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TMI Blog1980 (9) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... g assessed to sales tax both under the Central Sales Tax Act and the U.P. Sales Tax Act. The first petitioner, Indian Oil Corporation Limited, IOC for short, are a Government company incorporated under the Companies Act, 1956, engaged inter alia in the manufacture and marketing of petroleum products. The second petitioner is the managing director and a shareholder of IOC. Union of India has been impleaded as the first respondent in the petition. The 2nd respondent is the Assistant Superintendent of Commercial Taxes, Central Circle, Bihar. The 3rd and 4th respondents are respectively the State of Bihar and the State of U.P. The 5th respondent Indian Explosives Limited are a company having their registered office at Calcutta; they have a factory at Panki, Kanpur in Uttar Pradesh, manufacturing urea fertilizers. IOC have a refinery at Barauni in the State of Bihar and also a depot at Panki, Kanpur. In 1966 IOC completed a pipeline from their refinery at Barauni in Bihar to Kanpur in U.P. through Patna in Bihar and Mughalsarai and Allahabad both in U.P. At their Barauni refinery IOC manufacture naphtha which is the principal raw material for production of fertilizers. On Febru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e buyer's fertilizer factory and the pipeline between the buyer's and the seller's fences shall be constructed by the buyer at their expense. (ii) The cost of transferring naphtha by the pipeline from the point of its manufacture to the fence of the buyer's fertilizer factory shall be borne by the buyer. 8.. The seller shall provide at their cost storage facilities at the seller's Panki/Kanpur installation of a capacity equivalent to not less than 30 days' requirement of the buyer. 10.. (iii) Three samples of naphtha for testing will be taken from the seller's tank at their Panki/Kanpur installation prior to transfer in the presence of buyer's representatives at such frequency as may be mutually agreed. According to the 5th respondent, since the commencement of supply of naphtha under the aforesaid agreement IOC went on charging from them sales tax at the rate prescribed by the U.P. Sales Tax Act on the plea that the sales were chargeable under the said Act. On or about March 16, 1974, the assessing authority under the U.P. Sales Tax Act assessed IOC to sales tax under the said Act on their total turnover for the assessment year 1969-70 including the sales of naphtha to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or that year as inter-State sales. Thereafter for the assessment years 1973-74 and 1974-75 somewhat surprisingly the U.P. assessing authority went back on the view taken in the immediately preceding two years and again treated the sales as local sales and the 5th respondent preferred appeals from these two orders of assessment. In this confused situation IOC filed the instant writ petition in this Court on May 1, 1979. Meanwhile the appellate authority under the U.P. Sales Tax Act dealing with the appeal preferred by IOC against the order of assessment relating to the year 1970-71 had remanded the case to the assessing authority and the assessing authority by his order dated December 20, 1979, held that the sales were local sales. The 5th respondent had started several other proceedings to avoid the sale of naphtha to them under the agreement dated February 9, 1970, being assessed to sales tax under the U.P. Act. On August 29, 1977, they filed a suit in the Calcutta High Court against IOC seeking to restrain IOC from collecting sales tax from them under the U.P. Sales Tax Act. The 5th respondent also filed two writ petitions in the Allahabad High Court, Nos. 102 and 103 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd. v. Superintendent of Taxes [1975] 35 S.T.C. 445 (S.C.); [1975] 3 S.C.R. 797., Balabhagas Hulaschand v. State of Orissa [1976] 37 S.T.C. 207 (S.C.); [1976] 2 S.C.R. 939., and Union of India v. K.G. Khosla & Co. (P.) Ltd. [1979] 43 S.T.C. 457 (S.C.); [1979] 3 S.C.R. 453., In our opinion the terms of the agreement dated February 9, 1970, summarised above make it quite clear that the sales of naphtha to the 5th respondent were inter-State sales. Under clause 4 of the agreement the seller is "to make the supply of naphtha to the buyer from its refinery at Barauni". The source of supply is thus the seller's refinery at Barauni in Bihar and the destination is the buyer's factory at Kanpur. This one clause alone is sufficient to prove that the sales in question were inter-State sales. However on behalf of the petitioners and the State of U.P. it is contended that the sales were not inter-State sales and were local sales within the State of Uttar Pradesh. It is pointed out from clause 3(iii) that supplies of naphtha are made on the buyer's indents in writing addressed to the seller at their Kanpur installation and not at their refinery at Barauni which, it is contended, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Each case turns on its own facts and the question is whether applying the settled principle which we have mentioned above to the facts of the present case the sales can be said to be inter-State sales. An attempt to show that some of the factors present in the instant case are present or absent in some case or other in which this Court held the sale to be a local sale or inter-State sale hardly serves any useful purpose. On the facts of the present case the sales are clearly inter-State sales and the State of U.P. had therefore no jurisdiction to assess the petitioners to sales tax under the State Act. As the movement of naphtha commences from Barauni in Bihar, the sales tax payable on the sales of naphtha under the agreement dated February 9, 1970, can be assessed and collected only by the authorities in the State of Bihar on behalf of the Government of India in view of section 9 of the Central Sales Tax Act. On behalf of the State of Bihar a point was taken that the present petition under article 32 of the Constitution of India complaining of violation of the fundamental right guaranteed by article 31 of the Constitution was not maintainable after the repeal of article 31 by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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