TMI Blog2016 (6) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... question does not bring about the dispute accurately, brief facts may be noted. Respondent assessee is a public limited company and is engaged in business of manufacturing engineering goods and execution of work contracts in different parts of the country. The company has manufacturing division at Hajira near Surat in the State of Gujarat. The company had entered into contract with ONGC for the commission of turnkey projects at Bombay High which is situated in exclusive economic zone of the coast of India. The question of charging sales tax came up for consideration before the Tribunal. The Tribunal followed the decision of the Division Bench of this Court in the case of Larsen and Toubro Ltd. vs. Union of India and others dated 2.9.2011 in Special Civil Application No. 5575 of 2011 and provided as under: (ii) it is held that the transaction of works contract with ONGC is an export sale not liable to CST. In view of this finding, the alternative contentions raised by the appellant are not required to be dealt with. 3. Learned counsel for the parties agree that issue is identical to one which has been decided by this Court in the case of Larsen and Toubro Ltd. (supra). F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... always extended to the territorial waters of India and to the seabed and subsoil underlying and the air space over, such waters. Maritime Zones Act also envisages contiguous zones of India as the area beyond and adjacent to the territorial waters and the limit of the contiguous zone is the line every point of which is at a distance of twenty-four nautical miles from the nearest point of the baseline referred to in sub-section (2) of section 3. Sub-Section (5) of Section 5 empowers the Central Government by notification in Official Gazette to extend any enactment relating to any matter referred to in clause (a) or clause (b) of sub-Section(4), namely, the security of India and immigration, sanitation, customs and other fiscal matters to the contiguous zone and also make such provisions as it may consider necessary for facilitating the enforcement of such enactment. It is further provided that any enactment so extended shall have effect as if the contiguous zone is the part of the territory of India. 32. Section 6 of the Maritime Zones Act pertains to continental shelf and is described as an area which occupies seabed and subsoil of the submarine areas that extend beyond the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect to, besides other purposes, customs and other fiscal matters in relation to such designated area. Sub-Section (7) of Section 7 authorizes the Central Government by notification in Official Gazette to extend with such restrictions and modifications as it thinks fit, any enactment for the time being in force in India or any part thereof to the Exclusive Economic Zone or any part thereof and make such provisions as it may think necessary for facilitation of the enforcement of such enactment and any enactment so extended shall have effect as if the exclusive economic zone or the part thereof to which it has been extended is a part of the territory of India. 34. From the above provisions it can clearly be seen that though Union of India has certain rights over the Exclusive Economic Zone, the Indian Union does not have sovereignty over such an region. Clause (a) to sub-Section (7) of Section 7, for example provides that the Union has, over the Exclusive Economic Zone, sovereign rights for the purpose of exploration, exploitation, conservation and management of the natural resources. Sovereign rights are thus for the limited purposes provided therein. Sub-Section (4) of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory of India. 35. In view of the above discussion, it clearly emerges that when the sale of goods took place at Bombay High, for which the goods moved from Hazira to Bombay High, such movement does not get covered within the expression movement of goods from one State to another contained in clause (a) of Section 3 of CST Act. It is clear that the goods had not been moved from one State to another since, in our opinion, Bombay High does not form part of any State of Union of India. We may notice that similar issues came up before different courts including the Apex Court under different fiscal statues such as the Customs Act, Central Excise Act and the Income Tax Act. The Income Tax Act, 1961 by virtue of sub-Section (2) of Section 1 extends to the whole of India. In the present form Section 2(25A) of the Income Tax Act, 1961 reads as under:- Section 2(25A) : India means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and subsoil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continental shelf and exclusive economic zone. It is important to note that in this case we are concerned with the concept of taxable territory of India under the Income-Tax Act,1961. This is important as it is only by virtue of notification dated March 31, 1983, that the continental shelf and the exclusive economic zone became part of the taxable territory with effect from April 1, 1983. Therefore, the said tax could not have been levied on the income which accrued in the accounting year ending March 31, 1983, when the territory in which it accrued was not the taxable territory to which the Income-tax Act applied. To levy the tax, the income must accrue in the territory to which the Income-Tax Act applies. In this case article 297 of the Constitution is not relevant. For the purpose of deciding this matter the only relevant issue is whether the income earned by a non-resident accrued in a taxable territory prior to April 1, 1983. On facts it is clear that the foreign technician had earned salary income before April 1, 1983, by working on the oil rigs, located beyond 12 nautical miles and therefore he was not taxable for the assessment year 1983-84. Our view is supported by the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exclusive Economic Zone in respect of income derived by every person from all or any of the activities specified in the notification. 