{"id":33460,"date":"1980-09-10T00:00:00","date_gmt":"1980-09-09T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/indian-oil-corporation-ltd-anr-vs-union-of-india-and-ors-on-10-september-1980"},"modified":"2017-08-29T21:45:54","modified_gmt":"2017-08-29T16:15:54","slug":"indian-oil-corporation-ltd-anr-vs-union-of-india-and-ors-on-10-september-1980","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/indian-oil-corporation-ltd-anr-vs-union-of-india-and-ors-on-10-september-1980","title":{"rendered":"Indian Oil Corporation Ltd. & Anr vs Union Of India And Ors on 10 September, 1980"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Indian Oil Corporation Ltd. & Anr vs Union Of India And Ors on 10 September, 1980<\/div>\n
Equivalent citations: 1981 AIR 446, \t\t 1981 SCR (1) 673<\/div>\n
Author: A Gupta<\/div>\n
Bench: Gupta, A.C.<\/div>\n
           PETITIONER:\nINDIAN OIL CORPORATION LTD. & ANR.\n\n\tVs.\n\nRESPONDENT:\nUNION OF INDIA AND ORS.\n\nDATE OF JUDGMENT10\/09\/1980\n\nBENCH:\nGUPTA, A.C.\nBENCH:\nGUPTA, A.C.\nFAZALALI, SYED MURTAZA\nKAILASAM, P.S.\n\nCITATION:\n 1981 AIR  446\t\t  1981 SCR  (1) 673\n\n\nACT:\n     Sales Tax\tlegislation-Central  Sales  Tax\t Act,  1956-\nSection 3(1)-Factory  in Barauni  in Bihar-Naphtha  sent  by\npipeline  from\tBarauni\t to  kanpur  in\t U.P.-Orders  placed\npursuant to  an agreement  by the  buyer in  Kanpur  on\t the\nseller's office\t in Kanpur-Sale-Whether\t taxable  under\t the\nCentral Sales Tax or U.P. Sales Tax Act.\n\n\n\nHEADNOTE:\n     The  Indian  Oil  Corporation  was\t a  manufacturer  of\nnaphtha with  its works\t at Barauni  in Bihar  while the 5th\nrespondent  was\t a  manufacturer  of  fertilizers  with\t its\nfactory at  Kanpur.  The  Indian  Oil  Corporation  supplies\nnaphtha to the 5th respondent's fertilizer factory at Kanpur\nthrough a pipeline. Both the buyer and the seller have their\noffices at  Kanpur and indents are addressed by the buyer to\nthe seller at their Kanpur office. The pipeline from Barauni\nto the\tpetitioner's depot at Kanpur has been constructed by\nthe petitioner,\t the pipeline  between the  buyer's and\t the\nseller's fences is however constructed by the buyer, the 5th\nrespondent.\n     On the  question whether  the sale of naphtha should be\ntaxed under  the Central  Sales Tax  Act or  under the\tU.P.\nSales Tax  Act, the U.P. authorities insisted that since the\nindent had  been placed\t by the buyer on the seller at their\nKanpur Office  the sale\t was a local sale while the sale tax\nauthorities in\tBihar insisted that since there was transfer\nof goods  from one State to another the sale was inter-State\nchargeable to tax under the Central Sales Tax Act.\n     Allowing the petition,\n^\n     HELD: On  the facts  of the  present case the sales are\nclearly inter-State  sales and\tthe State  of  U.P.  had  no\njurisdiction to\t assess the  petitioners to  sales tax under\nthe State  Act. As  the movement  of naphtha  commences from\nBarauni in  Bihar the  sales tax  payable on the sales under\nthe agreement  can be  assessed and  collected only  by\t the\nauthorities  in\t  the  State  of  Bihar\t on  behalf  of\t the\nGovernment of  India in\t view of  section 9  of the  Central\nSales Tax Act. [680E]\n     It is now well-settled by a series of decisions of this\nCourt that a sale shall be an inter-State sale under section\n3(a) if\t there is  a contract of sale preceding the movement\nof goods  from one  State to another and the movement is the\nresult of  a covenant  in the  contract of  sale  or  is  an\nincident of  that contract;  in order  that a  sale  may  be\nregarded as an inter-State sale it is immaterial whether the\nproperty in the goods passes in one State or another. [678H-\n679A]\n674\n     Tata Iron\t& Steel\t Co. Ltd.  v. S.  