1994 (6) TMI 214 - AT - VAT and Sales Tax

Issues Involved:

1. Exigibility of aviation turbine fuel (ATF) to entry tax under the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972.
2. Exemption from entry tax based on State Government orders.
3. Validity of assessment, demand, and realization of entry tax.
4. Maintainability of the application under the West Bengal Taxation Tribunal Act, 1987.
5. Entitlement to refund of entry tax paid.

Issue-wise Detailed Analysis:

1. Exigibility of ATF to Entry Tax:

The primary issue was whether ATF supplied by the applicant to domestic and international flights at Dum Dum Airport is subject to entry tax under the Act. The applicant argued that the ATF is intended for consumption outside the Calcutta Metropolitan Area (CMA) and thus should not be subject to entry tax. The Tribunal noted that ATF is a specified good under the Act and is subject to entry tax under Section 6(1), which states, "there shall be levied and collected, for the purposes of this Act, a tax on the entry of every specified goods into the Calcutta Metropolitan Area (for consumption, use or sale therein) from any place outside that area." The Tribunal found that the ATF supplied to aircrafts is meant for consumption outside CMA, supported by certificates showing that aircrafts had enough fuel reserve for emergencies, making the supply for consumption outside CMA.

2. Exemption from Entry Tax Based on State Government Orders:

The applicant claimed exemption based on a State Government order dated April 29, 1978, issued under Rule 14(8) of the Rules, which exempts petroleum products sold and exported or conveyed out of CMA without being consumed or used therein. The respondents argued that the exemption does not apply to ATF sold to foreign-going aircrafts. The Tribunal found that the notification dated April 29, 1978, allows exemption for petroleum products sold and exported or conveyed out of CMA without being consumed or used therein, and the applicant's supply of ATF fits this criterion.

3. Validity of Assessment, Demand, and Realization of Entry Tax:

The respondents assessed, demanded, and realized entry tax from the applicant from January 1985 to March 1988, and rejected revision petitions and refund claims. The Tribunal found that the assessment and collection of entry tax from the applicant were unauthorized under the Act, as the ATF supplied was for consumption outside CMA. The Tribunal quashed the impugned assessment and levy orders and directed the respondents to refrain from assessing or collecting entry tax on ATF supplied to aircrafts for consumption outside CMA.

4. Maintainability of the Application under the West Bengal Taxation Tribunal Act, 1987:

The respondents challenged the maintainability of the application on the ground of time-limit under Section 8(2) of the West Bengal Taxation Tribunal Act, 1987. The Tribunal noted that the application had a recurring cause of action and was in the nature of a writ application under Article 226 of the Constitution. The Tribunal found that the application was maintainable, as the applicant had been challenging the assessment and collection of entry tax since January 1985, and the issue was of a recurring nature.

5. Entitlement to Refund of Entry Tax Paid:

The applicant sought a refund of the entry tax paid. The Tribunal held that the applicant is entitled to a refund of the entry tax collected in respect of ATF supplied to aircrafts at Dum Dum from January 1985, as the imposition and collection were unauthorized. The Tribunal directed the respondents to refund the amount within six months, subject to an application within eight weeks.

Separate Judgments:

The Tribunal delivered a majority judgment allowing the application, quashing the impugned assessment and levy orders, and directing the respondents to refrain from assessing or collecting entry tax on ATF supplied for consumption outside CMA. The Tribunal also directed a refund of the entry tax collected. However, the Chairman dissented, opining that the application should be dismissed and that the consumption or use of ATF within CMA should be investigated in each case before granting relief.

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