the provisions of this Act and the said rules and notifications shall be read and construed accordingly. Explanation. For the purpose of this section, whether a sale or purchase takes place( i) outside the State … shall be determined in accordance with the principles specified in sections xxx , 4 and xxx of the Central Sales Tax Act, 1956 (74 of 1956);… (Emphasis Supplied) 43.5) Thu .....

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territorial limits of the State of Maharashtra. 44) Under common law, realm of a country does not extend to the territorial waters. 44.1) Under Common Law, the realm of a State (to be understood as Country or a NationState ) extends only upto the low water mark. This is so clarified in the commentary Law relating to waters by Coulson and Forbes, chapter titled Of the Sea and Rights Therein vide the 6th Edition of the book. The relevant portions of the commentary are extracted and reproduced here .....

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e, international law has conceded an extension of dominion over the seas washing the shores. 3. This concession is evidenced by treaty or by long usage. 4. In no case can the concession extend the realm of England so as to make the conceded portion liable to the common law, or to vest the soil of the bed in the crown. This must be done by the act of the Legislature. (Emphasis Supplied) (Page 12_ of the commentary) (Pg.13, Compilation Vol - IV) 44.2) Halisbury s Laws of England in the chapter on .....

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ilimore held (at Page 67) that the country extends to low water mark where the high seas began. 45) Decision of US Federal Supreme Court in United States Vs State of California - (1947) (332) US 19: 45.1) The judgment of the Supreme Court of United States in United States vs. State of California (1947) 332 US 19 dealt with claim of the State of California that a belt extending to three English miles from low water mark lies within the original boundaries of the State of California. The Federal G .....

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d of the sea only became of great potential importance at the beginning of this century when oil was discovered there. As a consequence of this discovery, California passed an Act in 1921 authorizing the granting of permits to California residents to prospect for oil and gas on blocks of land off its coast under the ocean. This state statute and others which followed it, together with the leasing practices under them, have precipitated this extremely important controversy, and more pointedly rai .....

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92: 46.1) The decision of the Supreme Court of Canada In the matter of a Reference by the Governor General in Council concerning the ownership of and Jurisdiction over offshore mineral rights as set out in Order in Council [1967] SCR 792 specifically dealt with the question whether the state of British Columbia (part of Canada) had any legislative competence over the territorial waters abutting British Columbia and became a part of it after its union with Canada. The relevant portions of the jud .....

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e Territorial Sea and Fishing Zones Act, as between Canada and British Columbia, (a)… (b)… (c) Has Canada or British Columbia legislative jurisdiction in relation to the said lands? … The British North America Act, 1871 makes provision in s. 2 for the establishment by the Parliament of Canada of new provinces. By s. 3, it provides for the alteration of the limits of the provinces… There has never been any alteration of the limits of the Province of British Columbia pu .....

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s upon the open sea only extends to low water; all beyond is the high sea. 2. For the distance of three miles, and in some cases more, international law has conceded an extension of dominion over the seas washing the shores. 3. This concession is evidenced by treaty or by long usage. 4. In no case can the concession extend the realm of England so as to make the conceded portion liable to the common law, or to vest the soil of the bed in the crown. This must be done by the act of the Legislature. .....

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d exploit these lands and Canada has the exclusive legislative jurisdiction in respect of them either under s. 91 (1) (a) of the British North America Act or under the residual power in S. 91. British Columbia has no legislative jurisdiction since the lands in question are outside its boundaries. … We answer Questions … and 1(c) in favor of Canada. 46.2) The Supreme Court of Canada thus held that the territorial waters (referred to as lands including seabed, seaward from the low wa .....

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3) The same reasoning would squarely apply in determining the boundary of a state in India. As per Article 3 of the Constitution, Parliament may extend or alter the limits of a state. No such action has been taken by Parliament with respect to the territorial waters. Further only India has any recognition in international law, as having the necessary sovereignty over the territorial waters. 46.4) In the present cases, Petitioners is not submitting that the legislature of the State of Maharashtra .....

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of Maharashtra , territorial waters not being a part of the State of Maharashtra, the MVAT Act, 2002 will not apply to sales made in territorial waters. 47) Under International Law, sovereignty of India extends to territorial waters: 47.1) In Gramphone Co. Ltd. Vs UOI (1984) 2 SCC 534, (pgs. 3759 of Compilation Vol - VI) the Hon ble Supreme Court has held in para 3, 5 and 32 that International Law becomes part of body of law of the Courts by theory of incorporation, without necessity of any sep .....

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ionstate or a country alone that has any identity: 48.1) The Convention on the Rights and Duties of States 1934 signed at Montevideo, which is considered to be one of the earliest representatives of the international law on the subject of statehood. 48.2) Article 1 and 2 of the convention clearly provides that it is the nationstate or country (referred in that context as state ) which is a sole person in the eyes of international law. 48.3) The relevant extract of the same is as follows: ARTICLE .....

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iples enumerated in this Convention as form of codification of the customary international law on this issue. 48.5) The term State as used by authorities in and authors on international law refer to the country or nation or state as whole and not to that of its constituent units. 49) Constituent assembly debates with respect to territorial waters and Article 297: 49.1) Dr. B. R Ambedkar as Chairman of Constituent Assembly, in the above debates referred to the decision of the United States Suprem .....

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, because you know under the American Constitution, the Central Government gets only such powers as have been expressly given to them. Therefore, in the United States it is a moot question as yet, I think, whether territorial waters belong to the States or the Centre. We thought that this is such an important matter that we ought not to leave it either to speculation or future litigation or to future claims, that we ought right now to settle this question, and therefore this article is introduce .....

