Offshore natural gas sale outside Gujarat and reopening on same material was held without jurisdiction.

Sale of natural gas was treated as completed offshore when the goods were separated, measured and appropriated at the delivery point under the governing contracts; later sweetening at Hazira did not change the situs, so the transaction was outside Gujarat and not liable to Gujarat sales tax. The movement of gas from the offshore area to Hazira was also held not to be import into India, as the area fell within an extended customs regime. Reassessment was struck down because the authority had already examined the same agreements and replies, and reopening on identical material amounted to a mere change of opinion. The writ petitions were maintainable despite an alternative remedy because the challenge was jurisdictional.

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Issues: (i) Whether the sale of natural gas under the production sharing contract and interim sales and purchase agreement took place outside the State of Gujarat within the meaning of section 4(2) of the Central Sales Tax Act, 1956. (ii) Whether the sale was in the course of import of goods into the territory of India within the meaning of section 5(2) of the Central Sales Tax Act, 1956. (iii) Whether the reassessment notices and reassessment orders were without jurisdiction as being founded on a mere change of opinion and absence of reason to believe. (iv) Whether the writ petitions were not maintainable because of the availability of an alternative statutory remedy.

Issue (i): Whether the sale of natural gas under the production sharing contract and interim sales and purchase agreement took place outside the State of Gujarat within the meaning of section 4(2) of the Central Sales Tax Act, 1956.

Analysis: The governing documents had to be read together to ascertain the joint intent of the parties. The agreements provided for sale and purchase of natural gas, not sweetened gas. The contract contemplated delivery at the offshore delivery point, where the gas was separated, measured, and appropriated to the contract. At that stage the goods had become ascertained goods, and the later sweetening at Hazira was only a post-appropriation process that did not alter the situs of sale. The price clause in the interim agreement was only a pricing mechanism and could not override the delivery point fixed by the principal contract.

Conclusion: The sale took place outside the State of Gujarat and was not exigible to Gujarat sales tax.

Issue (ii): Whether the sale was in the course of import of goods into the territory of India within the meaning of section 5(2) of the Central Sales Tax Act, 1956.

Analysis: The relevant offshore area fell within the customs regime because the Customs Act had been extended to the designated area under the maritime zones notifications. Once the customs frontiers stood extended to that area, movement of natural gas from the offshore fields to Hazira could not be characterised as import into the territory of India for the purposes of the sales tax law. The movement was from one point within the extended customs regime to the mainland and did not satisfy the statutory concept of import.

Conclusion: The sale was not in the course of import into the territory of India.

Issue (iii): Whether the reassessment notices and reassessment orders were without jurisdiction as being founded on a mere change of opinion and absence of reason to believe.

Analysis: The assessing authority had already examined the PSC, the interim agreement, and the petitioners' detailed replies in earlier proceedings and had accepted the position by passing nil assessments. The later reassessment notices repeated the same basis without any new material. Such reopening amounted to a mere change of opinion and did not satisfy the statutory precondition of reason to believe that turnover had escaped assessment.

Conclusion: The reassessment notices and the consequential orders were without jurisdiction.

Issue (iv): Whether the writ petitions were not maintainable because of the availability of an alternative statutory remedy.

Analysis: The petitions raised a pure jurisdictional challenge to the levy itself, without requiring trial of disputed facts. Where the impugned action is alleged to be wholly without jurisdiction, the existence of an alternative remedy does not bar writ jurisdiction. The long pendency of the matters and the interim orders already operating also weighed against relegating the petitioners to the appellate forum.

Conclusion: The writ petitions were maintainable.

Final Conclusion: The Court held that the transactions were not taxable under the Gujarat sales tax law, quashed the impugned assessment proceedings, and granted refund of the amounts deposited under interim orders with interest.

Ratio Decidendi: For fiscal situs under section 4(2) of the Central Sales Tax Act, 1956, the decisive factor is where the ascertained goods are appropriated to the contract, and a later processing step within the State does not shift the situs of an already completed offshore sale; reopening on the same material after earlier assessment cannot rest on a mere change of opinion.

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