R. Sarkar<\/a> [1961] 1\nS.C.R. 379;  Kelvinator of  India Ltd.\tv. State  of Haryana<\/a>\n[1974] 1  S.C.R. 463;  Oil India  Ltd. v.  Superintendent of\nTaxes<\/a> [1975]  3 SCR  767; Balabhagas  Hulaschand v. State of\nOrissa<\/a> [1976]  2 SCR  939; Union  of India v. K. G. Khosla &\nCo. (P) Ltd.<\/a> [1979] 3 SCR 453, referred to.\n     The terms of the agreement make it quite clear that the\nsales of  naphtha to  the respondent were inter-State sales.\nThe source  of supply is the seller's refinery at Barauni in\nBihar and  the destination is the buyer's factory at Kanpur.\nThis clause  alone is  sufficient to prove that the sales in\nquestion were inter-State sales. [679B-C]\n     Clause 3(iii)  of the  agreement which  says  that\t the\nnaphtha\t shall\t be  supplied  against\tindents\t in  writing\naddressed to  the seller  at their  installation  at  Kanpur\ncannot be  read in  isolation. Sub-clause  (iv) of  clause 3\nsets out  the details  of the  buyer's requirement  for\t the\nfirst four  years and  thereafter. Under clause 8 Indian Oil\nCorporation are\t bound not  only to  bring  the\t contractual\nquantity of  naphtha from  Barauni to  the  seller's  Kanpur\ninstallation but  also to  provide at their own cost storage\nfacilities at  Kanpur of  a capacity  equivalent to not less\nthan 30\t days' requirement  of the  buyer. The\tindents\t are\ntherefore not outside the agreement but are relatable to the\nbuyer's requirements under the agreement. It is obvious that\nthe sales  under the  agreement\t are  not  possible  without\ninter-State movement of naphtha. Clause 3 read with clause 8\nalso proves  that really there are no two movements but only\none movement from Barauni to Kanpur pursuant to the contract\nof sale\t and the  arrangement regarding\t storage  facilities\nprovided in clause 8 is only for operational convenience, it\nis only\t a mechanism  devised to  facilitate the transfer of\nnaphtha through\t the seller's  pipeline to  their  depot  at\nKanpur and  from there\tto the\tbuyer's\t factory  at  Kanpur\nthrough the  pipeline constructed at the buyer's cost. It is\nrelevant in  this connection to note that under clause 7(ii)\nthe cost of transferring naphtha from Barauni to the buyer's\nfence is to be borne by the buyer. [679G-H; 680A-C]\n\n\n\nJUDGMENT:\n<\/pre>\n
     ORIGINAL JURISDICTION: Writ Petition No. 444 of 1979.
\n\t  (Under Article 32 of the Constitution)
\n     F. S.  Nariman & Anil B. Dewan, B. D. Barucha, Ravinder
\nNarain and Talat Ansari for the Petitioner.\n<\/p>\n
     A. Subhashini for Respondent No. 1<\/span><\/p>\n
     Lal Narain\t Sinha, Att.  Genl. and\t U.P. Singh  for the
\nRespondents Nos. 2-3.\n<\/p>\n
     Soli J.  Sorabjee, V. K. Pandita and E. C. Agarwala for
\nR.4.\n<\/p>\n
     Subrata Roy  Chowdhury, Biswaroop Gupta, Bhaskar Gupta,
\nSurhid Roy Chowdhury & D. N. Gupta for Respondent No. 5.\n<\/p>\n
     The Judgment of the Court was delivered by
\n675<\/span>
\n     GUPTA, J.-In  this petition  under Article\t 32  of\t the
\nConstitution of\t India dealer  seeks relief  from  the\tsame
\nsales being  assessed to  sales tax  both under\t the Central
\nSales Tax  Act\tand  the  U.P.\tSales  Tax  Act.  The  first
\npetitioner Indian  Oil Corporation  Limited, IOC  for short,
\nare a  government company  incorporated under  the Companies
\nAct,  1956   engaged  inter  alia  in  the  manufacture\t and
\nmarketing of  petroleum products.  The second  petitioner is
\nthe Managing  Director and  a shareholder  of IOC.  Union of
\nIndia has  been impleaded  as the  first respondent  in\t the
\npetition. The 2nd respondent is the Assistant Superintendent
\nof Commercial  Taxes, Central Circle, Bihar. The 3rd and 4th
\nrespondents are\t respectively the  State of  Bihar  and\t the
\nState of  U.P. The  5th respondent Indian Explosives Limited
