2012 Supreme(All) 2338

[2012(9) ADJ 10 (DB)(LB)]
ALLAHABAD HIGH COURT
(Lucknow Bench)
BEFORE : DEVI PRASAD SINGH AND DEVENDRA KUMAR UPADHYAYA, JJ.
RELIANCE INDUSTRIES LIMITED ....Petitioner
Versus
STATE OF U.P. ....Respondent
(Civil Misc. Writ Petition Nos. 6281 of 2010 and 1346, 1445, 1471, 1655, 1676 of 2012, decided on 7th September, 2012)

Headnote:(A) U.P. Value Added Tax Act, 2008—Sections 25, 2(b), 2(c), 7, 55, 57, 2(ap), 2(ac), 2(ag), 2(ja), 4(2) and 43—U.P. Value Added Tax Rules, 2009—Rule 2 (c) and 60—Assessment—Imposing of VAT—Inter State sale—Power of State Legislature—Impugned order passed by Tribunal imposing VAT on Inter State Sale/purchase—On transfer of property in goods—Works contract—State Legislature not competent to impose tax—On such transfer (deemed sale)—When sale had taken place overall State—Provisions of CST Act applicable to a transfer property in goods involved in execution of works contracts—Not permissible for State Legislature to define expression "Sale"—In a way as to bring within ambit of taxing power a sale in course of inter-State trade/commerce—Inter-State sale shall be governed by Sections 3(a) and 3(b) of CST Act—However, transaction must be a sale as defined in Section 2(g) of CST Act—Location of sale would be place where property in good passes—In present case sale/passing of goods had taken place outside the State of U.P.—Movement of goods had taken place from outside State of U.P.—Instant case being a inter-State sale—Movement of goods commenced in one State but terminated in other State—Under garb of Section 4(2) of VAT Act State has no right to impose tax—In present case Admittedly, natural gas handed over to bailee/transporter in terms of agreement at place 'G' (State of A.P.)—After travelling a long distance it reaches State of U.P.—Movement of lean gas from said place itself is indicative of fact that sale in question of inter-state sale—Minor variation in the quantity/shortfall of natural gas—Shall not empower State of U.P. to impose VAT—In term of Section 9(3) of CST Act State of A.P. is beneficiary—In terms of Regulation, 2008, GSPA, RGTIL and GTA delivery of lean gas shall be deemed to be made to buyer at place 'G' (State of A.P.)—Agreements executed in terms of Petroleum and Natural Gas Regulatory Board (Access Code For Common Carrier or Contract Carrier Natural Gas Pipelines) Regulations, 2008—No finding recorded by Assessing Authority that these agreements were executed in violation of statutory provision/GSPA is an agreement and not an agreement to sale—Assessing Authority failed to exercise jurisdiction vested in it—State of U.P. have no jurisdiction/statutory right to impose VAT—In violation of CST Act, read with constitutional provisions and Regulation, 2008. [Paras 7, 11, 12, 14,15, 24, 35, 57, 76, 82, 84, 92, 95, 102, 117, 133, 141, 148, 154, 158, 164, 175, 184, 191, 204, 218, 235, 243, 244 and 288]

       (B) Constitution of India, 1950—Entry 53, List I 7th Schedule—Legislation—Natural gas—Legislative power of Union of India/Central Government—That Government alone has legislative power to regulate flow of natural gas. [Para 5]

       (C) Constitution of India, 1950—Article 301—Freedom of Trade—Inter-State Restriction—Article 301 provides freedom not from all laws—But freedom from such laws which restrict—Or affect activities of trade or commerce among States. [Para 34]

       (D) Freedom of trade—Tax—Power of State to impose—On imported goods is subject to restriction—That State shall not discriminate between goods so imported—And goods so manufactured or produced—Restriction shall be reasonable. [Para 35]

       (E) Constitution of India, 1950—Article 301—Imported goods—Imposition of tax—Consideration of—In determining whether imposition of tax on imported goods is subject to a tax higher than that imposed on local goods—If there is a single area or any class of producers in a State—Who are exempted from any tax—That tax cannot be levied upon imported goods—As such taxing law must be held to be invalid. [Para 37]

