1986 (3) TMI 324 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Exigibility to tax on purchase turnover of petroleum products under Section 5A of the Kerala General Sales Tax Act, 1963.
2. Taxability of purchase turnover of asphalt exported outside India.
3. Concessional rate of tax on naphtha sold to F.A.C.T.
4. Taxability of purchase turnover of petrol used for own consumption.
5. Taxability of sales turnover of crude oil imported and sold to Cochin Refineries Ltd.

Detailed Analysis

1. Exigibility to Tax on Purchase Turnover of Petroleum Products under Section 5A
The primary issue was whether the purchase turnover of petroleum products purchased by the assessee from Cochin Refineries Ltd. is exigible to tax under Section 5A of the Kerala General Sales Tax Act, 1963. The Tribunal held that the purchase turnover is not exigible to tax under Section 5A due to the exclusion of tax on sales of petroleum products by one oil company to another as contained in Schedule I of the Act. However, the Court disagreed, holding that Section 5A is a charging section independent of Section 5 and is intended to bring to tax transactions of purchase where no tax is payable under Section 5, provided one of the conditions in clauses (a) to (c) is satisfied. The Court concluded that the exemption of sale from one oil company to another does not apply to the levy of tax on the purchase turnover under Section 5A.

2. Taxability of Purchase Turnover of Asphalt Exported Outside India
The Tribunal found that asphalt is a commodity exempted from taxation as per a notification issued by the Government, and thus, the sales turnover relating to asphalt is not exigible to tax. The Court agreed with this finding, noting that the exemption under the notification is total with respect to asphalt, making the purchase turnover not liable to tax.

3. Concessional Rate of Tax on Naphtha Sold to F.A.C.T.
For the assessment years in question, the appellate authority allowed a concessional rate of tax on the sales turnover of naphtha sold to F.A.C.T. The Tribunal upheld this decision, and the Court found no reason to overturn this finding, thus confirming the concessional rate of tax for these transactions.

4. Taxability of Purchase Turnover of Petrol Used for Own Consumption
The Tribunal held that the purchase turnover of petrol used for own consumption by the assessee is not liable to tax under Section 5A, as such use cannot be said to be in the course of "business" as defined in Section 2(vi) of the Act. The Court agreed with this interpretation, affirming that the purchase turnover of petrol for own consumption is not exigible to tax.

5. Taxability of Sales Turnover of Crude Oil Imported and Sold to Cochin Refineries Ltd.
The appellate authority held that the sales turnover of crude oil imported and sold to Cochin Refineries Ltd. is not exigible to tax. The Tribunal and the Court upheld this decision, confirming that the sales turnover of crude oil is not liable to tax under the Act.

Conclusion
The Court allowed T.R.C. Nos. 14, 17, and 20 of 1986, restoring the orders of the Deputy Commissioner (Appeals) and sustaining the levy of tax on the purchase turnover of petroleum products exported to countries outside India. T.R.C. Nos. 18 and 19 of 1986 were dismissed, confirming the Tribunal's findings on the concessional rate of tax on naphtha, the non-taxability of asphalt, and petrol used for own consumption. The Court rejected the prayer for leave to appeal to the Supreme Court, finding no substantial question of law of general importance.