TMI Blog2022 (6) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... able. The Supreme Court in case of COMMISSIONER OF INCOME TAX OTHERS VERSUS CHHABIL DASS AGARWAL [ 2013 (8) TMI 458 - SUPREME COURT] while dealing with the order of assessment passed under section 148 of the Income Tax Act, 1961, held that it is settled law that non-entertainment of petitions under writ jurisdiction of High Court when an efficacious alternative remedy is available is a rule self-imposed limitation. It is essentially the rule of policy, convenience and discretion rather than the rule of law. High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to invoke the extraordinary jurisdiction under Article 226. If this Court entertains this petition impugning the assessment order without directing the petitioner to avail alternative remedy available under section 26 of the MVAT Act and if the petition is rejected on its own merits, the petitioner in that event would not be able to subsequently avail of alternative remedy by way of an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the part of the State of Maharashtra. The State of Maharashtra had no jurisdiction to levy tax on the goods involved in the execution of work contract, executed on the ONGC platform. 5. The Assessing Officer passed an Assessment Order on 29 th June, 2019 rejecting the contention of the petitioner that the transfer of the property in this case took place on the ONGC platform which were not part of the State of Maharashtra. The Assessing Officer held that the work contract was executed between the ONGC and the petitioner and both were registered under the said MVAT Act. It is held that the continental self/exclusive economic zone/Mumbai High are comprised within the territory of India. The movement of goods from the State of Maharashtra to Mumbai High does not constitute the movement from one State to another State as no any other State is involved in this contract activities. 6. It is held that a sale by export involves a series of integrated activities commencing from the agreement of sale with foreign buyer and ending with the delivery of such goods to a common carrier for transport out of the country by land or sea. It is held that in case of export, there is always a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner on the basis of the order of assessment impugned. 12. Mr. Ishaan Patkar, learned counsel for the petitioner made the following submissions :- (a) The Assessing Officer in the Assessment Order dated 29th June, 2019 for the period 2005-06 has levied tax under the Maharashtra Value Added Tax Act, 2002 on the deemed sale of transfer of property in goods involved in the works contract executed in Bombay High which is outside the territory of State of Maharashtra. He submits that the term deemed sale is outside the State and thus cannot be taxed in view of Article 286(1)(a). The deemed sale is in the course of export and thus cannot be taxed in view of Article 286(1)(b) of the Constitution of India. (b) Learned counsel pointed out the findings from the assessment order and submits :- (i) Contracts between the petitioner and the ONGC are works contracts executed at Bombay High. Application of Rule 58 of MVAT Rules, 2005 reinforces this finding. (ii) The delivery of the goods takes place in Nhava Sheva and thus the works contract is completed within the State of Maharashtra. Finding no.(i) is not disputed. However, finding no.(ii) regarding deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment in case of A. V. Thomas (supra). 17. It is submitted that assuming but not admitting that the nexus theory could be applied to a works contract in Bombay High, the mischief of multiple taxation will be revived. The respondents in paragraph 2 of the affidavit-in-reply have put-forth two nexus as sufficient nexus i.e. (i) That the parties are registered and situated in State of Maharashtra and (ii) That the goods moved from State of Maharashtra. He submits that in today s world, corporation have branches in many States and are also registered under the VAT laws of many States. If arguments of the respondents are accepted, if goods are purchased from Delhi and they have to move across Madhya Pradesh to reach Maharashtra, then all three States will levy tax. 18. It is submitted that in this case, the petitioner can replace the goods at any time till point of incorporation. The inspection and testing of any goods by ONGC do not give ONGC right to insist that the same goods should be incorporated into the works. If the petitioner replaces the goods at any point of time, the new goods will have to undergo inspection and testing. The goods involved in the execution of a work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed reliance on the judgment of Hon ble Supreme Court in case of Gannon Dunkerley (supra) and would submit that Article 366(29A)(b) is subject to Article 286 and Article 269 read with 92A of List I. The tax is leviable at the time of incorporation/accretion and the value which can be taxed is only the value at the time of incorporation of goods into the works and not beyond that. He relied upon definition of sale in Section 2(g) of the Central Sales Tax Act, 1956 and would submit that the said definition was amended on 11th May, 2002 to include all the deemed sales covered by Article 366(29A), but no amendments are carried out in Sections 3, 4 and 5 which were enacted decades prior to Article 366(29A) to cover normal sales. 