9911796707
TMI Blog2016 (6) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusive economic zone of the coast of India. The question of charging sales tax came up for consideration before the Tribunal. The Tribunal followed the decision of the Division Bench of this Court in the case of Larsen and Toubro Ltd. vs. Union of India and others dated 2.9.2011 in Special Civil Application No. 5575 of 2011 and provided as under: "(ii) it is held that the transaction of works contract with ONGC is an export sale not liable to CST. In view of this finding, the alternative contentions raised by the appellant are not required to be dealt with." 3. Learned counsel for the parties agree that issue is identical to one which has been decided by this Court in the case of Larsen and Toubro Ltd. (supra). For convenience, we may record the findings of the Court in the said judgment. "30. From the above statutory provisions it can be seen that as per Article 1 of the Constitution the territory of India comprises of the territories of the States, Union territories specified in the First Schedule and such other territories as may be acquired. Admittedly, Bombay High which is situated at about 180 kms. from the shores of India is not part of the territory of India as st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 empowers the Central Government by notification in Official Gazette to extend any enactment relating to any matter referred to in clause (a) or clause (b) of sub-Section(4), namely, the security of India and immigration, sanitation, customs and other fiscal matters to the contiguous zone and also make such provisions as it may consider necessary for facilitating the enforcement of such enactment. It is further provided that any enactment so extended shall have effect as if the contiguous zone is the part of the territory of India. 32. Section 6 of the Maritime Zones Act pertains to continental shelf and is described as an area which occupies seabed and subsoil of the submarine areas that extend beyond the limit of its territorial waters throughout the natural prolongation of its land territory to the outer edge of the continental margin or to a distance of two hundred nautical miles from the baseline referred to in sub-section (2) of Section 3. Sub-Section (2) of Section 6 provides that India has, and always had, full and exclusive sovereignty rights in respect of its continental shelf. It may be noted that the words used are sovereign rights and not sovereignty in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such enactment and any enactment so extended shall have effect as if the exclusive economic zone or the part thereof to which it has been extended is a part of the territory of India. 34. From the above provisions it can clearly be seen that though Union of India has certain rights over the Exclusive Economic Zone, the Indian Union does not have sovereignty over such an region. Clause (a) to sub-Section (7) of Section 7, for example provides that the Union has, over the Exclusive Economic Zone, sovereign rights for the purpose of exploration, exploitation, conservation and management of the natural resources. Sovereign rights are thus for the limited purposes provided therein. Sub-Section (4) of Section 7 does not speak of unlimited sovereign rights much less sovereignty of the Union of India over the exclusive economic zone. It is only by virtue of the notification in Official Gazette that the Central Government may declare any area of exclusive economic zone to be a designated area and make such provision as it may deem necessary with respect to such area for different purposes including for the purpose of customs and other fiscal matters in relation to such designated are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India. We may notice that similar issues came up before different courts including the Apex Court under different fiscal statues such as the Customs Act, Central Excise Act and the Income Tax Act. The Income Tax Act, 1961 by virtue of sub-Section (2) of Section 1 extends to the whole of India. In the present form Section 2(25A) of the Income Tax Act, 1961 reads as under:- "Section 2(25A) : "India" means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and subsoil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976), and the air space above its territory and territorial waters." Presently, Section 2(25A) of the Income Tax Act thus provides that "India" means territory of India and several other areas including Exclusive Economic Zone. Prior to its amendment by the Finance Act, 2007 with effect from 25.8.1976, Section 2(25A) of the Indian Income Tax Act read as under:- "2(25A) "India" shall be deemed to include the Union territories of Dadra and Naga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1983, when the territory in which it accrued was not the taxable territory to which the Income-tax Act applied. To levy the tax, the income must accrue in the territory to which the Income-Tax Act applies. In this case article 297 of the Constitution is not relevant. For the purpose of deciding this matter the only relevant issue is whether the income earned by a non-resident accrued in a taxable territory prior to April 1, 1983. On facts it is clear that the foreign technician had earned salary income before April 1, 1983, by working on the oil rigs, located beyond 12 nautical miles and therefore he was not taxable for the assessment year 1983-84. Our view is supported by the judgment of the Madras High Court in the case of CIT v. Ronald William Trikard [1995] 215 ITR 638 and also by the judgment of the Bombay High Court in the case of McDermott International Inc.