       (F) Constitution of India, 1950—Article 285—State taxation—Exemption from—Property of Union—Immunity of Union property from State taxation may be withdrawn in case Parliament makes laws to that effect. [Para 41]

       (G) Constitution of India, 1950—Article 285(2)—Central Government Property—Taxation—Power of Local Authority—Existing right of a local authority to tax Central Government/Union property under Article 285(2) may be taken away by law made by Parliament. [Para 41]

       (H) Interpretation of Statute—Report of Law Commission—Statutory provision—Interpretation of—When can be—In even of conflicting opinions or uncertainty in law—It may be taken into account while constructing such statutory provision. [Para 51]

       (I) Constitution of India, 1950—Article 286 (As Amended)—Inter-State trade—Legislation—Power of Parliament—By 6th Constitutional Amendment, 1956 Parliament took over power to deal with inter-State trade and legislate on subject. [Para 57]

       (J) Interpretation of Statute—Deeming provision—Legal fiction—Which means for purpose of respective law—What is deemed to be, must be regarded as being in fact also. [Para 70]

       (K) Words and Phrases—Legal assumption—Meaning of—A thing is true—Which is either not true or which is as probably false as true. [Para 74]

       (L) Central Sale Tax Act, 1956—Section 3, Explanation—Inter-State sale—What amounts to—Passing of goods to other State with its redirection to same State shall not constitute inter-State sale. [Para 78]

       (M) Legal Maxim—"Casus Omisus"—Applicability of—When can be—It may be applied only in case there is any ambiguity in statutory povision. [Para 80]

       (N) U.P. Value Added Tax Act, 2008—Section 7—Turn over—Exemption from tax—Where turn over of sale and purchase—Is in course of inter-State trade/commerce and sale takes place outside the State. [Para 88]

       (O) Central Sale Tax Act, 1956—Section 3 (a)—Unascertained goods—Future goods—Distinction between—No distinction between them, including goods which are already existing. [Para 93]

       (P) Central Sale Tax Act, 1956—Section 2 (g)—Sale—Meaning of—It transfer of property in goods—Involved in execution of work contract—Which includes delivery of goods under any system of payment—Which includes right to use. [Para 102]

       (Q) Central Sale Tax Act, 1956—Section 3—Inter-State sale—Ingredients of—Where sale/purchase occasions moment of goods from one State to other—And is affected by transfer of documents of title to goods during its movement from one State to other. [Para 102]

       (R) Petroleum and Natural Gas Regulatory Board (Access Code For Common Carrier or Contract Carrier Natural Gas Pipelines) Regulations, 2008—Regulation 10—Natural gas—Measurement of—It shall be measured in energy terms—And shall be based on gross calorific value. [Para 148]

       (S) Sale of Goods Act, 1930—Section 39—Goods—Deemed delivery—What amounts to—For purpose transmission to buyer or delivery of goods to a safe custody—Shall be, prima facie, deemed to be a delivery of goods to buyer. [Para 199]

       (T) Sale of Goods Act, 1930—Sections 23 and 39—Delivery of goods—Buyer—Presumption of—Wherein terms of Contract, property is handed over to buyer or shipper through transporter—There shall be presumption that goods are delivered to buyer. [Para 204]

       (U) Constitution of India, 1950—Entry 92-A List I Articles 269(1) and 286 (a) (3)—Sale—State Legislature—Framing of rule—Power of—State Legislature cannot so frame rule—As to convert an outside sale—Or a sale in course of import and export into a sale inside the State. [Para 219]

       (V) Words and Phrases—"Delivery point"—Goods—Gas transfer from seller to buyer—Delivery point shall be point—At which title, custody and risk or loss of damage to gas transfers from seller to buyer. [Para 235]

       (W) Code of Civil Procedure, 1908—Section 2(9)—Judgment—Meaning of—It means statement given by the Judge on grounds of a decree or order. [Para 263]

       (X) Constitution of India, 1950—Article 226—Alternative remedy—Writ petition—Maintainability of—In case order is passed without jurisdiction, in violation of principle of natural justice, affects fundamental rights—Alternative remedy is no bar. [Para 18 and 19]

       Result; Petition Allowed.