23. Learned counsel for the petitioner relied upon the judgment of Hon ble Supreme Court in case of Builders Association of India v/s. Union of India (supra) holding that (i) the tax on transfer of property and goods involved in the execution of works contract under Article 366(29A)(b) is also subject to the restrictions in Article 286 and (ii) such tax is restricted to the goods which are incorporated into the works and not on the entire works con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1956. 29. Insofar as the issue of alternate remedy raised in the affidavit-in-reply by the respondents is concerned, it is submitted by the learned counsel that since the petition has raised jurisdictional issue on levy of tax by the respondents on the works contract, where the property has passed offshore, the powers of this Court to entertain this writ petition under Article 226 of the Constitution of India are not taken away. 30. Learned counsel for the petitioner placed reliance on the following judgments :- (a) Sale of Goods Act, 1930 relevant extracts (b) State of Madras vs. Richardson Cruddas, (1968) 21 STC 245 (c) Seath vs. Moore, (1886) 13 R.(HL) 57 (d) In re Blyth Shipbuilding, (1925) Ch 494 (e) Hyder Consulting vs. Governor, (2015) 2 SCC 189 (f) Shiv Kumar vs. Union of India, (2019) 10 SCC 229 (g) CST vs. Moonlight, (2010) SCC Online Bom 672 (h) B. Narsamma vs. Dy. Commr., (2016) 15 SCC 167 (i) Atkinson vs. Bell, 8 B C 276 (1046) (j) CCT vs. KTC Automobiles, (2016) 4 SCC 82 (k) TELCO vs. Asst. Commr., (1970) 1 SCC 622 (l) CST vs. Steel Plant, 1995 SCC Online Bom 550 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods was at Mumbai within State of Maharashtra. The terms and conditions of the agreement executed between HAL offshore and ONGC when considered in entirety would establish that the entire transaction of deemed sale has taken place in State of Maharashtra. There is a nexus at the place where the goods are delivered. As it is the place where it can be said that the goods are appropriated. As per the terms of agreement the goods are to be checked, verified by ONGC at Nhava-Sheva and the goods can be rejected by ONGC and returned at Nhava-Sheva and substantial payment i.e. upto 80% of the cost of goods/materials was released to the petitioner by ONGC under the said agreement. 36. Learned AGP for the State placed reliance on Clause 2.18, 5.2, 8.2, 8.3, 17 and of the said agreement and would submit that the point of delivery of material was at Nhava Sheva and thus levy was proper and was within the jurisdiction of the State of Maharashtra. 37. Learned AGP for the State placed reliance on Clause 17 of the agreement which provides for Contract Price and would submit that the said contract entered into between the petitioner and ONGC is a firm price and the petitioner was bound to k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes the territorial water along the entire coast line of that State. She submits that territorial would include not only land but also water. The petitioner as well as ONGC have themselves submitted to the jurisdiction of the State of Maharashtra. 41. Learned AGP relied upon the judgment of Karnataka High Court in case of the Great Eastern Shipping Company Limited Vs. State of Karnataka, ILR 2004 KAR 3750 and in particular paragraphs 5 and 6 thereof. She also relied upon the judgment of Madras High Court in case of A.M.S.S. V.M. and Co. Vs. The State of Madras, AIR 1954 MADRAS 291 in which the judgment of Karnataka High Court in case of Great Eastern Shipping Company Limited (supra) has been followed. She submits that the definition of State under the State of Karnataka Act is identical to the provisions of MVAT Act. She relied upon the finding of Karnataka High Court on issue no.2 at page 67 of the said judgment and would submit that since the material supplied by the petitioner to ONGC was at Nhava-Sheva, even if the goods or material passes in High seas, it was within the territory of State of Maharashtra having jurisdiction to levy VAT on the petitioner. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner has succeeded on this issue and therefore no dispute arises in respect of the Charter Hire contracts in this petition; (iii) works contracts involving the activities forming part of the agreement between the petitioner and ONGC which are the subject matter of this petition. 47. It is submitted that the Assessing Officer has not classified the contracts at Sr.nos.(i) and (ii) of the works contract in his order. It is also not the case of the respondents in their Affidavit-in-Reply that the contracts at Sr.nos.(i) and (ii) were the works contract. The petitioner is not undertaking any activity of laying down any pipes for this operation and maintenance of chlorinator contract. No such finding is recorded by the Assessing Officer in the impugned Assessment Order. 48. It is submitted that the sample contract annexed to the compilation relates only to works contracts and is not representative of the other two activities, which are operation and maintenance of chlorinator or charter hire of vessels. 49. It is submitted by the learned counsel that the petitioner has not claimed any deductions under Rule 58 at all. He relied upon the judgment of the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India (supra) has held that the indivisible contract is altered into a contract for sale of goods and supply of services, the Hon ble Supreme Court in case of Gannon Dunkerley II (supra) still did not recognize the chattel qua chattel transfer principles of Sale of Goods Act, 1930 for determining the point of transfer of property under Article 366(29A)(b). 