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2004 Supreme(All) 124
IN THE HIGH COURT OF ALLAHABAD
M. KATJU, POONAM SRIVASTAVA
INDIAN OIL CORPORATION - Appellant
Versus
STATE OF UTTAR PRADESH - Respondents
C. M. W. P. 251 Of 2003
Decided On : 01/27/2004
BHARATJI AGARWAL, Piyush Agrawal, S.P.GUPTA
Headnote:
U.P. TAX ON ENTRY OF GOODS ACT, 2000 - SUBJECT - ARTICLES 301 AND 304 OF THE CONSTITUTION OF INDIA - ACT SECTION LIST - SECTION 4 - SUMMARY - The impugned Act is declared violative of Articles 301 and 304 of the Constitution and is hence ultra vires. Any amount collected under the said Act shall be refunded to the petitioners with 10% per annum interest from the date of realisation to the date of refund and the refund shall be made within two months from today. However, if the burden of the tax has been passed on by the petitioners to the consumers then the refund shall not be given to the petitioners of the tax realised as it will amount to unjust enrichment.
Fact of the Case:
The petitioners are challenging the constitutional validity of the U.P. Tax on Entry of Goods Act, 2000 (hereinafter referred to as the Act) on the ground inter alia that it is violative of articles 301 and 304 of the Constitution of India.
Finding of the Court:
The impugned Act is not saved by Article 304. (b) of the Constitution. The restrictions imposed by the impugned Act are not reasonable and they are not in the public interest, as they would hamper the progress and development of the national economy.
Issues: Whether the impugned Act is violative of Articles 301 and 304 of the Constitution of India.
Ratio Decidendi: Taxes are compensatory taxes which instead of hindering trade commerce and intercourse facilitate them by providing roads and maintaining the roads in a good state of repairs. Whether a tax is compensatory or not cannot be made to depend on the preamble of the statute imposing it.
Final Decision: Petition allowed.
( 1 ) THESE two writ petitions alongwith connected and similar writ petitions are being disposed off by a common judgment.
( 2 ) HEARD Shri Bharatji Agarwal, Senior advocate, Sri Piyush Agarwal, Advocate, and other learned counsel for the petitioners, and shri S. P. Gupta, Senior Advocate and learned standing Counsel for the respondents.
( 3 ) BY means of this writ petition the petitioners are challenging the constitutional validity of the U. P. Tax on Entry of Goods act, 2000 (hereinafter referred to as the Act)on the ground inter alia that it is violative of articles 301 and 304 of the Constitution of india.
( 4 ) THE petitioner No. 1 in writ petition no. 251 of 2003 is a public sector corporation, being a Government of India undertaking. It has various units in the country, but in this case we are only concerned with its refinery unit at Mathura where the petitioner is manufacturing various petroleum products which are sold by the petitioner within and outside the State of U. P. The refinery of the petitioner situate at Mathura purchases crude oil from different Gulf countries from abroad. This crude oil which is coming from outside the country within the local area of Mathura has been subjected to entry tax under the aforesaid Act during the assessment years 2000-01, 2001-02, and 2002-03 and is liable to be similarly assessed in future years.
( 5 ) IT is alleged in paragraph 4-A of the writ petition that the Mathura refinery was designed and conceived to supply the requirement of petroleum in the northern region of the country, particularly in the states of U. P. , Delhi, Haryana and Punjab using crude oil produced in the oil fields located in India as well as imported into India from gulf countries. The Mathura Refinery was designed to process up to 6 MMTPA of crude oil to produce liquefied petroleum gas, naptha, petrol diesel, kerosene, aviation turbine fuel (ATF), furnace oil and bituman. It is alleged in paragraph 4-B of the writ petition that crude oil is not produced in the state of U. P. The crude oil produced in the country is barely sufficient to meet 30% of the demand of crude oil in the country. In view of the difficulties in transporting the crude oil from road and rail in huge quantities the petitioner Corporation had to construct a pipeline connecting the crude handliing facilities in the Gulf of Kutch to mathura Refinery for the transportation of indigenous crude oil produced by the offshore oil fields of the western coast of India (Particularly Bombay High) and of imported crude oil from the Gulf of Kutch to Mathura refinery at considerable cost. For this purpose land was acquired for the petitioner under the Petroleum, Minerals and Pipelines (Acquisition of Right of User of Land) Act, 1962 for which compensation was paid by the petitioner and the right of user in respect of which vested in the petitioner No. 1. The pipeline was subsequently constructed beneath the said land linking Mathura refinery with the crude oil handling facilities in the Gulf of Kutch for the transportation of crude oil to Mathura refinery without the use of any infra-structure or facility whatsoever provided by the State of U. P. or by any local authority within U. P.
( 6 ) IN Paragraph 4-D of the writ petition it is alleged that the petitioner corporation had to compete with multinationals and the private sector in its business. Reliance Industries, which is the biggest refinery and producer of petroleum products in India after the petitioner No. 1, has a modern state of the art refinery and is in a position to economically produce and to export petroleum products from its refinery in Gujarat without any burden of entry tax on the import of crude oil into the State of Gujarat for processing in its refinery or any burden of entry -tax on petroleum products exported by it.
( 7 ) THE petitioner No. 1 expanded the refining capacity of Mathura refinery to a processing capacity of 8 million M per annum of crude oil. Since it
