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TMI Blog2020 (6) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 12 of the Tamil Nadu VAT Act, 2006 on the supply of crude petroleum oil by a consortium of four crude oil exploration companies for the period between January 2007 to March 2010 and April 2010 to March 2012 respectively. 4. In W.P.No.7383 of 2012, one of the crude exploration oil company namely Hindustan Oil Exploration Company Ltd to forbear the 1st respondent Asst. Commissioner (Commercial Taxes) from recovering salestax on the petroleum crude oil supplied to M/S.Chennai Petroleum Corporation Ltd., the writ petitioner in W.P.No.27868 of 2014 and W.P.No. 28117 of 2014. 5. Hindustan Oil Exploration Co Ltd has been issued with 5 different notices dated 8.3.2012 to recover tax on the proportionate quantity of crude oil supplied to Chennai Petroleum Corporation Limited and on sale of worn out machinery, parts and consumables sold but not disclosed resulting in evasion of tax. 6. The facts of the case are that on 30.12.94, a Production Sharing Agreement was signed between the Government of India, Oil and Natural Gas Corporation Limited, Vaalco Energy Incorporated, Hindustan Oil Exploration Co Ltd and Tata Petrodyne Private Limited for exploring and producing crude petr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Union of India and therefore the concept of sale was incompatible. 12. It is further submitted that in any event the sale had taken place outside the State of Tamil Nadu and therefore the respondents have no jurisdiction to levy and demand Value Added Tax. 13. It is submitted that under the Crude Sales Agreement for the Sale and Purchase of Crude Oil the custody, transfer and delivery of crude oil was made on ship to ship transfer basis from the FSO to the off take Vessel in the development area and the transfer of custody, title, risk and delivery and to the crude oil shall take place at the delivery point 14. It is submitted that the expression delivery point also has been defined in the agreement to mean the upstream face of the flanges connecting the export of course from the FSO to the flanges on board of the Offtake vessel. The expression FSO under the agreement means the seller's storage tankers in which crude oil is temporarily stored prior to delivery to the buyer. 15. The learned counsel for Chennai Petroleum Corporation Ltd drew my attention to the decision of the Bombay High Court in Commissioner of Sales-Tax Versus Pure Helium (India) Ltd. (2012) 49 VST 14 whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s further submitted that M/s. Hardy Exploration and Production India Inc also undertook to pay tax and file returns for and on behalf of the consortium. Therefore, it was not open for the respondents to issue notices to be petitioner namely Hindustan Oil Exploration Company Ltd. 23. It is further submitted that Chennai Petroleum Corporation Ltd undertook to pay the tax liability and had paid the same and therefore it was not open for the respondent to also call upon the petitioner to pay tax. 24. It is further submitted that the State has discriminated in as much as show cause notices have been issued only to Hindustan Oil Exploration Company Ltd and not to the other crude oil-producing companies which were also signatory to be agreements referred to supra. 25. Alternatively, it is submitted that the Court can direct the 1st respondent to decide the issue preliminary objection of the petitioner regarding exigiblity in terms of the decision of the Honourable Supreme Court in Vodafone International Holdings BV versus Union of India 2012 (6) SCC 757. 26. It is submitted that if there was no tax payable it cannot be taxed on the basis of estoppel or any equitable doctrine as equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other co-explorers of petroleum crude oil under the "Crude Oil Sale Agreement"dated 26.9.2003 for the Sale and Purchase of Crude Oil. 31. Whether the sale had taken place within the State of Tamil nadu or not and whether the liability to pay tax would be on the seller and on the buyer under section 3 of the Tamil Nadu VAT Act, 2006 would require determination by the Assessing Officer. There is no mechanism provided for payment of tax on the recipient of good on reverse charge basis under the Tamil Nadu VAT Act, 2006 except in the case of works contract under the Rules made thereunder. An agreement cannot shift the burden of tax on the buyer. 32. In fact, as per clause 10.1 of the Crude Oil Sale Agreement 26.9.2003, the sellers are responsible for payment of all taxes and duties which are necessary to, or payable in respect of the production and delivery of crude oil upstream of the Delivery Point. 33. As per clause 10.2, the buyer namely Chennai Petroleum Corporation Ltd was merely responsible making for provision at its cost of all permits, authorities and approvals and for payment of all taxes, duties, dues and charges which are necessary to, or payable in respect of the buyin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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