\nare a  company having  their registered\t office at Calcutta;
\nthey have  a factory  at  Panki,  Kanpur  in  Uttar  Pradesh
\nmanufacturing urea  fertilizers.  IOC  have  a\trefinery  at
\nBarauni in  the State  of Bihar\t and also  a depot at Panki,
\nKanpur. In  1966 IOC  completed pipeline from their refinery
\nat Barauni in Bihar to Kanpur in U.P. through Patna in Bihar
\nand Mughalsarai\t and Allahabad both in U.P. At their Barauni
\nrefinery IOC  manufacture naphtha which is the principal raw
\nmaterial for production of fertilizers.\n<\/p>\n
     On February  9, 1970  an agreement\t was entered into by
\nand between IOC and the 5th respondent in terms of which IOC
\nwere to\t sell and  the 5th respondent were to buy the entire
\nquantity  of  naphtha  required\t for  the  5th\trespondent’s
\nfertilizer factory  at Kanpur.\tBelow is  a summary  of\t the
\ndifferent clauses of the agreement that are relevant for the
\npresent\t purpose;   the\t numbers   given  to  the  different
\nparagraphs in  this summary  follow  the  numbering  of\t the
\ncorresponding clauses of the original agreement:\n<\/p>\n
     1.\t  The agreement\t shall be  deemed to  have come into
\n\t  force from  September 10, 1969 [when the supply of
\n\t  naphtha commenced]  and shall remain in force till
\n\t  December 31,\t1980. It  shall continue  to  be  in
\n\t  force thereafter unless terminated by either party
\n\t  giving to the other not less than one year’s prior
\n\t  notice  of   the  intention\tto   terminate\t the
\n\t  agreement.\n<\/p><\/blockquote>\n
     2.\t  The  naphtha\tto  be\tsupplied  shall\t be  of\t the
\n\t  specification\t set   out  in\tSchedule  I  of\t the
\n\t  agreement.\n<\/p><\/blockquote>\n
     3.\t  (i)  The   quantity  of   naphtha  that   the\t 5th
\n\t  respondent agree  to buy  and IOC  agree  to\tsell
\n\t  shall be  2,50,000 tonnes  per annum\twhich is the
\n\t  maximum rate per annum.\n<\/p><\/blockquote>\n
     (iii) The naphtha shall be supplied against the buyer’s
\n\t  indents in  writing addressed to the seller at the
\n\t  seller’s Panki\/Kanpur installation.\n<\/p><\/blockquote>\n
676<\/span><\/p>\n
     (iv) It is\t agreed\t that  the  buyer’s  requirement  of
\n\t  naphtha for  the first four years shall be 95,000,
\n\t  1,70,000,    2,00,000\t   and\t  2,25,000    tonnes
\n\t  respectively.\n<\/p><\/blockquote>\n
    (viii)  In case  the buyer fails to take delivery during
\n\t  any year  the quantities  of naphtha as stipulated
\n\t  above for  reasons other  than  Force\t Majeure  at
\n\t  their Kanpur\tplant, the  seller shall be entitled
\n\t  to sell the quantity which the buyer has failed to
\n\t  lift. Similarly if the seller fails to deliver the
\n\t  stipulated quantities\t of naphtha  during any year
\n\t  for reasons  other than  Force  Majeure  at  their
\n\t  Barauni refinery  and\/or the transportation system
\n\t  from Barauni\tto  their  Panki  installation,\t the
\n\t  buyer shall  be entitled  to purchase the quantity
\n\t  not delivered in that year from other sources.\n<\/p><\/blockquote>\n
     4.\t  The supply  of naphtha  to the buyer shall be made
\n\t  from the seller’s refinery at Barauni.\n<\/p><\/blockquote>\n
     5.\t  The  price   of  naphtha  shall  be  exclusive  of
\n\t  transfer charges,  excise duty and all other taxes
\n\t  levies which shall be recovered by the seller from
\n\t  the buyer at actual rates prevailing and levied by
\n\t  concerned agencies from time to time.\n<\/p><\/blockquote>\n
     7.\t  (i) Naphtha  shall be\t supplied through a pipeline
\n\t  at the fence of the buyer’s fertilizer factory and
\n\t  the pipeline\tbetween the buyer’s and the seller’s
\n\t  fences shall\tbe constructed by the buyer at their
\n\t  expense.\n<\/p><\/blockquote>\n