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to introduce, it would still be open to them to say: Our accession gives jurisdiction to the Central Government over the physical territory of the original States; but our territory which includes territorial waters is free from the jurisdiction not only on the physical territory, but also on territorial waters, which according to the International Law and according to our original status before accession belong to us. We therefore want to state expressly in the constitution that when any Mariti .....

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mbedkar in the constituent assembly debates referred to above. Therefore, the Petitioners submits that the territorial waters abutting the State of Maharashtra cannot be said to be a part of the territory of the State of Maharashtra. 50) Under the Constitution of India and in particular in view of Article 366(30) the territorial waters belong to the Union of India and cannot be construed to be part of the territory of any State - They will be part of unspecified union territory: 50.1) Article 1 .....

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(Emphasis Supplied) 50.2) Further, Article 366(30) defines a Union territory (as introduced by Seventh Constitution Amendment Act, 1956) as follows: Union territory means any Union territory specified in the First Schedule and includes any other territory comprised within the territory of India but not specified in that Schedule. (Emphasis Supplied) 50.3) Article 1 makes it clear that the territories of States are conclusively fixed as provided in the First Schedule to the Constitution. Similarl .....

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tory of India, but not belonging to any specified state or union territory in the first schedule, it will be an unspecified union territory in itself. 50.6) Article 297 further clarifies and reiterates the position that the territorial waters vest with the Union Article 297 of the Constitution is extracted and reproduced below for ready reference. 297. Things of value within territorial waters on continental shelf and resources of the exclusive economic zone to vest in the Union. (1)All lands, m .....

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h as may be specified, from time to time, by or under any law made by Parliament (Emphasis Supplied) 50.7) The Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 vide Section 3 thereof provides that the sovereignty of India has always extended to territorial waters, sea bed and subsoil underlying air space over such waters. The section is extracted and reproduced below: 3. Sovereignty over, and limits of, territorial waters (1) The sovereignty of In .....

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1.1) In the General Clauses Act, 1897 the term State has been defined under Section 3(58) as follows: State - As respects any period before the commencement of the Constitution (Seventh Amendment) Act, 1956 shall mean a Part A State, a Part B State pr a Part C State, and as respects any period after such commencement, shall mean a State specified in the First Schedule to the Constitution and shall include a Union Territory. 51.2) Further, the term Union Territory has been defined in the Section .....

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wn as the State of Maharashtra under Section 3 of the Maharashtra Reorganaisation Act, 1960;] 51.4) Thus, a combined reading of all the above provisions makes it clear that the territory of the State of Maharashtra will extend only upto the low water mark of its boundaries as specified in the First Schedule to the Constitution of India, and nothing more. 52) Alternatively and without prejudice to the above contentions, it is urged that: 52.1) Under Section 4 of Sale of Goods Act, 1930, term cont .....

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in 1955 2 SCR 243. 2) Tata Iron & Steel Co. Ltd. vs. S.R. Sarkar reported in 1961 (1) SCR 379. 53) This contention is amplified by Mr. Sridharan by urging that taxable event is a completed sale, absent any special definition of situs of sale in the relevant sale tax statute, sale takes place where property in the goods passes. Mr. Sridharan, in that regard, places reliance upon Judgment of the Hon ble Supreme Court in the case of Popatlal Shah vs. the State of Madras reported in (1953) 4 STC .....

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ion 23 of the Act provides as follows: 23. Sale of unascertained goods and appropriation.- (1)Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given ei .....

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contrary. Evidently, this portion of law of Sale of goods Act, 1930 is also not relevant for Section 4(2)(b) of CST Act, 1956. Therefore, if in a given case, there is appropriation, but without passing of property under the sale of Goods Act, 1930 due to contrary intention of parties, such appropriation would be relevant and material for purpose of Section 4(2)(b) of CST Act, 1956, though not for purpose of Section 23 of Sale of Goods Act, 1930. 54) Mr. Sridharan submits that the present case w .....

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would clearly constitute future goods. Mr. Sridharan relied upon treaties such as Atiyah s Sale of Goods , 12th Edition, Benjamin on Sale of Goods , 2nd Edition for the purpose of explaining to us the meaning of the terms unascertained goods . In the Petitioner s case, it is customers purchase order which indicates or states 18 metric tonne of high speed oil. Therefore, it is clear that the goods sold by the Petitioners squarely fall within the ambit of unascertained goods. Therefore, section 4( .....

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or measure the goods, the property in the same does not pass until such measurement or weighment is completed. As stated in Atiyah (supra) and Benjamin (supra), the same principle will be equally applicable in relation to sale of unascertained or future goods. 55.2) Therefore, for purposes of Section 4(2)(b) of CST Act, 1956 appropriation in case of unascertained goods can be said to have taken place when all of the following aspects are satisfied: 5. The goods are first ascertained by the sell .....

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g delivery of specific or ascertained goods, to a common courier, as a statutory illustration of appropriation. Similar provision is contained in Section 23(2) of Indian Sale of Goods Act, 1930. 57) Delivery to common courier has to be distinguished from a case like the present case. In the present case, it is part of sellers obligation to transport the goods to place in the sea where the vessel is waiting/anchored pump/unload the fuel into customers vessel, and weighment all under customer supe .....

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to customers location, delivers the required quantity of motor spirit, after weighing of the same by customer. That takes place in the territorial waters, which are outside the State of Maharashtra. Therefore, the goods are not within the State when they are appropriated to the contract of sale under Section 4(2(b)) of the CST Act, 1956. 60) Mr. Sridharan finally contended that in the present case, the sales made by the Petitioners only take place upon delivery to the customers vessels in the te .....

