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2008 (2) TMI 109 - HC - Income TaxAssessees did not pay the amount of sales tax so realised in that accounting year but claim deduction of the amount of sales tax collected during the last quarter of the accounting year held that, sales tax collected in the last quarter of the accounting year was paid before the due date applicable for furnishing the return, could not be disallowed deduction allowed Tribunal was not correct in confirming the addition of sales tax - Tribunal has not correctly applied section 43B
Issues Involved:
1. Whether oil rigs engaged in operations in the exclusive economic zone/continental shelf of India, falling outside the territorial waters of India, are "foreign going vessels" as defined by Section 2(21) of the Customs Act, 1962, and are entitled to consume imported stores thereon without payment of customs duty in terms of Section 87 of the Customs Act, 1962. Detailed Analysis: Principal Issue: - The main issue is whether oil rigs operating in the exclusive economic zone/continental shelf of India, outside the territorial waters, qualify as "foreign going vessels" under Section 2(21) of the Customs Act, 1962, and if they are entitled to consume imported stores without paying customs duty under Section 87 of the Customs Act, 1962. Facts: - The appellants are engaged in offshore drilling operations under contracts with the Oil and Natural Gas Commission (ONGC). Initially, they were allowed to transship stores to oil rigs without customs duty. However, from November 1993, the Revenue Authorities refused this exemption, leading to legal challenges. Previous Judgments: - The Bombay High Court in Amership Management Pvt. Ltd. v. Union of India [(1996) 86 ELT 12 (Bom)] held that oil rigs are "foreign going vessels" and entitled to exemptions under Sections 86(2), 87 read with Section 2(21) of the Customs Act, 1962. This decision was followed in subsequent cases, including the appellants' case. Relevant Notifications and Legal Provisions: - Various notifications under the Maritime Zones Act, 1976, extended the Customs Act and Customs Tariff Act to designated areas in the continental shelf and exclusive economic zone. - Article 1(3) of the Constitution of India and Section 3(28) of the General Clauses Act define "India" in a broad sense. - Section 2(21) of the Customs Act defines "foreign going vessel," and Section 87 provides exemptions for stores consumed on such vessels. Contentions by Appellants: - The appellants argued that their oil rigs, operating beyond 12 nautical miles from the shore, qualify as "foreign going vessels" and should be exempt from customs duty under Sections 86(2) and 87. - They contended that the Maritime Zones Act, 1976, does not extend the territorial waters of India but only grants limited sovereign rights for resource exploitation. Contentions by Respondents: - The respondents argued that the designated areas in the continental shelf and exclusive economic zone are part of India's territory for customs purposes, as per the Maritime Zones Act, 1976, and the related notifications. - They contended that the oil rigs are not "foreign going vessels" because they operate within areas where India exercises sovereign rights and customs laws apply. Findings: - The court held that the territorial waters of India extend up to 12 nautical miles, and beyond that, India has limited sovereign rights in the continental shelf and exclusive economic zone. - Notifications under the Maritime Zones Act, 1976, extended the Customs Act to these areas, making them part of India's territory for customs purposes. - The court concluded that oil rigs operating in these designated areas are not "foreign going vessels" under Section 2(21) of the Customs Act, and the stores consumed on these rigs are subject to customs duty. Conclusion: - The appeals were dismissed, and the court upheld the view that oil rigs in the designated areas are not entitled to the exemptions under Sections 86(2) and 87 of the Customs Act, 1962. The judgment emphasized the limited sovereign rights India has over the continental shelf and exclusive economic zone, making these areas part of India's territory for customs purposes.
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