The legislative amendment to Section 10A of the Gujarat Sales Tax Act, 1969, effective from 01.04.1993, removed the exemption for turnover tax on sales to Oil Marketing Companies, establishing liability for the petitioner.

JUDGMENT :

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned Senior Advocate Mr.S.N.Soparkar with learned advocate Mr.Akshat Khare for petitioner and learned Assistant Government Pleader Mr.Chintan Dave for the respondents.

2. Rule, returnable forthwith. Learned Assistant Government Pleader Mr.Chintan Dave waives service of notice of rule for and on behalf of the respondent-State.

3. Having regard to the controversy in narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for hearing.

4. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for quashing and setting aside the order dated 18.01.2016 passed by the Gujarat Value Added Tax Tribunal (for short ‘the Tribunal’) in Revision Application No.39 of 2004. The petitioner has further prayed for holding that the respondents are not entitled to collect any turnover tax (for short TOT) from the petitioners as per Assessment Orders dated 12.02.2001 and to give remission in the amount of TOT payable by the Oil Marketing Companies on the sale effected by the petitioner. The petitioner has also prayed for quashing and setting aside the revisional order dated 26.12.2003 passed by the Special Commissioner of Sales Tax, Gujarat State- respondent No.2 and order dated 12.02.2001 passed by the Assistant Commissioner of Sales Tax assessing the liability of TOT amounting to Rs.3,65,65,350/- by declaring that the petitioner is liable to pay TOT by virtue of statutory exemption as per entry No.173 under Section 49(2) of the Gujarat Sales Tax Act, 1969 (for short ‘the Act’). It is also prayed to hold and declare that the Oil Marketing Companies (OMCs) are not liable to pay TOT in the turn over of sale on which the petitioner has already paid TOT by virtue of statutory provisions and to give further directions to respondents to refund the TOT to OMCs qua TOT on which the petitioner has already paid the TOT.

5. Brief facts of the case are as under :

5.1. The petitioner-Oil and Natural Gas Corporation Limited is engaged in business of exploration, Mining, Processing, Distribution of Hydrocarbon Products and allied activities.

5.2. In the year 1993-94, the petitioner has sold LPG (Liquefied Petroleum Gas) and NGL (Natural Gas Liquids) to various dealers namely Indian Oil Corporation (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL). These buyers who are purchasing petroleum products from the petitioner are collectively referred as OMCs. These OMCs further re-sell LPG and NGL to respective end users which complete the entire supply chain for petroleum products.

5.3. By virtue of entry No.173 under Section 49(2) of the Act “Sales of Petroleum Products including liquefied petroleum Gas, manufactured or purchased or imported from across the customs frontiers by any of the special specified companies to any other specified companies (including ONGC as well as OMCs)” are wholly exempted from any tax under the Act.

5.4. As per Section 49(2) of the Act, the transactions i.e. turnover of sales between ONGC and OMCs for the sale of petrolatum products are not to be calculated in total turn over of sales for levying tax under the Act.

5.5. The word "tax" has been defined in Section 2(32) of the Act which includes turn over tax also and therefore the sale of petrolium products to OMCs by ONGC are only exumpted from tax under the Act including TOT.

5.6. The Government of Gujarat introduced TOT on goods in Schedule-II and III by notification No.GUJ.8-1988 with effect from 06.08.1988. As per the said notification, TOT was introduced on sale or purchase by any dealer who is liable to pay tax as per Section 3 of the Act if the total TOT exceeds Rs.99,99,999/- in a year. The TOT was levied as single point tax meaning thereby that the TOT was to be paid only one time within the supply chain.

5.7. Sub-section (2) of Section 10A of the Act, ennumerates the deduction of sale