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ax on sale of motor spirits in the State of Maharashtra has always been a single point levy. In pursuance of the same, the Petitioners is covered by the notifications issued under Section 41(4) of the Maharashtra Value Added Tax Act 2002 61.2) Section 41, subsection (4) of the MVAT Act, 2002 states as follows: 41. Exemption and refund :… (4) Subject to such conditions as it may impose, the State Government may, by notification in the Official Gazette, provide for exemption from the paymen .....

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above, Respondent No. 1 issued Notification No. VAT1505/ C.R. 135/Taxation1 dated 30th November 2006. The relevant portion of the notification has been extracted below: In exercise of the powers conferred by the Explanation to subsection (4) of Section 41 of the Maharashtra Value Added Tax Act 2002 (Mah. IX of 2005) and in supersession of the Government Notification Finance Department No. VAT 1505/CR124/ Taxation 1 dated the 1st April 2005, the Government of Maharashtra hereby with effect from .....

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n 41 of the Maharashtra Value Added Tax Act 2002 (Mah. IX of 2005), Government of Maharashtra hereby with effect from 1st April 2005 exempts from payment of whole tax, the class or classes of sales specified in column 2 of the schedule. SCHEDULE Class or Classes of Sales Conditions 1. Sales at retail outlet of motor spirits other than ATF and aviation gasoline 1. The sale should not be made to any oil company mentioned in the notification issued for the purposes of Clause (a) of Sub Section (4) .....

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either is the sale made to an oil company, nor is the outlet owned by an oil company. Therefore, the products sold by the Petitioners, i.e. High Speed Diesel are exempted from payment of VAT by virtue of the abovementioned notifications, provided they are in the nature of retail sale. 61.6) It is to be noted that motor spirits have traditionally been taxed separately, however subject to a single point levy , as done previously under the erstwhile Bombay Sales of Motor Spirit Taxation Act 1958. T .....

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the provisions of subrules (2) & (3) every trader shall pay tax at the relevant date specified in rule 14 on the sales or purchases of motor spirit effected by him during each calendar month. 2) (a) No tax shall be payable by a trader not being a company mentioned in clause (b) on sales made by him of motor spirit- (ii) which was purchased by him after the commencement of the Act from a trader holding or deemed to be holding a license under the Act or before such commencement from a trader .....

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gle point tax at the hands of the oil companies and not liable to be taxed twice particularly, at the hands of a retailer. In fact, the Budget Speech of Hon ble Finance Minister of the Government of Maharashtra Shri Jayant Patil dated 22.03.2002 reported in (2002) 25 MTJ (Amendments, Notifications & Circulars) 177, 183 clarifies this in the following terms: 34. Motor Spirits Motor Spirits are presently taxed under a different Act and all the tax is paid by Oil Companies. [……] 6 .....

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cious and semiprecious stones, pearls and jewelry thereof will be taxed at the rate of 1 percent. The tax rate on liquor and Motor Spirits will remain unchanged. All other commodities will be taxed at the standard rate of 12.5 per cent. 61.10) Thereafter, in the year 2006, it ultimately led to the Government of Maharashtra seeking to amend the original Section 41(4) by way of Maharashtra Tax Laws (Levy, Amendment and Validation) Ordinance 2006 dated 20th June 2006. The intent of the Respondent 1 .....

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999) 3 SCC 632 rendered the decision based on the parliamentary history and placed reliance on the Budget Speech of the Finance Minister. The relevant paragraph of the judgment is as follows: 11. In the year 1967, through the Finance Act No. 2, the words beginning from word which to 1967 were omitted. Thus exemption from incometax was allowed beyond the year 1967. In the year 1975, it was felt that the exemption from incometax on income from poultry business is capable of being abused by unscrup .....

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come from livestock breeding and poultry and dairy farming is exempt from Income tax. This exemption is prone to abuse by showing income which would otherwise be chargeable to tax as exempt income. I accordingly propose to restrict the exemption to ₹ 10,000 in a year. 61.12) Clearly as can be seen, the Hon ble Court placed reliance on the speeches of the Finance Minister in Parliament to interpret the scope of the various provisions in the Income Tax Act 1961. 61.13) Therefore, based on al .....

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in the Petroleum Control Order 1999 by the Respondents is unjustified and illegal: 62.1) It is submitted that the in the impugned order the Respondent have sought to deny the benefit of the Notification No. VAT1505/ C.R. 135/Taxation1 dated 30th November 2006 based on the definition of the term retail sale in the Petroleum Control Order 16th April, 1999. 62.2) The said definition defines the term retail sale as 2.(i) Retail sale means sale of petroleum products not exceeding 2500 litres to any .....

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from specific Oil Companies and makes the supply to the ships of various customer at specified locations at sea. There is no generic buying of HSD that is undertaken by the Petitioners and neither is the HSD further sold by the customers of the Petitioners. Thus it is submitted that the transactions of the Petitioners in this case, satisfies the basic meaning of the term retail sales. 62.5) The Petroleum Control Order 1999 has been issued in exercise of the powers conferred by Section 3 of the E .....

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axation 1 dated 30th November 2006 along with Notification No. VAT1505/ C.R. 135/Taxation1 dated 30th November 2006 is one issued by the Respondent under the Maharashtra VAT Act 2002 a state legislation. 62.6) Therefore, it is submitted by the Petitioners that reliance cannot be placed on the meaning of the term retail in the Petroleum Control Order 1999, for the purpose of deciding the availability of exemption under the Maharashtra VAT Act, 2002. In ordinary terms, since the sales made by the .....

