2009 (11) TMI 825 - HC - VAT and Sales Tax

Whether or not the petitioner has really exported petroleum oil and lubricant products to Nepal? Whether or not such a transaction is sale in the course of export to a foreign country? Held that - On a perusal of the substitute bills of export after the same are submitted by IOC at the inception of the procedure, have to pass through customs authorities, excise authorities, etc., of the Indian Government, as well as of the Nepalese Government. It is, therefore, a possible situation that IOC may not have the occasion to retain a copy of the same or have photo copies done, because once the procedure commences, the documents pass out of the physical possession and control of IOC and throughout remain with the Governmental authorities of India and Nepal. In that view of the matter, it does not appear to us to be just and reasonable for the learned authorities under the Bihar Act to insist on production of substitute bills of export. In that view of the matter, we feel that the learned authorities under the Bihar Act have misdirected themselves by putting needless and clearly avoidable emphasis on the substitute bills of export. The nature of the transaction, namely, it is sale in course of export, is not in doubt. We also notice from a perusal of the three orders in question that the learned authorities have not applied themselves to the merits of the materials produced by IOC, and have rejected the petitioner s claim for exemption outright on the ground of non-production of the bills of export. We are, therefore, of the view that the impugned order is not sustainable in law.

Issues Involved:
1. Whether the petitioner exported petroleum oil and lubricant products to Nepal.
2. Whether such a transaction qualifies as a sale in the course of export to a foreign country.
3. Quantification of the goods exported to Nepal for tax exemption under the Bihar Finance Act, 1981, for the period 1995-96.
4. Adequacy of the evidence produced by the petitioner to support the claim of export.

Issue-wise Detailed Analysis:

1. Export of Petroleum Oil and Lubricant Products to Nepal:
The primary question in this writ petition under Article 226 of the Constitution of India is whether the petitioner has exported petroleum oil and lubricant products to Nepal. The Government of Nepal entered into a treaty with the Government of India for the export of these products, and the petitioner, a public sector undertaking of the Government of India, was responsible for the export. The treaty was followed by an agreement between the petitioner and Nepal Oil Corporation (NOC) detailing the export procedure. The petitioner has been assessed under the Bihar Finance Act and previously received tax exemptions for similar exports in other years. However, for the year 1995-96, the authorities denied the exemption due to the alleged non-production of primary evidence supporting the export.

2. Qualification as Sale in the Course of Export:
Article 286 of the Constitution of India prohibits the imposition of tax on the sale or purchase of goods in the course of export out of India. Section 7 of the Bihar Finance Act, 1981, aligns with this constitutional provision, exempting sales in the course of export from tax. The court noted that the treaty and agreement between the two governments and their instrumentalities (IOC and NOC) substantiate that the transactions in question qualify as sales in the course of export, thus falling under the exemption provided by Section 7(1)(c) of the Bihar Act.

3. Quantification of Goods Exported for Tax Exemption:
The petitioner produced several documents during the assessment proceedings, including the treaty, the agreement with NOC, certificates of import issued by NOC, and Bhansar receipts detailing the exports. The assessing officer, however, rejected the exemption claim due to the non-production of bills of export, which were considered primary evidence. The court observed that the substitute procedure for bills of export, as per the agreement and Central Excise Rules, involves multiple governmental authorities and may not leave the petitioner in possession of these documents. The court found it unreasonable for the authorities to insist on these documents and emphasized that other reliable evidence should be considered to determine the quantity of goods exported.

4. Adequacy of Evidence Produced:
The court noted that the authorities did not doubt the nature of the transaction but erred in their insistence on the bills of export. The materials produced, such as the treaty, agreement, import certificates, and Bhansar receipts, were deemed adequate to prove the exports. The court highlighted that the authorities failed to apply their minds to the merits of these materials and wrongly rejected the exemption claim outright. The court directed the assessing officer to re-evaluate the exemption claim without insisting on the bills of export and to consider additional materials like bank transactions and other relevant documents.

Conclusion:
The court set aside the impugned order dated March 4, 2005, passed by the Commercial Taxes Tribunal, Bihar, Patna, and remanded the matter to the assessing officer for reconsideration. The officer is to assess the exemption claim based on the merits of the evidence provided, without insisting on the substitute bills of export, and to ensure the correctness of the figures returned by the petitioner.

← Previous Next →