     (ii) The cost  of transferring  naphtha by the pipeline
\n\t  from the  point of its manufacture to the fence of
\n\t  the buyer’s  fertilizer factory  shall be borne by
\n\t  the buyer.\n<\/p><\/blockquote>\n
     8.\t  The seller  shall provide  at their  cost  storage
\n\t  facilities   at    the    seller’s\tPanki\/Kanpur
\n\t  installation of  a capacity equivalent to not less
\n\t  than 30 days’ requirement of the buyer.\n<\/p><\/blockquote>\n
     10.  (iii) Three samples of naphtha for testing will be
\n\t  taken from the seller’s tank at their Panki\/Kanpur
\n\t  installation prior  to transfer in the presence of
\n\t  buyer’s representatives  at such  frequency as may
\n\t  be mutually agreed.<\/p><\/blockquote>\n
     According to the 5th respondent, since the commencement
\nof supply  of naphtha under the aforesaid agreement IOC went
\non charging  from them\tsales tax  at the rate prescribed by
\nthe U.P.  Sales Tax  Act on  the plea  that the\t sales\twere
\nchargeable under  the said  Act. On  or about March 16, 1974
\nthe  assessing\tauthority  under  the  U.P.  Sales  Tax\t Act
\nassessed IOC  to sales tax under the said Act on their total
\nturnover for the assessment year 1969-70 including
\n677<\/span>
\nthe  sales  of\tnaphtha\t to  the  5th  respondent.  The\t 5th
\nrespondent filed a writ petition in the Allahabad High Court
\nchallenging the\t assessment made on the basis that the sales
\nwere local  and asserting  that they were inter-state sales.
\nBefore the  writ petition was disposed of the U.P. assessing
\nauthority assessed  IOC\t for  the  assessment  year  1970-71
\ntreating the  sale of naphtha to the 5th respondent as local
\nsale. On  August 27,  1975 the\tAllahabad High Court allowed
\nthe said  writ\tpetition  quashing  the\t impugned  order  of
\nassessment to  the extent  it sought  to levy  tax under the
\nU.P. Sales  Tax Act  on the  sales of  naphtha\tto  the\t 5th
\nrespondent. The\t High Court  held that\tthe sales  under the
\nagreement dated February 9, 1970 were inter-state sales. IOC
\npreferred an  appeal against  the  order  of  assessment  in
\nrespect of  the assessment  year 1970-71  and  although\t the
\nappeal was  on grounds not relevant for the present purpose,
\nit is  necessary to refer to it because at a later stage IOC
\nhad the\t scope of  the appeal  enlarged, induced  by the 5th
\nrespondent according  to IOC, by including a ground that the
\nsales of  naphtha under the agreement were interstate sales.
\nOn June\t 29, 1978  the 2nd respondent levied sales tax under
\nthe Central  Sales Tax Act on the sales of naphtha by IOC to
\nthe 5th\t respondent for the assessment year 1970-71 treating
\nthem as\t inter-state sales.  Under section  9 of the Central
\nSales Tax  Act the tax levied under that Act is collected in
\nthe State from which the movement of the goods commenced; in
\nthis case  the movement commenced from Barauni in Bihar. IOC
\npreferred an  appeal against  this order  to  the  appellate
\nauthority. For\tthe assessment\tyear 1971-72  the  assessing
\nauthority under\t the U.P. Sales Tax Act treated the sales of
\nnaphtha\t to   the  5th\t respondent  as\t  inter-state  sales
\npresumably  in\t view  of  the\taforesaid  judgment  of\t the
\nAllahabad High\tCourt. This  assessment order was challenged
\nby the\tCommissioner of\t Sales Tax,  U.P. in revision before
\nthe appropriate\t authority. For the same assessment year the
\nBihar authority\t assessed the  sales on\t the basis they were
\ninter-state sales.  For the next assessment year 1972-73 the
\nU.P. authority\tagain treated the sales as inter-state sales
\nand again  the order  was  challenged  in  revision  by\t the
\nCommissioner of\t Sales Tax,  U.P. The  Bihar authority\talso
\ntreated the  sales  for\t that  year  as\t inter-state  sales.