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llowing Judgments: (i) The Great Eastern Shipping Company Ltd. vs. State of Karnataka, ILR 2004 KAR 3750. (ii) Pride Foramer vs. Union of India, 2002 (148) ELT 19 (Bom.) (iii) Deputy Commissioner of Commercial Taxes, Madras Division vs. Davar and Co., (1963) 14 STC 904 (Mad). (iv)United States of America vs. California 332 U. S. 19 (1947) (US Supreme Court) (v) In the matter of a reference by the Governor General in Council Concerning Ownership and Jurisdiction over Reference to Offshore Mineral .....

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h orders, in turn, the Petitioners approached the oil companies and placed their orders in order to meet and satisfy the commitments. The oil company prepared the shipping bills and invoices and the same are raised on the Petitioners. Thereafter, the oil company puts the required quantity of high speed diesel on the tank lorry and the tank lorry, along with the shipping bills and invoices proceeds towards the port. After the port formalities are complete, the high speed diesel/the required quant .....

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e rates, but after allowing set off. 66) As far as the first contention that the assessment order is predated or backdated is concerned, Mr. Sonpal submits that there is no merit in the same. However, if the Petitioners are inclined to raise these issues and which are mixed questions of fact and law, they have an alternate and equally efficacious remedy of an Appeal to challenge the assessment order. They can very well raise these objections and this Court should not therefore go into the same. .....

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he issue of chargeability is independent of where the delivery is given. In other words, even if the goods are ultimately delivered to buyer in territorial waters, the chargeability is independent of location of delivery and not based on the location of delivery. 68) Firstly, the Karnataka High Court in case of Great Eastern Shipping Company (supra) based on sales tax laws only has decided the issue that the territorial water is part of abutting State of Karnataka and therefore the issue is no m .....

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e of any territory apart from the States. Hence, what belongs to Union essentially belongs to the States. Hence, territorial waters are part of the States. The principles of mutuality applies with full force. Constituents of Union are nothing but Union in that sense. As in the Fisheries Laws, the State has made a deemed provision for treating territorial waters as part of State not because unless it is so clarified the issue can be raked up by the parties. This inclusion is not even held to be u .....

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on used to prevail for one transaction. Consequently, Article 286 Explanation I provided that the tax will be levied only by the State in which delivery is given. However, the same was not workable and as per suggestions of Law Commission (M. C. Setalvad), Constitutional sixth amendment, deleted Explanation I and replaced Article 286(2) and (3) with new clauses 286(2) and (3) which empowered legislature to formulate principles for determining the sale within a State and outside the State. Conseq .....

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re applied to the facts of the case, irrespective of the delivery having been given in the territorial waters or irrespective of the contract or custom or usage to the contrary, or whether territorial waters form part of Maharashtra or not, and even assuming while not admitting that territorial waters are not part of Maharashtra, the sale in the present case is exigible to sales tax and there can be no other legal conclusion. This is elaborately explained in the ensuing paragraphs. 72) It is irr .....

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placing order by the Petitioner and acceptance of the said order by the oil company, to execute the contract or placing indent to the storage tank to deliver the HSD from stock may be by way of written delivery order, constitutes acceptance of the order and thus concluded contract comes in existence at the time when the oil company acts upon order to execute the same. Now section 4(1) and (2)(a) provides for the principles of determining when a sale is said to be taken inside a State. Sub secti .....

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ce within the State. In the present case, the goods are appropriated of its quantity and loaded on the tanker trucks. Invoice in the name of the Petitioner is prepared and shipping bill is drawn. It is this time when the goods are appropriated, that the goods are within the State that is in the oil company s precints and premises. There is no and cannot be dispute about this proposition. At the time of filling the tanker trucks of required quantity that the sale is deemed to have taken within St .....

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hat the appropriation is made at the time when barges unload the HSD on ship is not in accordance with law. 73) Once the sale is within a State it is outside all other States. Once the present sale is within Maharashtra, as explained above, it is outside all other States. 74) All sales are required to be within the State for taxing by that State. Exports sales, interState sales and local sale are all within the State. But, for Article 286 and 269 item 92A of List I of Schedule VII, and section 8 .....

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fication and now cannot be allowed to take a stand that the sale is in territorial waters which is not part of Maharashtra and beyond taxing powers for that reason. 76) So far as the applicability of exemption Notification is concerned, least to say is that the Notification is not at all applicable to the transactions of the Petitioner. The Notification is issued for exemption of sale from taxation when high speed diesel is sold from retail outlet. To say that high speed diesel is sold from reta .....

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ed in two statutory texts as annexed in the compilation separately filed. Looking at the definition in those statutory texts and applying common parlance test which is applicable in context of taxing statue it is clear what is meant by retail outlet is nothing but filling stations. The photographs of the filling station in the compilation titled common parlance materials, the position is more than clear what is meant by retail outlet. There are no retail outlets other than filling stations. Othe .....

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to words in the Notification and cannot be made applicable to all retail sales. It is trite that exemption Notification must be strictly construed. There is no scope for enlarging the scope beyond the words used in it. No casus ommissus can be provided when words used are clear and unambiguous. When Government has chosen to exempt only those sales which are through retail outlet, it cannot be justified to reach any thing beyond what is provided in Notification to enlarge the scope. On these sub .....

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rnover of sales and purchases are properly admitted. Deductions are correctly claimed, tax has been calculated at the proper rates, set off has been correctly claimed and the deemed tax in respect of the said period has been admitted to be payable and has been paid is the correct position or assertion. If the position is otherwise, then, appropriate corrective action was contemplated. 79) The partner of the Petitioner M/s. Raj Shipping Agency attended the hearing on certain dates and what has be .....