40. By a notification dated 27.2.2010 provisions of Chapter V of Finance Act, 1994 ( pertaining to Service Tax) have been extended to continental shelf and Exclusive Economic Zone as indicated for the purposes specified in the notification. It can thus be seen that the Central Government has been issuing notifications extending different taxing statutes to designated areas, continental shelf and Exclusive Economic Zone. Such notifications have been issued extending the Income Tax Act, 1961, Customs Act and the Customs Tariff Act, Central Excise Act and the Central Excise Tariff Act, the Service Tax and the provisions contained in Finance Act, 1994. However, admittedly, no such notification has been issued extending all or any of the provisions of CST Act to any of the designated areas, continental shelf or Exclusive Economic Zone. To our mind in absence of such notification, respondents could not have demanded tax under the CST Act from the petitioners on its sale of machinery, parts etc. to the respondent No.5, which sale was completed at Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 it was observed that it is a concept of restricted sovereignty linked to the resources sense sans the incidents of territoriality. This is so because, in other respects, the status of the waters in this area as a part of the high seas is specifically recognised and retained in the Convention. In this background, the Apex Court held as under:- 85. Reading of Sections 6 and 7 of the Maritime Zones Act, 1976 makes it clear that India's jurisdiction over the Maritime Zones Act, 1976 extends to the continental shelf and exclusive economic zone. Consequently, if mineral oil is extracted or produced in the exclusive economic zone or continental shelf and is brought to the mainland, it will not be treated as import and, therefore,, no customs duty would be leviable. Likewise, goods supplied to a place in the exclusive economic zone or continental shelf will not be treated as export under the Customs Act and no export benefit can be availed on such supply. Any mineral oil produced in the exclusive economic zone or continental shelf will be chargeable to Central excuse duty, as goods produced in India. The decision of the Bombay High Court in the case of Pride Foramer was uphel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the situation where CST Act has not been extended by issuance of notification by the Central Government to the continental shelf or the exclusive economic zone. 43. Coming to the decisions cited by the counsel for the State, we may record that the cases of Burmah Shell Oil Storage Distributing Co. of India Ltd. vs. CTO (supra), Madras Marine and Co. vs. State of Madras and The State of Madras vs. Davar Co. Etc., related to the question whether the movement of goods can be stated to be in course of export. Counsel for the petitioners did not pursue this line of arguments in the present petition, confining challenge only to the non-applicability of the provisions of CST Act contending that since there is no inter- State movement, CST Act would not apply. We, therefore, need not go any further into this aspect. 44. In the case of Oil and Natural Gas Corporation Ltd vs. Rt. Hon.Sir Michael Karr and another (supra), the Bombay High Court was concerned with the jurisdiction of arbitration proceedings and the decision therein, therefore, would have no direct bearing on the present issue. 45. In the case of Nand Lal Hira Lal vs. The Punjab State (supra), the Punjab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd which is for the limited purpose of claiming rights to exploit the natural resources and exploration etc. the Indian Union claims limited sovereign rights. 47. Learned Government Pleader also referred to Section 9 of CST Act to contend that the State has the power to collect Central Sales Tax when the jurisdiction over the transaction is within the State. To such preposition there cannot be any dispute at all. The Central Sales Tax envisages tax collection by the respective States as contained in Section 9 of the Act. For application of Section 9 of the Act, however, there must first be exigibility to tax of a certain transaction. When we hold that the transaction in question is not exigible to CST, the question of permitting the State to collect such tax does not arise. 48. In the reply affidavit filed, objection has also been raised with respect to availability of alternative efficacious remedy. We are conscious that the petitioners have assailed the order of assessment passed by the competent authority under the CST Act. We are also conscious that against such an order, statutory appeals are available. It is also true that the Courts normally do not permit the lit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 226 of the Constitution of India in spite of alternative statutory remedy, is not affected specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation. In the case of State of U.P. vs. Mohammad Nooh reported in AIR 1958 SC 86, the Apex Court observed that there is no rule with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right appeal has been conferred by statute. 50. Before closing, we my record that counsel for the petitioners also argued that even if the sale had taken place and completed at Hazira, the same would not be categorized as a local sale as the sale occasioned the movement of goods from Hazira to Bombay High. He, therefore, argued that even if the sale had been completed at Hazira, the same would not be exigible to any sales tax. We, however, need not go into this question for the following reasons:- (1) Both the sides have agreed on record and proceeded before us on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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