Exemption for fuel supplies to foreign aircraft upheld as evidentiary declaration requirement; disputed transactions sent back for verification

A State declaration requirement for claiming exemption on sales of aviation turbine fuel and lubricants to eligible foreign aircraft was upheld because it functioned only as an evidentiary mechanism and did not conflict with the Central exemption scheme. On the disputed transactions, the existing record was insufficient to establish eligibility for exemption, since invoices alone did not prove that all purchasers were covered foreign airlines. The exemption claim was therefore remitted for fresh transaction-wise verification, with an opportunity to produce further evidence showing coverage under the relevant convention or agreement.

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Issues: (i) Whether the State notification requiring production of a declaration from the foreign airline for claiming exemption on sale of aviation turbine fuel and lubricants was ultra vires or contrary to the Central enactment; (ii) Whether the assessment order denying exemption for some transactions for want of supporting material could be sustained, or whether the matter required reconsideration.

Issue (i): Whether the State notification requiring production of a declaration from the foreign airline for claiming exemption on sale of aviation turbine fuel and lubricants was ultra vires or contrary to the Central enactment.

Analysis: The exemption scheme under the Central enactment was intended to implement international aviation arrangements and to grant exemption from levy of taxes and duties on fuel and lubricants supplied to eligible foreign aircraft. The State notification issued under the State sales tax law did not add a substantive restriction inconsistent with the Central law. The declaration requirement was treated as an evidentiary aid to identify whether the purchaser was an eligible foreign airline operating under the relevant convention or agreement, and not as a prohibition contrary to the Central notification.

Conclusion: The State notification was held valid and not ultra vires.

Issue (ii): Whether the assessment order denying exemption for some transactions for want of supporting material could be sustained, or whether the matter required reconsideration.

Analysis: The invoices by themselves did not conclusively establish that every purchaser was an eligible foreign airline covered by the exemption regime. Since declarations were not produced for all transactions, the eligibility of the disputed sales required further verification. The petitioner was to be given an opportunity to produce evidence showing that the relevant aircraft belonged to countries covered by the convention or relevant agreements, and the authority could then reconsider the claim for exemption transaction-wise.

Conclusion: The assessment order was set aside and the matter was remitted for fresh consideration.

Final Conclusion: The challenge to the State notification failed, but the assessment was reopened for reconsideration of the exemption claim on the disputed sales after further evidence.

Ratio Decidendi: A State-issued declaration requirement is valid if it operates only as an evidentiary mechanism to implement a Central exemption scheme and does not contradict the Central law; where eligibility for exemption is not established by the existing record, the assessment may be remitted for fresh verification.

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