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ete and selfconsistent as, dealer has erred in calculating taxable turnover. Thus, this act of the dealer is resulted in evasion of tax due to him. Hence, said act of the dealer is squarely covered under the ambit of provisions u/s 29(3) of MVAT Act, 2002, as the dealer has concealed the particulars and has knowingly furnished inaccurate particulars of above said transaction liable to tax. I have reason to believe that; dealer has knowingly furnished inaccurate particulars of above said transact .....

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sment order. 80) The principal argument of Mr. Sridharan needs to be considered in the light of some of the documents on record. Exhibit A12 is the invoice. M/s. Indian Oil Corporation has raised the invoice and has stated that the consignee is the present Petitioner. The other details and to be found in that invoice as also another challancuminvoice are that there is a indent which is raised based on which the product high speed diesel and in the quantity mentioned in Kilo Liters has been loade .....

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vessels within or beyond the port limits of Mumbai Port. These outgoing vessels, to which the supplies are made, are located beyond approximately 1.55 nautical miles from the coast of Mumbai and are anchored in various anchorage points within the territorial waters of the Union of India, off the coast of Maharashtra. It is stated that the outgoing shipping vessel places an inquiry for the required quantity of HSD with the Petitioner. Pursuant to the inquiry made by the customer, the Petitioner .....

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OE/10182/12.4.1.2/TSH/... Raj Shipping Agencies Banaji Mansion, 17, Banaji Street, Fort, Mumbai - 400 023 Tel: 91 22 2288 4720/21 Fax: 91 22 2287 3986 Email: rajship@vsnl.com Kind Attn: Mr. Pervez Mehta Dear Sir, Pipeline Replacement Project - II for ONGC Subcontract 10182/PRP2/SC018 - Bunkering Services - Supply of Fuel Oil Notice of Award We refer to your proposal dated April 18, 2008 sent via email and subsequent discussions and clarifications you had with Mr. Albert Jacob (Sr. Manager Opera .....

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inafter referred to as ONGC). The Contract between Leighton and ONGC is referred to as the Main Contract ref. No. MR/OW/MM/PRP2/ 15/2007, signed by Leighton and ONGC on 14th April, 2008. The Main Contract covers 208km of pipelines in 39 segments over 3 seasons/years, (From 2009 till 2011) and this award relates to that full scope of work. Whereas a Contract between Leighton and Raj Shipping is being prepared to formalise the final details, the broad basis of our Notice of Award to you are as fol .....

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from P&V channel) is at lumpsum INR 74,700/upto 180 KL thereafter INR 415/per KL. d) Barging charges at outer BFL (25 NM from P&V channel) is at lumpsum INR 180,000/upto 180 KL thereafter INR 1000/per KL. e) Barging charges at MUMBAI HIGH (90120 NM from P&V channel) is at lumpsum INR 418,500/upto 270 KL thereafter INR 1550/per KL. All the rates quoted above are firm and fixed for period up to 30th June, 2011 PAYMENT TERMS: All payments shall be made within 30 days from the date of r .....

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ed to perform the said scope of work. GENERAL a) Leighton requires Raj Shipping agrees to enter into a formal contract agreement as per mutually agreed terms and conditions. b) Leighton shall raise a Formal Purchase Order for every requirement. However, in case of any Urgent requirement an email confirmation by nominated representative could be sent, which would be followed by Formal PO. c) Supply will be made at the location indicated in the Purchase Order (email request), and at the date/time .....

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giving written Notice of Cancellation to Raj Shipping. Termination by Leighton shall not constitute a breach of this NOA nor entitle Raj Shipping to any damage or claims except as expressly provided under this Article. Raj Shipping shall receive as compensation that portion of the amount due on the work performed up to the date of termination subject to prior approval. The amount due for the work performed shall be the amount which Raj Shipping can demonstrate to Leighton that Raj Shipping has .....

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easonable. BINDING PROVISIONS This notice of Award NOA is intended to create a legally binding agreement, therefore, until such time as the format Agreement is executed this NOA signed by the duly authorized representatives of Leighton and Raj Shipping and the referenced documents, shall constitute a binding and enforceable agreement between the parties. When a formal agreement is executed, the terms and conditions thereof will govern retrospectively any Work carried out by Raj Shipping pursuant .....

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Kumar Kanmegam Sr. Project Manager - PRP II Cc. Russell Waugh, Nigel Butl..., Alay Goenka. We Raj Shipping Agencies hereby confirm our agreement with and acceptance of the contents of this Notice of Award. Signed, on behalf of Raj Shipping Agencies, Signature: __________________ Name: PARVEZ ADI MEHTA Title: PARTNER Date: 31.10.2008 81) Thus, pursuant to such agreement or an approval of a quote by the customer, the shipping vessel places a purchase order/nomination with the Petitioner for the r .....

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bill and once they are ready, the oil marketing company loads the required quantity of high speed diesel in the tank lorries, which then come to the barge loading point at Mallet Bunder along with the invoice copy of the oil marketing company. 82) The sister concern of the Petitioner owns selfpropelled barges having large cargo tanks (below deck) ranging from 40 thousand liters (40KL) to 200 thousand liters (200KL). The barges have pumps fitted on them with a flow meter in order to pump out the .....