\nThereafter for\tthe assessment\tyears  1973-74\tand  1974-75
\nsomewhat surprisingly the U.P. assessing authority went back
\non the view taken in the immediately preceding two years and
\nagain  treated\t the  sales  as\t local\tsales  and  the\t 5th
\nrespondent  preferred  appeals\tfrom  these  two  orders  of
\nassessment. In this confused situation IOC filed the instant
\nwrit petition  in this\tCourt on May, 1, 1979. Meanwhile the
\nappellate authority  under the\tU.P. Sales  Tax Act  dealing
\nwith the  appeal preferred  by\tIOC  against  the  order  of
\nassessment relating to
\n678<\/span>
\nthe year  1970-71 had  remanded the  case to  the  assessing
\nauthority and  the assessing  authority by  his order  dated
\nDecember 20, 1979 held that the sales were local sales.\n<\/p>\n
     The  5th\trespondent   had   started   several   other
\nproceedings to\tavoid the  sale of naphtha to them under the
\nagreement dated February 9, 1970 being assessed to sales tax
\nunder the U. P. Act. On August 29, 1977 they filed a suit in
\nthe Calcutta  High Court against IOC seeking to restrain IOC
\nfrom collecting sales tax from them under the U.P. Sales Tax
\nAct. The 5th respondent also filed two writ petitions in the
\nAllahabad High\tCourt, Nos.  102 and  103 of 1978. The first
\npetition challenges  the assessment  order relating  to\t the
\nyear 1970-71 made by the U.P. authority. The second petition
\nis directed  against the  revisional proceedings  started by
\nthe Commissioner  of Sales  Tax,  U.P.\tin  respect  of\t the
\nassessment years  1971-72 and 1972-73. All these proceedings
\nare still pending.\n<\/p>\n
     The petitioners’  case in\tthe present writ petition is
\nthat the  sales of  naphtha to the 5th respondent were local
\nsales in  Kanpur and  as such they were assessable under the
\nU.P. Sales Tax Act and that the assessment orders dated June
\n29,  1978   and\t November  30,\t1978  respectively  for\t the
\nassessment year\t 1970-71 and 1971-72 made by the Bihar Sales
\nTax authority  under  the  Central  Sales  Tax\tAct  are  in
\nviolation  of\tthe  fundamental   rights  guaranteed  under
\nArticles 19  and  31  of  the  Constitution  of\t India.\t The
\npetitioners seek  a writ  in the  nature of  certiorari\t for
\nquashing the  aforesaid assessment  orders and a writ in the
\nnature of  mandamus directing  the Bihar sales tax authority
\nto forebear  from assessing  the sales of naphtha to the 5th
\nrespondent  on\t the  basis  they  were\t inter-state  sales.