54. It is submitted by the learned counsel that the formula in Gannon Dunkerley II for determining the value of the goods at the time of incorporation is applicable whether the works contract is one for lumpsum consideration or whether separate amounts were set out for the materials or stipulation for payment of consideration on receipt of materials at site as was the case in Commissioner of Sales Tax vs. Steel Plant (supra). 55. Learned counsel for the petitioner submits that after Service Tax regime was introduced under Chapter V of the Finance Act, 1994, it has been held in Commissioner, Central Excise and Customs, Kerala vs Larson and Toubro (2016) 1 SCC 170 that labour and services portion can be taxed exclusively by Parliament. In this case, it was held that there is a clear segregation in the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticularly the description at Serial No.5 onwards and submits that the said description would show 0 i.e. no return was filed in the first place and therefore, no claims were lodged. The petitioner was not registered under the MVAT Act, 2002 for the period in issue in this Petition, that is 2005-06 and therefore no returns were filed at all. He also invited our attention to Row 6(a), Row 6(r), 14(f) and would submit that neither was any set off on purchases claimed, nor was it allowed. The Assessing Officer himself has nowhere said that the deductions were claimed. 59. In so far as the sales in the course of import is concerned, it is submitted that the sales in the course of import cannot be taxed by the State due to the prohibition in Article 286(1)(b). It is submitted that Supreme Court in case of Indian Copper Corporation (supra) has recognized that even if a sale is held to be within a State, the power to tax the sale will be unavailable to that State if it is in the course of import. 60. In so far as the set off of tax paid on purchase of goods is concerned, learned counsel disputed that any set off of tax paid on purchase of goods was claimed by Petitioner and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fundamentally different principles for determining situs of sale. Where Section 4 Central Sales Tax Act, 1956 does not apply, the rule of situs continues to be where the transfer of property takes place as declared in Indian Copper Corporation (supra). It is stated that the peculiar issue of there being a State required for delivery for consumption which can shift the situs away from the State where transfer of property takes place does not arise after the deletion of the Explanation to Article 246(1)(a). 65. It is submitted by the learned counsel that the submission of the respondents that labour has been taken from Maharashtra and PF and ESI are subject to jurisdiction of Maharashtra is entirely irrelevant to the question at issue in this case. Both the parties filed their written arguments in addition to the oral submissions made across the bar. REASONS AND CONCLUSION : 66. Learned counsel for the petitioner as well as the respondents have addressed this Court on various issues, most of which are summarized in the earlier part of this judgment. Learned AGP for the respondents vehemently urged before this Court that this petition is not maintainable on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kotah, AIR 1955 SC 425, Union of India vs. T.R. Varma ,AIR 1957 SC 882, State of U.P. vs. Mohd. Nooh, AIR 1958 SC 86 and K.S. Venkataraman Co. (P) Ltd. vs. State of Madras, AIR 1966 SC 1089 in which it was held that though Article 226 confers a very wide powers in the matter of issuing writs on the High Court, the remedy of writ is absolutely discretionary in character. If High Court is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere, it can refuse to exercise its jurisdiction. The High Court in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or procedure required for decision has not been adopted. 71. It is held by the Supreme Court that the Act provides complete machinery for the assessment / re-assessment of tax, imposition of penalty and for obtaining the relief in respect of any proper orders passed by the Revenue Authorities and the assessee could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of Constitution of India when it had adequate remedy open to him by an appeal to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and without considering the merits of the matter which are disputed facts, it cannot be concluded one way of the other, for which writ petition is not the remedy. The principles laid down by the Karnataka High Court in case of M/s. Leighton India Contractors Pvt. Ltd. (supra) apply to the facts of this case. We are in agreement with the view taken by the Karnataka High Court in the said judgment. 75. In paragraphs (b) and (c) of the writ petition, the petitioner has prayed for a declaration that section 26 of the MVAT Act is ultra virus to extent it has constituted the First Appellate Authority and seeks further declaration that section 26 (6A) of the MVAT Act is ultra virus the Constitution of India. Both these issues raised by the petitioner are being dealt with by a Full Bench of this Court in case of United Projects vs. The State of Maharashtra Anr. in Writ Petition No.2883 of 2018 . The said issues are thus not required to be dealt with by the Division Bench of this Court in this writ petition. 76. If this Court entertains this petition impugning the assessment order without directing the petitioner to avail alternative remedy available under section 26 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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