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paper book read as under:- 12. After reaching the anchorage point of the nominated vessel, the HSD is pumped out of the barge into the fuel tank or bunker of the nominated vessel. Once the supply is complete, the Master or the Authorized Officer of the vessel acknowledges the receipt of the ordered quantity of HSD on the Bunker Delivery Note (BDN) and the Shipping Bill. An illustrative copy of the Bunker Deliver Note (BDN) duly acknowledged by the officer of the vessel is marked and annexed as E .....

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f HSD actually delivered, along with charges for transportation and hiring of the barge belonging to its sister concern companies. These may be way of a lumpsum rate/KL previously agreed to by the Petitioner or the charges for sale of HSD and transportation may be indicated separately in the invoice. 15) The sister concern of the Petitioner separately charges the Petitioner company for the hire of the barge by the Petitioner company for the purpose of the supplies to be made to various customers .....

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ales made by the Petitioner are within the territorial waters of India and accordingly not sales liable to tax within Maharashtra. 86) In this context, the definitions of the terms business appearing in section 2(4), dealer appearing in section 2(8), non resident dealer appearing in section 2(16), petroleum products appearing in section 2(17A), place of business appearing in section 2(18) and sales appearing in section 2(24) of the Maharashtra Value Added Tax Act, 2002 read as under: 2(4) busine .....

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st or rearing of seedlings or plants shall be deemed to be business; (ii) any transaction of sale or purchase of capital assets pertaining to such service, trade, commerce, manufacture, adventure of concern shall be deemed to be a transaction comprised in business; (iii) sale or purchase of any goods, the price of which would be credited or, as the case may be, debited to the profit and loss account of the business under the double entry system of accounting shall be deemed to be transactions co .....

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tile agent, by whatever name called, who for the purposes of or consequential to his engagement in or in connection with or incidental to or in the course of the business, buys or sells any goods on behalf of any principal or principals whether disclosed or not; (b) an auctioneer who sells or auctions goods whether acting as an agent or otherwise or, who organises the sale of goods or conducts the auction of goods whether or not he has the authority to sell the goods of the belonging to any prin .....

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or sells goods to, its members; Explanation. For the purposes of this clause, each of the following persons, bodies and entities who sell any goods whether by auction or otherwise, directly or through an agent for cash, or for deferred payment, or for any other valuable consideration, shall, notwithstanding anything contained in clause (4) or any other provision of this Act, be deemed to be a dealer, namely: (i) Customs Department of the Government of India administering the Customs Act, 1962; .....

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Reserve Bank of India Act, 1934; (II of 1934) (viii) Maharashtra State Road Transport Corporation constituted under the Road Transport Corporation Act, 1950; (LXIV of 1950) (ix) Shipping and construction companies, Air Transport Companies, Airlines and advertising agencies; (x) any other corporation, company, body or authority owned or constituted by, or subject to administrative control, of the Central Government, any State Government or any local authority: Exception I. An agriculturist who s .....

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tor Vehicles Act, 1988 (59 of 1988), which are used or adopted to be used for hire or reward shall not be deemed to be a dealer within the meaning of this clause in respect of sale or purchase of such transport vehicles or parts, components or accessories thereof. 2(16) nonresident dealer means a dealer who effects purchases or sales of any goods in the State, but who has no fixed place of business in the State; 2(17A) petroleum products means, (a) Superior Kerosene Oil (SKO); (b) Liquefied Petr .....

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but does not include a mortgage, hypothecation, charge or pledge; and the words sell , buy and purchase , with all their grammatical variations and cognate expressions, shall be construed accordingly; Explanation. for the purpose of this clause,- (a) a sale within the State includes a sale determined to be inside the State in accordance with the principles formulated in section 4 of the Central Sales Tax Act, 1956 (74 of 1956); (b) (i) the transfer of property in any goods, otherwise than in pu .....

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; (iii) a delivery of goods on hirepurchase or any system of payment by instalments; (iv) the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v) the supply of goods by any association or body of persons incorporated or not, to a member thereof for cash, deferred payment or other valuable consideration; (vi) the supply, by way of or as part of any service or in any other manner whatsoever, .....

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goods in the State of Maharashtra. 88) Therefore, it would not be proper to proceed on any assumptions straightaway. One cannot presume that merely because the tax in this case is sought to be levied, assessed and collected from the Petitioner that it is out of the purview of the MVAT Act. All the sections noted above will have to be read together and harmoniously with other provisions of the MVAT Act to find out as to whether the sale in this case could be said to be within the State of Mahara .....

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where the sale has taken place. A combined reading of the above definitions together with the charging sections in Chapter II would demonstrate as to how the levy is attracted and imposed. A splitting up or picking and choosing one part of the transaction will not be of any assistance. A holistic view has to be taken. 90) In that regard, we find that there are several steps which form part of the transaction undertaken by the Petitioners. Firstly, the Petitioners themselves are registered as de .....

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lt with the goods in Mumbai and which are defined to mean every kind of movable property. In the present enactment, the term goods as also petroleum products have been defined separately. It is not the case of the Petitioner that these definitions cannot be read together or that petroleum products would not be goods. The term motor spirit is also defined and it would include one of the Petitioners product, namely, high speed diesel [see section 2(15A)] whereas the word Petroleum products is defi .....

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urges that the sale in this case is outside the State and within the meaning of Chapter II of the Central Sales Tax Act, 1956 and further alternatively pleads that it is exempted from MVAT would denote as to how the levy is understood. It is only the transaction or deal with the shipping lines and undertaken by the Petitioner is claimed as not occurring within the State. That is because the HSD is supplied by barges to the ships or vessels located beyond 1 or 1.5 nautical miles in the high seas .....

