Point of Law : Power of judicial review is traceable to Articles 32 and 226 that confer on Supreme Court and High Courts power to issue prerogative and like writs to protect citizens from state action that infringes upon their rights.

JUDGMENT :

A.K. Jayasankaran Nambiar, J.

These writ appeals separately impugn the judgment of a learned Single Judge that dismissed the writ petitions preferred by the appellant challenging (i) the orders of assessment under the KVAT Act for the assessment years 2015-16 to 2017-18 and a show cause notice for the year 2014-15 [W.P(C).No.17451/2021], (ii) the order of the assessing authority rejecting the claim for input tax credit on the purchase of capital goods [W.P(C).No.18783/2021] and (iii) the order imposing penalty on the appellant under the KVAT Act for the assessment years 2016-17 and 2017-18 [W.P(C).No.18443/2020]. While W.A.No.374 of 2021 arises from the judgment of a learned Single Judge in W.P(C).No.18443/2020, W.A.Nos.73 and 91 of 2022 arise from the common judgment of another learned Single Judge in W.P(C).Nos.17451/2021 and 18783/2021. Since the issue involved in all these appeals is common, they are taken up together for hearing and disposed by this common judgment.

THE FACTS IN BRIEF

2. The appellant is stated to be a private limited company involved, inter alia, in the activity of production and sale of industrial gases such as Hydrogen, Nitrogen and HP Steam. It is a wholly owned subsidiary company of Air Products and Chemicals Inc., USA. It is also a registered dealer under the Kerala Value Added Tax Act [hereinafter referred to as the 'KVAT Act'] and an assessee on the rolls of the Asst. Commissioner (Assmt), Special Circle – II, Ernakulam. It is stated that for the purposes of implementing its Integrated Refinery Expansion Project, Bharath Petroleum Corporation Limited [BPCL] found it necessary to ensure a continuous and reliable supply of Hydrogen, Nitrogen and HP Steam of particular specifications so as to increase the production of their petroleum products. They accordingly published a notification inviting bids for supply of these gases. The appellant responded to the said notification and was eventually awarded the contract.

3. According to the appellant, its obligations under the contract were to Build, Own, Operate (BOO) and maintain a Hydrogen and Nitrogen manufacturing plant at its own cost and expenditure on the land to be allocated by BPCL on lease basis, with the objective of ensuring exclusive and uninterrupted supply of Hydrogen, Nitrogen and HP Steam to BPCL at competitive prices. In the agreement between the parties, the price of the gases is fixed in terms of a formula specified in Article 15 thereof, which comprises of Fixed Monthly Charges as well as Variable Charges. The Fixed Monthly Charges consist of an fixed amount towards return on the investment of the appellant, a component towards maintenance costs and other overheads, as well as manpower costs. The variable charges, on the other hand, comprises of the variable costs of producing the industrial gases. Although separate invoices are raised for the Fixed Charges and Variable Charges, they together go to make up the price for the supply of the industrial gases under the agreement. As regards the production plant itself, the agreement envisaged that the plant to be installed by the appellant, together with all the pipelines, metering and other systems would be the property of the appellant during the term of the agreement, and even after its termination, unless transferred or removed in accordance with the agreement. It is significant that the agreement gives BPCL an option to takeover the production plant if the agreement is not renewed upon completion of its initial term of fifteen years from the date of commencement of the supply of gases to BPCL. In the event BPCL exercises its option, it has to compensate the appellant at a fair value as determined in accordance with the procedure set out in Appendix 8 of the agreement.

4. For the assessment years 2015-16 to 2017-18, the assessment of the appellant under the KVAT Act was complet