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2017 Supreme(Bom) 18
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. DHARMADHIKARI, B.P. COLABAWALLA, JJ.
M/s. BrahMos Aerospace Private Limited - Petitioners
Versus
The State of Maharashtra – Respondent
WP NO.11393 OF 2015
Decided on : 10-01-2017
Advocate Appeared:
For the Petitioner:Mr. V. Sridharan, Senior Advocate with Mr. Prakash Shah and Mr. Rahul Thakar i/b. M/s. PDS Legal
For the Respondents: Mr. V. A. Sonpal Special Counsel with Ms. Sushma Bhende
Headnote:
The Court held that the movement of goods from Hyderabad to Nagpur cannot be construed as a mere stop over in the inter-State movement as projected by the petitioners/dealer. The final product was appropriated at Nagpur in the form of a missile as per the contract entered with Armed Forces, which is despatched from Nagpur to the customer after pre-delivery inspection. This is not a branch transaction of warhead from Nagpur to Hyderabad as claimed by the dealer (petitioners) before us in the audit report. Hence, that cannot be allowed.
Fact of the Case:
The petitioners are challenging an order of assessment dated 17th August, 2015 passed by the fifth respondent to this writ petition for the year 2012-13. The petitioners state that the Indo-Soviet Treaty of August, 1971 and Inter-Government Agreement dated 12th February, 1998 has been entered into between the Government of Russian Federation and the Government of Republic of India based on which the petitioner company has been formed. That is a joint venture company established by Defence Research and Development Organisation (hereinafter referred to as “the DRDO”) and NPO Mashinostroeniya – a State Unitary Enterprise incorporated and registered under the Russian Federation's Legislation (hereinafter referred to as “the NPOM”). The petitioner has been established for the purpose of design, development, production and sale of Brahmos Cruise Missile weapon system. The DRDO has contributed 50.50% of the equity capital and NPOM has contributed 49.50% of the equity capital in the above joint venture company.
Finding of the Court:
The Court held that the movement of goods from Hyderabad to Nagpur cannot be construed as a mere stop over in the inter-State movement as projected by the petitioners/dealer. The final product was appropriated at Nagpur in the form of a missile as per the contract entered with Armed Forces, which is despatched from Nagpur to the customer after pre-delivery inspection. This is not a branch transaction of warhead from Nagpur to Hyderabad as claimed by the dealer (petitioners) before us in the audit report. Hence, that cannot be allowed.
Issues: Whether the movement of goods from Hyderabad to Nagpur can be construed as a mere stop over in the inter-State movement as projected by the petitioners/dealer.
Ratio Decidendi: The Court held that the movement of goods from Hyderabad to Nagpur cannot be construed as a mere stop over in the inter-State movement as projected by the petitioners/dealer. The final product was appropriated at Nagpur in the form of a missile as per the contract entered with Armed Forces, which is despatched from Nagpur to the customer after pre-delivery inspection. This is not a branch transaction of warhead from Nagpur to Hyderabad as claimed by the dealer (petitioners) before us in the audit report. Hence, that cannot be allowed.
Final Decision: The Court held that the movement of goods from Hyderabad to Nagpur cannot be construed as a mere stop over in the inter-State movement as projected by the petitioners/dealer. The final product was appropriated at Nagpur in the form of a missile as per the contract entered with Armed Forces, which is despatched from Nagpur to the customer after pre-delivery inspection. This is not a branch transaction of warhead from Nagpur to Hyderabad as claimed by the dealer (petitioners) before us in the audit report. Hence, that cannot be allowed.
(Per S. C. Dharmadhikari, J.)
1. Heard both sides.
2. Leave to amend the writ petition by incorporating the proposed/draft amendment is granted. We are of the view that the amended paras do not raise any new factual issue. Therefore, the writ petition can be amended in terms of the draft amendment. For the reasons indicated hereinafter, we do not deem it necessary to go into the pleas of both sides on these amended paragraphs.
3. Rule. Respondents waive service.
4. By this writ petition under Article 226 of the Constitution of India, the petitioners are challenging an order of assessment dated 17th August, 2015 passed by the fifth respondent to this writ petition for the year 2012-13.
5. The petitioners state that the Indo-Soviet Treaty of August, 1971 and Inter-Government Agreement dated 12th February, 1998 has been entered into between the Government of Russian Federation and the Government of Republic of India based on which the petitioner company has been formed. That is a joint venture company established by Defence Research and Development Organisation (hereinafter referred to as “the DRDO”) and NPO Mashinostroeniya – a State Unitary Enterprise incorporated and registered under the Russian Federation's Legislation (hereinafter referred to as “the NPOM”). The petitioner has been established for the purpose of design, development, production and sale of Brahmos Cruise Missile weapon system. The DRDO has contributed 50.50% of the equity capital and NPOM has contributed 49.50% of the equity capital in the above joint venture company.
6. As per agreement dated 9th July, 1999, development work sharing and development cost sharing was also finalised, by which, the DRDO, the Ministry of Finance, Government of Maharashtra and NPOM, work share was in the ratio of equity contribution.
7. After development and successful trials of Brahmos Cruise Missiles, the Indian Arm Forces have awarded contracts to the petitioner for manufacture and supply of Brahmos Cruise Missiles. Taking into consideration the production capacities, the petitioner has entered into contracts and supplements with NPOM, joint venture partner for different configuration of missiles and various other Indian industry partners. Within the purview of the inter-Government agreement dated 12th February, 1998, NPOM and the petitioner shall have equal ownership on industrial and/or intellectual property, including inventions, industrial designs/models and other scientific and technical results on know-how, information etc., acquired by them in the course of implementation of the contracts and their supplements between them under the said agreement. These agreements have not been referred to and the terms thereof need not detain us.
8. It is stated that pursuant to this agreement, a manufacturing unit of the petitioner has been set up at Hyderabad, erstwhile United State of Andhra Pradesh and presently the State of Telangana. The manufacturing unit has been established in the year 2001 and the manufacturing facility came in for operation from 2007-08. During the interregnum period of 2001-08, the petitioner has been importing fully integrated missiles from its joint venture partner, namely, NPOM and has been effecting sales of the same to the Indian Armed Forces. Consequent on the completion of the manufacturing facility in the year 2007-08, the petitioner has been importing missiles in Semi-Knocked Condition (SKD), assembling them with certain bought out items in the erstwhile United State of Andhra Pradesh and has been effecting the sales of the same to the Indian Armed Forces.
9. It is submitted that the Petitioner manufactures three types of Missiles namely, Combat Missiles, Practice Missiles and Technology/Training Missiles. The combat missiles which are used in battle field are equipped with warheads.
10. The terms “Warhead” refers to the explosive and/or toxic material that is delivered by a missile rocket or torpedo.
11. It is an explosive charge used to destroy th
