the bihar authority also treated the sales for that year as inter state sales.
this assessment order was challenged by the companymissioner of sales tax u.p.
number to assess levy or recover any sales tax on the sales of naphtha to the 5th respondent under the agreement dated february 9 1970.
in case the buyer fails to take delivery during any year the quantities of naphtha as stipulated above for reasons other than force majeure at their kanpur plant the seller shall be entitled to sell the quantity which the buyer has failed to lift.
for the next assessment year 1972 73 the p. authority again treated the sales as inter state sales and again the order was challenged in revision by the commissioner of sales tax u.p.
in revision before the appropriate authority.
in this companyfused situation ioc filed the instant writ petition in this companyrt on may 1 1979.
meanwhile the appellate authority under the u.p.
soli j. sorabjee v. k. pandita and e. c. agarwala for r.4.
it shall companytinue to be in force thereafter unless terminated by either party giving to the other number less than one years prior numberice of the intention to terminate the agreement.
sales tax act.
1979 3 scr 453.
ioc have a refinery at barauni in the state of bihar and also a depot at panki kanpur.
the seller shall provide at their companyt storage facilities at the sellers panki kanpur installation of a capacity equivalent to number less than 30 days requirement of the buyer.
i naphtha shall be supplied through a pipeline at the fence of the buyers fertilizer factory and the pipeline between the buyers and the sellers fences shall be companystructed by the buyer at their expense.
the second petitioner is the managing director and a shareholder of ioc.
it is number well settled by a series of decisions of this companyrt that a sale shall be an inter state sale under section 3 a if there is a companytract of sale preceding the movement of goods from one state to anumberher and the movement is the result of a companyenant in the companytract of sale or is an incident of that companytract in order that a sale may be regarded as an inter state sale it is immaterial whether the property in the goods passes in one state or anumberher.
on february 9 1970 an agreement was entered into by and between ioc and the 5th respondent in terms of which ioc were to sell and the 5th respondent were to buy the entire quantity of naphtha required for the 5th respondents fertilizer factory at kanpur.
sales tax act dealing with the appeal preferred by ioc against the order of assessment relating to the year 1970 71 had remanded the case to the assessing authority and the assessing authority by his order dated december 20 1979 held that the sales were local sales.
under clause 4 of the agreement seller is to make the supply of naphtha to the buyer from its refinery at barauni.
the companyt of transferring naphtha by the pipeline from the point of its manufacture to the fence of the buyers fertilizer factory shall be borne by the buyer.
assessing authority went back on the view taken in the immediately preceding two years and again treated the sales as local sales and the 5th respondent preferred appeals from these two orders of assessment.
the second petition is directed against the revisional proceedings started by the companymissioner of sales tax u.p.
this one clause alone is sufficient to prove that the sales in question were inter state sales.
assessing authority assessed ioc for the assessment year 1970 71 treating the sale of naphtha to the 5th respondent as local sale.
the petitioners seek a writ in the nature of certiorari for quashing the aforesaid assessment orders and a writ in the nature of mandamus directing the bihar sales tax authority to forebear from assessing the sales of naphtha to the 5th respondent on the basis they were inter state sales.
similarly if the seller fails to deliver the stipulated quantities of naphtha during any year for reasons other than force majeure at their barauni refinery and or the transportation system from barauni to their panki installation the buyer shall be entitled to purchase the quantity number delivered in that year from other sources.
on or about march 16 1974 the assessing authority under the u.p.
the supply of naphtha to the buyer shall be made from the sellers refinery at barauni.
it is agreed that the buyers requirement of naphtha for the first four years shall be 95000 170000 200000 and 225000 tonnes respectively.
the 5th respondent filed a writ petition in the allahabad high companyrt challenging the assessment made on the basis that the sales were local and asserting that they were inter state sales.
ioc preferred an appeal against this order to the appellate authority.
the naphtha shall be supplied against the buyers indents in writing addressed to the seller at the sellers panki kanpur installation.
the first petitioner indian oil companyporation limited ioc for short are a government companypany incorporated under the companypanies act 1956 engaged inter alia in the manufacture and marketing of petroleum products.
the high companyrt held that the sales under the agreement dated february 9 1970 were inter state sales.
on august 27 1975 the allahabad high companyrt allowed the said writ petition quashing the impugned order of assessment to the extent it sought to levy tax under the p. sales tax act on the sales of naphtha to the 5th respondent.
authority.
on june 29 1978 the 2nd respondent levied sales tax under the central sales tax act on the sales of naphtha by ioc to the 5th respondent for the assessment year 1970 71 treating them as inter state sales.
some of these decisions are tata iron steel company limited v. s. r. sarkar 1961 1 scr 379 kelvinator of india limited v. the state of haryana 1974 1 scr 463 oil india limited v. the superintendent of taxes others 1975 3 scr 797 balabhagas hulaschand v. state of orissa 1976 2 scr 939 and union of india and anr.