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he sale in this case has no connection or nexus with the State of Maharashtrra, we would understand it that way. 91) In this case we find that the high speed diesel, a petroleum product, is the subject matter of the transaction. The petitioner placed an order on the oil companies within the State to supply a fixed quantity of this petroleum product to the petitioner so as to enable the petitioner to fulfill its contractual obligation. That contractual obligation is of bunker supplies undertaken .....

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ontract awarded to the petitioner so as to enable M/s. Leighton Contractors in turn to fulfill its commitment to the Oil and Natural Gas Corporation Limited, particularly in relation to the pipeline replacement project - II. It is in that regard and bearing in mind such contracts that we must find out as to whether the Maharashtra Value Added Tax Act would apply. Merely because the high speed diesel oil is carried in barges by the petitioners for being supplied to or discharged into a vessel at .....

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tion is presumed to be territorial in its operation. The parliament or the State Legislature cannot be presumed to have exceeded their territorial powers. As has been throughout clarified that in the case of sales tax, it is not necessary that the sale or purchase should take place within the territorial limits of the State in the sense that all the ingredients of sale like the agreement to sell, the passing of title, delivery of goods etc. should have a territorial connection. Broadly speaking, .....

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her the appellant State has made a law imposing, or authorising the imposition of a tax on sales or purchases of goods in disregard of constitutional restrictions on its legislative power in that behalf, it is necessary to ascertain the scope of such power and the nature and extent of the restrictions placed upon it by Art. 286. The power is conferred by Art. 246(3) read with Entry 54 of List II of sch7 to the Constitution. The Legislature of any State has, under these provisions, the exclusive .....

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ace Brothers and Co. Ltd. v. Commr. Of IncomeTax Bombay, A. I. R. 1948 P. C. 118(B) in dealing with the competency of the Indian Legislature to impose tax on the income arising abroad to a nonresident foreign company, the constitutional validity of the relevant statutory provisions did not turn on the possession by the legislature of extraterritorial powers but on the existence of a sufficient territorial connection between the taxing State and what it seeks to tax. In the case of salestax it is .....

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ately resulted in a concluded sale or purchase to be taxed. 94) Expanding this principle further and in applying what is popularly known as the nexus theory to sales tax legislation in the case of Tata Iron & Steel Company vs. State of Bihar, AIR 1958, SC 452, the Hon ble Supreme Court held that although the tax was on a completed sale, one or more of the several ingredients constituting the sale could furnish the connection between the taxing statute and the sale. Existence of the goods wit .....

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ontained in Section 2(h) Explanation II (ii) of the Act was ultra vires the Government of India Act, 1935. It was argued by Mr. Chagla that the doctrine of nexus was not applicable to salestax legislation, because such legislation was concerned with the tax on the transaction of sale, that is to say, a completed sale and to break up a sale into its component parts and to take one or more such parts and to apply the theory to it would mean that the State would be entitled to impose tax on one or .....

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tive competence of the Provincial Legislature of Bihar. The second proviso added by the amending Act did not extend the meaning of the expression sale so as to include a contract of sale: what it actually did was to lay down certain circumstances in which a sale, although completed elsewhere, was to be deemed to have taken place in Bihar. The circumstances mentioned in the proviso to Section 2 (g) of the Bihar State Sales Tax Act, namely, the presence of the goods in Bihar at the date of the agr .....

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side the Province. It is sufficient if there is a proper territorial nexus or connection between the taxing authority and the transaction sought to be taxed. The fact that the goods are manufactured in the Province constitutes a real and pertinent nexus or connection which confers jurisdiction upon the Provincial Legislature to impose the tax. In dealing with the question whether the production or manufacture of goods constituted a sufficient nexus to the subjectmatter of taxation. S.R. Das C. J .....

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ted a sufficient nexus between the taxing State and the sale. In the first case the goods are actually within the State at the date of the agreement for sale and the property in those goods will generally pass within the State when they are ascertained by appropriation by the seller with the assent of the purchaser and delivered to the purchaser or his agent. Even if the property in those goods passes outside the State the ultimate sale relates to those very goods. In the second case the goods, .....

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decision was reiterated by this Court in a subsequent case Bharat Sugar Mills Ltd. v State of Bihar, (1960) 11 STC 793 = (AIR 1961 SC 1183). In 1958 SCR 1355 = (AIR 1958 SC 452) the course of dealing between the manufacturers and the purchasers was described as follows: The intending purchaser has to apply for a permit to the Iron and Steel Controller at Calcutta, who forwards the requisition to the Chief Sales Officer of the assessee working in Calcutta. The Chief Sales Officer thereafter make .....

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patched to various stations, but the consignee in the railway receipt is the assessee itself and the freight also is paid by the assessee. The railway receipts are sent either to the branch offices or the assessee or to its bankers, and after the purchaser pays the amount of consideration, the railway receipt is delivered to him. These facts are admitted and the correctness of these facts are not disputed by the State of Bihar In our opinion, the ratio of this decision applies to the present cas .....

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oner. The manufacturers as also the refineries are very much within the State of Maharashtra viz. at Mumbai. The Petitioners are at Mumbai. Meaning thereby, their place of business is at Mumbai. It is from that place that the Petitioner requests the oil companies to supply to it the high speed diesel. It is received by the Petitioner from the oil companies at Mumbai. It may be that the Petitioner treats this as a contract on which they paid the sales tax as a component of the price. However, it .....

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n to be discharged that they have deployed the vessels. It is these vessels which require the bunker supplies and which supplies are met by the Petitioner. The subject matter of the contract with M/s. Leighton is this high speed diesel or motor spirit which is taken and carried from Mumbai. Therefore, there is sufficient territorial nexus for the Maharashtra Value Added Tax Act to apply and to be invoked to the later sale by the Petitioner of the same goods to M/s. Leighton and other entities si .....

