2022 (7) TMI 44 - HC - VAT and Sales Tax

Levy of tax - sale of motor spirit and diesel oil - sale by the petitioner company to other oil marketing companies - tax has already been paid by the Oil Companies on the sale of same motor spirit and diesel oil at a much higher price on which the tax is sought to be levied from the selling oil companies to the other oil companies - U.P. Sales of Motor Spirit, Diesel Oil and Alcohol Taxation Act - HELD THAT - Considering that the relief could not be granted by the authorities to the revisionist only because he could not adduce the bifurcation of the sales but it is admitted that the sale made to the Oil Companies for which tax has already been paid subsequently they cannot be taxed again and, hence, to the extent that on the subsequent sales tax has been realized assessing the revisionist to the tax again would be unjust, illegal and arbitrary and to that extent interference is required in the present case. The matter is remitted back to the prescribed authority to proceed further with the matter and after recording the evidence as to whether the tax has been realized for the subsequent sale, the benefit of the judgment shall be granted to the revisionist after ascertaining the said facts which shall be inquired by him and if it is satisfied that the said subsequent sale has been taxed and the same has been deposited with the State Government, the revisionist cannot be made liable of the sale of said goods. Revision allowed.

Summary

Issues Involved:
1. Condonation of delay in filing the restoration application.
2. Legality of tax demand on the sale of motor spirit and diesel oil to other oil companies.
3. Double taxation and unjust enrichment.

Detailed Analysis:

1. Condonation of Delay in Filing the Restoration Application:
The Court addressed the delay in filing the restoration application No. 5043 of 2022, which was due to the unfortunate circumstances where one counsel expired and the other was elevated to the Bench. The Court found the explanation satisfactory and allowed the condonation of delay. Consequently, the application for restoration was also allowed, and Revision No. 76 of 2009 was restored to its original number.

2. Legality of Tax Demand on the Sale of Motor Spirit and Diesel Oil to Other Oil Companies:
The revisionist, an oil company, contested the judgment and order dated 27.1.2009 by the Commercial Tax Tribunal, which held them liable to pay tax on the sale of petroleum products to various State Oil Companies. The revisionist argued that the entire purchases of oil, diesel, and motor spirit were made within the State of U.P. from registered dealers and sold to Indian Oil Corporation Limited and other oil companies. They contended that tax had already been paid on these sales either at the point of sale or subsequently by the purchasing oil companies, invoking Section 3A(1-c) of the U.P. Trade Tax Act and a notification dated 15.1.2000, which stipulates that tax shall be levied at the point of sale by such dealer to a person other than the specified dealers.

3. Double Taxation and Unjust Enrichment:
The revisionist argued that once tax has been realized on the sale of the said products, either at the point of sale or subsequently by the purchasing oil companies, it was unjust and amounted to double taxation to levy tax on them again. They cited a previous judgment where the Court held that the State could not realize tax twice for the same goods and directed adjustments for any double tax collected. The Court agreed with this argument, noting that the tax could not be realized twice for the same goods and that the revisionist could not be made liable for tax again if it had already been paid on subsequent sales.

Conclusion:
The Court concluded that the reassessment proceedings were in accordance with law but recognized that the revisionist was not liable to pay tax on goods purchased from Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation. The Court found that the authorities did not consider whether tax had been deposited at the subsequent point of sale by the purchasing oil companies. The Court remitted the matter back to the prescribed authority to apply the principles laid down in the judgment of Civil Misc. Petition No. 5215 of 2007 and to ascertain whether the tax had been realized for the subsequent sale. If it was found that the tax had been deposited, the revisionist could not be made liable for the sale of said goods. Consequently, both revisions were allowed, and the order dated 27.1.2009 by the Commercial Tax Tribunal was set aside.