(No. 1) v. Union of India [1988] 173 ITR 155. The various judgments of the Supreme Court cited by Mr. Posti on behalf of the Revenue have no application to the facts of the present case as in those judgments the facts related to the amendment of the Income- Tax Act either by the Finance Act or by the Tax Law Amending Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinental shelf and Exclusive Economic Zone. Such notifications have been issued extending the Income Tax Act, 1961, Customs Act and the Customs Tariff Act, Central Excise Act and the Central Excise Tariff Act, the Service Tax and the provisions contained in Finance Act, 1994. However, admittedly, no such notification has been issued extending all or any of the provisions of CST Act to any of the designated areas, continental shelf or Exclusive Economic Zone. To our mind in absence of such notification, respondents could not have demanded tax under the CST Act from the petitioners on its sale of machinery, parts etc. to the respondent No.5, which sale was completed at Bombay High. 41. Decision of the Apex Court in the case of Aban Loyd Chiles Offshore Limited and another vs. Union of India and others (supra) is relevant for our purpose. In the said case, the facts were that the appellants had engaged in drilling operations for exploration of offshore oil, gas and other related activities under the contracts awarded to them by ONGC. Such drilling operations were carried out at oil rigs/vessels, which were situated outside the territorial waters of India. In that background, questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf and exclusive economic zone. Consequently, if mineral oil is extracted or produced in the exclusive economic zone or continental shelf and is brought to the mainland, it will not be treated as import and, therefore,, no customs duty would be leviable. Likewise, goods supplied to a place in the exclusive economic zone or continental shelf will not be treated as export under the Customs Act and no export benefit can be availed on such supply. Any mineral oil produced in the exclusive economic zone or continental shelf will be chargeable to Central excuse duty, as goods produced in India." The decision of the Bombay High Court in the case of Pride Foramer was upheld observing as under:- "89. We do not find any ambiguity in this situation. The interpretation given by the High Court in Pride Foramer case would not result in any absurd situation as contended by the counsel for the appellants. The appellants want the Court to read Section 2(21) of the Customs Act in isolation, which would not be the correct approach. The Customs Act has to be read along with the provisions of the Maritime Zones Act, 1976." The Apex Court concluded as under: "The combined effect of these notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioners did not pursue this line of arguments in the present petition, confining challenge only to the non-applicability of the provisions of CST Act contending that since there is no inter- State movement, CST Act would not apply. We, therefore, need not go any further into this aspect. 44. In the case of Oil and Natural Gas Corporation Ltd vs. Rt. Hon.Sir Michael Karr and another (supra), the Bombay High Court was concerned with the jurisdiction of arbitration proceedings and the decision therein, therefore, would have no direct bearing on the present issue. 45. In the case of Nand Lal Hira Lal vs. The Punjab State (supra), the Punjab and Haryana High Court was examining a situation where the sale of goods had occasioned the movement from the State of Punjab into the State of Jammu and Kashmir. Since CST Act is not extended to Jammu and Kashmir, contention of the assessee was that no sales tax can be collected on such sale of goods. It was in this background, the Division Bench held that the provisions of CST Act would be applicable since the same are extended to the State of Punjab. In the said case, however, it can be seen that the movement of goods was from Punjab to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 9 of the Act, however, there must first be exigibility to tax of a certain transaction. When we hold that the transaction in question is not exigible to CST, the question of permitting the State to collect such tax does not arise. 48. In the reply affidavit filed, objection has also been raised with respect to availability of alternative efficacious remedy. We are conscious that the petitioners have assailed the order of assessment passed by the competent authority under the CST Act. We are also conscious that against such an order, statutory appeals are available. It is also true that the Courts normally do not permit the litigant to by-pass such alternative remedy, particularly in the matters of fiscal statues. However, there are certain well established and well accepted exceptions to such a rule. For example when it is found that action of the authorities is wholly without jurisdiction, the Court may in a given case exercise writ jurisdiction despite availability of alternative remedy. We are fortified by the decision of the Division Bench of this Court in the case of Gujarat Gas Co. Ltd. vs. Joint Commissioner of Income- Tax (Assessment) reported in [2000] 245 ITR 84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ite grounds exist, certiorari will lie although a right appeal has been conferred by statute. 50. Before closing, we my record that counsel for the petitioners also argued that even if the sale had taken place and completed at Hazira, the same would not be categorized as a local sale as the sale occasioned the movement of goods from Hazira to Bombay High. He, therefore, argued that even if the sale had been completed at Hazira, the same would not be exigible to any sales tax. We, however, need not go into this question for the following reasons:- (1) Both the sides have agreed on record and proceeded before us on the basis that title of goods passed on at Bombay High and the sale took place at Bombay High. (2) Therefore any observations that we may make with respect to the contention of the counsel for the petitioners would be only obiter in nature since such question has not arisen for our consideration in this petition. (3) When the petitioners contended that the sale of goods had not occasioned movement of goods from one State to another, the question would be can it then still be kept out of the purview of the local sales tax if the sale had actually taken place at ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