\nAlternatively the  petitioners pray, in the event it is held
\nthat “the  sales are  inter-state sales\t and not intra-state
\nsales”, for  “appropriate reliefs,  orders, and\t directions”
\ndirecting the  State of\t U.P. not to assess, levy or recover
\nany sales  tax on the sales of naphtha to the 5th respondent
\nunder the agreement dated February 9, 1970.\n<\/p>\n
     Section  3(a)  of\tthe  Central  Sales  Tax  Act,\t1956
\nprovided that  “a sale\tor purchase of goods shall be deemed
\nto take place in the course of inter-state trade or commerce
\nif the sale or purchase occasions the movement of goods from
\none State to another”. It is now well settled by a series of
\ndecisions of  this Court that a sale shall be an inter-state
\nsale under  section 3(a)  if there  is a  contract  of\tsale
\npreceding the  movement of  goods from\tone state to another
\nand the movement is the result of a covenant in the contract
\nof sale\t or is an incident of that contract; in order that a
\nsale may be regarded as an inter-state sale it is immaterial
\nwhether the property in the
\n679<\/span>
\ngoods  passes  in  one\tstate  or  another.  Some  of  these
\ndecisions are:\tTata Iron  & Steel  Co. Ltd. v. S. R. Sarkar<\/a>
\n[1961] 1  SCR 379,  Kelvinator of India Ltd. v. The State of
\nHaryana<\/a>\t [1974]\t  1  SCR   463,\t Oil   India  Ltd.   v.\t The
\nSuperintendent\tof   Taxes  &\tothers<\/a>\t[1975]\t3  SCR\t797,
\nBalabhagas Hulaschand  v. State\t of Orissa<\/a>  [1976] 2 SCR 939
\nand Union of India and Anr. v. K. G. Khosla & Co. (P) Ltd. &
\nOrs.<\/a> [1979]  3 SCR  453. In  our opinion  the terms  of\t the
\nagreement dated\t February 9,  1970 summarized  above make it
\nquite clear  that the sales of naphtha to the 5th respondent
\nwere inter-state  sales. Under\tclause 4  of  the  agreement
\nseller is  “to make  the supply of naphtha to the buyer from
\nits refinery  at Barauni”.  The source of supply is thus the
\nseller’s refinery at Barauni in Bihar and the destination is
\nthe buyer’s  factory at\t Kanpur. This  one clause  alone  is
\nsufficient to  prove that  the sales in question were inter-
\nstate sales.\n<\/p>\n
     However, on  behalf of the petitioners and the State of
\nU.P. it\t is contended  that the\t sales were  not inter-state
\nsales and  were\t local\tsales  within  the  State  of  Uttar
\nPradesh. It  is pointed out from clause 3(iii) that supplies
\nof naphtha  are made  on  the  buyer’s\tindents\t in  writing
\naddressed to the seller at their Kanpur installation and not
\nat their  refinery at  Barauni which, it is contended, shows
\nthat the  supplies are\tmade from IOC’s storage at Kanpur to
\nthe 5th\t respondent’s factory  also at\tKanpur. It  is\talso
\ncontended that\tthe supply of naphtha to the buyer’s factory
\nat Kanpur involves two movements, one from Barauni to Kanpur
\nfor storage  at the  seller’s depot,  and the other from the
\ndepot to  the buyer’s  factory. This  contention is based on
\nclause 7(i) of the agreement which states that naphtha shall
\nbe supplied  at the  fence of  the buyer’s factory through a
\npipeline  between   the\t buyer’s  and  the  seller’s  fences
\nconstructed at\tthe buyer’s  expense. It is argued that this
\nstipulation shows  that the movement of naphtha from Barauni
\nis arrested  at the seller’s Kanpur depot and is followed by
\nanother movement  from there  to the  buyer’s factory  which
\nproves that  the sales\tare local  sales and not inter-state
\nbecause in  an inter-state sale the movement of goods is the
\nimmediate and direct result of the contract of sale.\n<\/p>\n
     Clause 3(iii)  of the  agreement which  says  that\t the
\nnaphtha\t shall\t be  supplied  against\tindents\t in  writing
\naddressed to  the seller  at their  installation  at  Kanpur
\ncannot be  read in  isolation. Sub-clause  (iv) of  clause 3
\nsets out  the details  of the  buyer’s requirement  for\t the
\nfirst four  years and  thereafter. Under  clause 8  IOC\t are
\nbound not  only to bring the contractual quantity of naphtha
\nfrom Barauni to the seller’s Kanpur installation but also to
\nprovide at  their own cost storage facilities at Kanpur of a
\ncapacity equivalent to not less than 30 days’ requirement of
\nthe buyer. The indents are therefore
\n680<\/span>
\nnot outside  the agreement  but are relatable to the buyer’s
\nrequirements under  the agreement.  It is  obvious that\t the
\nsales under  the agreement  are not  possible without inter-
\nstate movement\tof naphtha. Clause 3 read with clause 8 also
\nproves that  really thare  are no two movements but only one
\nmovement from  Barauni to Kanpur pursuant to the contract of
\nsale and the agreement regarding storage facilities provided
\nin clause  8 is only for operational convenience, it is only
\na mechanism  devised to\t facilitate the\t transfer of naphtha
\nthrough the  seller’s pipeline\tto their depot at Kanpur and
\nfrom there  to the  Buyer’s factory  at Kanpur\tthrough\t the
\npipeline constructed  at the buyer’s cost. It is relevant in
\nthis connection\t to note that under clause 7(ii) the cost of
\ntransferring naphtha from Barauni to the buyer’s fence is to
\nbe borne by the buyer.\n<\/p>\n
     Each case\tturns on  its own  facts and the question is
\nwhether\t applying   the\t settled  principle  which  we\thave
\nmentioned above\t to the\t facts of the present case the sales
\ncan be said to be inter-state sales. An attempt to show that
\nsome of\t the factors present in the instant case are present
\nor absent in some case or other in which this Court held the
\nsale to\t be a  local sale  or inter-state sale hardly serves
\nany useful  purpose. On\t the facts  of the  present case the
\nsales are  clearly inter-state\tsales and  the State of U.P.