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o back transaction and the taxing authority that we are not in a position to agree with Mr. Sridharan that MVAT Act is inapplicable. 96) Mr. Sridharan has relied upon the principles relating to extension of the State s boundaries to the territorial waters. Prior thereto, he has also relied upon section 8 of the MVAT Act but that in our opinion refers to certain transactions to which MVAT Act will not apply and which may fall within the purview of the Central Sales Tax Act 1956. It is clear that .....

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e Court, then, strictly speaking the works and commentaries need not be referred. 98) Equally, the principle that the country extends to its low water mark where the high seas begin is another principle which need not be referred in details for the simple reason that it can have no application to the facts and circumstances of the present case. For the afore indicated reasons, we have found that the very goods and which have been transported by the Petitioners via barges and to the vessels stati .....

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r Mumbai. These are thus the acts within the State of Maharashtra. It is in these circumstances that we have applied this theory and once it is found to be so applicable, then, where the boundaries of the State end and in relation to waters, what could be the limitation thereof are all matters which need not be considered by us. For this reason, we do not make any further reference to the decision of the US Federal Court in United States vs. State of California 1947 (332) US 19 as also the decis .....

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y Limited vs. Union of India 1984 (2) SCC 534. We are also not required then to refer to the principles of international law, particularly as to how a State or a country has been identified. 100) For the aforesaid reasons, we also need not refer to the Constituent Assembly debates with reference to the territorial waters and Article 297 of the Constitution of India or Article 366(30) of the Indian Constitution. 101) For the very same reasons the definition of the term State as appearing in Gener .....

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zone in the continental shelf. It is in that context and finding that the States within India would not able to reach these zones and it is only the Sovereign, namely, the Central Government which would be in a position to deal with it. We do not think that we are required to decide any such controversy. Once we have held that the Assessing Officer could have taken note of the Petitioners transaction and probed and investigated it further so as to bring it to tax also by applying the nexus theor .....

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reference to the decisions relied upon by Mr. Sonpal. Mr. Sonpal has placed heavy reliance on the judgment of the Karnataka High Court in the case of Great Eastern Shipping Company Limited vs. State of Karnataka reported in ILR 2004 Karnataka, 3750. 105) In that decision the Karnataka High Court was concerned with the appeal by the original Petitioners against the judgment and order by a single Judge of that Court passed in Writ Petition No.4971 of 1999. The appellant was a public limited compan .....

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Karnataka Sales Tax Act, 1957. That was on the ground that the service charges payable by the NMPT to the appellant under the agreement attracted tax under section 5C of the KST Act. The appellant negatived this claim on the ground that there was no transfer of right to use the goods by it to NMPT. The possession and custody of the tug in question, even after the agreement was entered into, continued with the appellant. However, this reply was not found to be convincing and the Assistant Commiss .....

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not liable to get itself registered under section 10 of the KST Act and also not liable to tax on the hire charges received from the NMPT. The learned single Judge took the view that the tug in question was in the State of Karnataka, though in territorial waters which forms the territory of the State, the question as to whether there was transfer of right to use the tug being one of fact the same has to be decided on the basis of the evidence produced by the parties before the second respondent .....

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authors and judgments of other courts outside India, concluded that the sweep of the power of the Union, particularly in relation to territorial waters, seabed and subsoil underlying and air space over such waters cannot be understood to limit the territorial jurisdiction of a State in respect of territorial waters lying adjacent to the land. 107) We are of the considered view that it is not necessary to decide such wider questions as are posed by the Karnataka High Court and answer them. For th .....

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appropriate case. 108) It is now time to note the contentions on the applicability of section 4 of the CST Act, 1956. Here as well, we have noted the contentions of both sides. Mr. Sridharan in his oral submissions as also in the written submissions and additional written submissions emphasised that even if by virtue of section 4 of the CST Act, a sale is treated as having taken place inside the State, the State cannot tax it under the State s Sales Tax Act, if the same transaction satisfies sec .....

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ection 3 of the CST Act falling in Chapter II deals with this aspect and enacts a deeming fiction. For that deeming fiction to apply there are two conditions and which are set out in clauses (a) and (b) of section 3 and there are explanations. It is thus upon fulfillment of these conditions and as set out that it could be said to be a sale in the course of InterState trade or commerce. 110) Section 4 subsection (1) opens with the words Subject to the provisions contained in Section 3 . Section 4 .....

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ascertained goods, at the time the contract of sale is made and in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation. Here also there is an explanation. 111) If we were to determine the applicability of the provisions referred above we would have to go into the factual aspects and in great details. Concededly, in proceedings under the .....

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, 1959. On the particular sale, therefore, no tax under the BST Act is leviable and recoverable. Such contentions and by projecting the relevant and necessary facts can be raised by the Petitioners and in the event they are not favourably considered or satisfactorily dealt with, they have remedies open and further of carrying the matters in higher forums or courts. Thus, no prejudice is being caused by relegating the Petitioners to these remedies. More so, when these remedies are efficacious. Fu .....

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the BST Act, 1959. 112) Similarly, with regard to the other contentions of Mr. Sridharan on the goods, namely, the petroleum products in question enjoying an exemption and the Petitioners having satisfied all the pre conditions, they are entitled to such exemptions are concerned, they are also capable of being raised, dealt with and considered in proceedings under the BST Act. While challenging the assessment orders, it would be open for the Petitioners to raise the contentions of applicability .....

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