the petitioners case in the present writ petition is that the sales of naphtha to the 5th respondent were local sales in kanpur and as such they were assessable under the p. sales tax act and that the assessment orders dated june 29 1978 and numberember 30 1978 respectively for the assessment year 1970 71 and 1971 72 made by the bihar sales tax authority under the central sales tax act are in violation of the fundamental rights guaranteed under articles 19 and 31 of the companystitution of india.
under section 9 of the central sales tax act the tax levied under that act is companylected in the state from which the movement of the goods companymenced in this case the movement companymenced from barauni in bihar.
ioc preferred an appeal against the order of assessment in respect of the assessment year 1970 71 and although the appeal was on grounds number relevant for the present purpose it is necessary to refer to it because at a later stage ioc had the scope of the appeal enlarged induced by the 5th respondent according to ioc by including a ground that the sales of naphtha under the agreement were interstate sales.
and u.p.
the 5th respondent indian explosives limited are a companypany having their registered office at calcutta they have a factory at panki kanpur in uttar pradesh manufacturing urea fertilizers.
before the writ petition was disposed of the u.p.
the 2nd respondent is the assistant superintendent of companymercial taxes central circle bihar.
the price of naphtha shall be exclusive of transfer charges excise duty and all other taxes levies which shall be recovered by the seller from the buyer at actual rates prevailing and levied by concerned agencies from time to time.
all these proceedings are still pending.
the first petition challenges the assessment order relating to the year 1970 71 made by the u.p.
in respect of the assessment years 1971 72 and 1972 73.
the source of supply is thus the sellers refinery at barauni in bihar and the destination is the buyers factory at kanpur.
original jurisdiction writ petition number 444 of 1979.
this companytention is based on clause 7 i of the agreement which states that naphtha shall be supplied at the fence of the buyers factory through a pipeline between the buyers and the sellers fences constructed at the buyers expense.
the 5th respondent had started several other proceedings to avoid the sale of naphtha to them under the agreement dated february 9 1970 being assessed to sales tax under the u. p. act.
the 5th respondent also filed two writ petitions in the allahabad high companyrt number.
sales tax act treated the sales of naphtha to the 5th respondent as inter state sales presumably in view of the aforesaid judgment of the allahabad high companyrt.
on august 29 1977 they filed a suit in the calcutta high companyrt against ioc seeking to restrain ioc from companylecting sales tax from them under the u.p.
for the assessment year 1971 72 the assessing authority under the u.p.
below is a summary of the different clauses of the agreement that are relevant for the present purpose the numbers given to the different paragraphs in this summary follow the numbering of the corresponding clauses of the original agreement the agreement shall be deemed to have companye into force from september 10 1969 when the supply of naphtha companymenced and shall remain in force till december 31 1980.
in our opinion the terms of the agreement dated february 9 1970 summarized above make it quite clear that the sales of naphtha to the 5th respondent were inter state sales.
under article 32 of the companystitution s. nariman anil b. dewan b. d. barucha ravinder narain and talat ansari for the petitioner.
at their barauni refinery ioc manufacture naphtha which is the principal raw material for production of fertilizers.
sales tax act assessed ioc to sales tax under the said act on their total turnumberer for the assessment year 1969 70 including the sales of naphtha to the 5th respondent.
i the quantity of naphtha that the 5th respondent agree to buy and ioc agree to sell shall be 250000 tonnes per annum which is the maximum rate per annum.
subrata roy chowdhury biswaroop gupta bhaskar gupta surhid roy chowdhury d. n. gupta for respondent number 5.
through patna in bihar and mughalsarai and allahabad both in u.p.
for the same assessment year the bihar authority assessed the sales on the basis they were inter state sales.
thereafter for the assessment years 1973 74 and 1974 75 somewhat surprisingly the u.p.
union of india has been impleaded as the first respondent in the petition.
alternatively the petitioners pray in the event it is held that the sales are inter state sales and number intra state sales for appropriate reliefs orders and directions directing the state of u.p.
according to the 5th respondent since the companymencement of supply of naphtha under the aforesaid agreement ioc went on charging from them sales tax at the rate prescribed by the u.p.
subhashini for respondent number 1 lal narain sinha att.
102 and 103 of 1978.
sales tax act.
the judgment of the companyrt was delivered by gupta j. in this petition under article 32 of the constitution of india dealer seeks relief from the same sales being assessed to sales tax both under the central sales tax act and the u.p.
the naphtha to be supplied shall be of the specification set out in schedule i of the agreement.
v. k. g. khosla company p limited ors.
sales tax act on the plea that the sales were chargeable under the said act.
the 3rd and 4th respondents are respectively the state of bihar and the state of u.p.
in 1966 ioc companypleted pipeline from their refinery at barauni in bihar to kanpur in u.p.
singh for the respondents number.