\nhad therefore  no jurisdiction\tto assess the petitioners to
\nsales tax  under the  State Act.  As the movement of naphtha
\ncommences from\tBarauni in  Bihar, the\tsales tax payable on
\nthe sales  of naphtha  under the agreement dated February 9,
\n1970 can  be assessed  and collected only by the authorities
\nin the\tState of  Bihar on behalf of the Government of India
\nin view of section 9 of the Central Sales Tax Act.\n<\/p>\n
     On behalf\tof the State of Bihar a point was taken that
\nthe present petition under Article 32 of the Constitution of
\nIndia complaining  of violation\t of  the  fundamental  right
\nguaranteed  by\tArticle\t 31  of\t the  Constitution  was\t not
\nmaintainable after  the repeal\tof Article  31 by the Forty-
\nFourth Amendment  of the  Constitution with effect from June
\n20,  1979.   The  petition   however   complains   also\t  of
\ninfringement of\t Article 19  and therefore does not cease to
\nbe maintainable.  Counsel for  the 5th\trespondent sought to
\nraise a\t question regarding  the justification\tof  treating
\nfreight as  part of the sale price, but that is not a matter
\nthat arises  for consideration\ton the present writ petition
\nfiled by IOC.\n<\/p>\n
     In the  result the\t alternative prayer made in the writ
\npetition succeeds,  the assessment orders for the assessment
\nyears 1970-71,\t1973-74 and  1974-75 passed by the Sales Tax
\nOfficer, U.P.  and the revision proceedings initiated by the
\nCommissioner of Sales Tax,
\n681<\/span>
\nU.P. for  the  assessment  years  1971-72  and\t1972-73\t are
\nquashed and respondent No. 4, the State of Uttar Pradesh, is
\ndirected to  refund to IOC the sales tax collected from them
\non the\tsales of  naphtha to  the 5th  respondent under\t the
\nagreement dated\t February 9,  1970 and, further, not to levy
\nsales tax  on the  sales under\tthe said agreement under the
\nU.P. Sales Tax Act.\n<\/p>\n
     The writ petition is allowed as indicated above; in the
\ncircumstances of the case we make no order as to costs.\n<\/p>\n
N.K.A.\t\t\t\t\t   Petition allowed.\n682<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Indian Oil Corporation Ltd. & Anr vs Union Of India And Ors on 10 September, 1980 Equivalent citations: 1981 AIR 446, 1981 SCR (1) 673 Author: A Gupta Bench: Gupta, A.C. PETITIONER: INDIAN OIL CORPORATION LTD. & ANR. Vs. RESPONDENT: UNION OF INDIA AND ORS. DATE OF JUDGMENT10\/09\/1980 BENCH: GUPTA, A.C. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-33460","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nIndian Oil Corporation Ltd. & Anr vs Union Of India And Ors on 10 September, 1980 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/indian-oil-corporation-ltd-anr-vs-union-of-india-and-ors-on-10-september-1980\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Indian Oil Corporation Ltd. & Anr vs Union Of India And Ors on 10 September, 1980 - 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