1975 (8) TMI 120 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Maintainability of the petition by the petitioner-company.
2. Nature of the sales as inter-State sales.
3. Jurisdiction of the U.P. Sales Tax Act in levying tax on the sales of naphtha.
4. Refund of the tax collected.

Summary:

1. Maintainability of the Petition:
The petitioner-company, Indian Explosives Limited, challenged the assessment order u/s 226 of the Constitution. Although the petitioner is not a dealer u/s U.P. Sales Tax Act, it is an aggrieved person as the tax burden ultimately falls on it. The court referenced Calcutta Gas Co. v. State of West Bengal and other cases to affirm that relief under article 226 can be sought by a person aggrieved. The court overruled the preliminary objection and held that the petitioner-company is entitled to maintain the writ petition.

2. Nature of the Sales as Inter-State Sales:
The court examined whether the sales of naphtha were inter-State sales u/s 3 of the Central Sales Tax Act, 1956. It was determined that the movement of goods from Bihar to U.P. was a direct result of the agreement of sale between the petitioner and IOC. The court cited K.G. Khosla & Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes and Oil India Ltd. v. Superintendent of Taxes to conclude that the sales were inter-State sales, as the movement of goods was incidental to the contract and there was no possibility of diversion.

3. Jurisdiction of the U.P. Sales Tax Act:
The court held that the U.P. Sales Tax Act does not apply to inter-State sales, which are taxable only under the Central Sales Tax Act. The assessment order treating the sales as liable to tax under the U.P. Sales Tax Act was deemed without jurisdiction.

4. Refund of the Tax Collected:
The court granted the petitioner's prayer for a refund of the tax collected by the IOC, directing the Sales Tax Officer to modify the assessment order and refund the tax on the turnover of raw naphtha to the IOC, which in turn should refund it to the petitioner.

Conclusion:
The petition was allowed, the impugned assessment order was quashed in part, and the petitioner was awarded costs against respondents Nos. 1 to 4.