TaxTMI 
TaxTMI 
2018 (3) TMI 1220
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....R.5/16. JUDGMENT :- [ PER B. P. COLABAWALLA J ] 1. At the out set, we must mention that all these matters were placed on Board on 15th March, 2018 under the caption "for directions" simply because after the arguments were concluded, the judgment was reserved on 8th February, 2017. Though the judgment was reserved, one of us (B. P. Colabawalla, J.) was hospitalized and thereafter advised not to resume regular duties, but to take specified cases for some duration. It is only recently that he has resumed his normal duties. Additionally, after resumption and being part of other Division Benches, on account of heavy workload, the judgment could not be made ready and pronounced. In these circumstances, on 15th March, 2018, we enquired from the learned advocates appearing for all the parties, as to whether there were any subsequent developments and/or events occurring post the matter being reserved for judgment, and whether any additional points of law are to be placed by either of them. All of them indicated that there are no changed circumstances that need to be taken into consideration. In addition thereto, all the parties also stated before us that they have no objection to the ....
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.... Benzenes ("LAB"). RIL required N-Paraffin as a raw material for the manufacture of LAB. According to RIL, Kerosene also known as Paraffin, is a mixture of Hydrocarbons in the range of C-8 to C-18. Out of such mixture, the Hydrocarbons C-8 and C-9 are known as Light Paraffin. Hydrocarbons from C-10 to C-13 are known as N-Paraffin (which is required by RIL). The range of Hydrocarbons from C-14 to C-18 are known as Heavy Paraffin. According to RIL, N-Paraffin itself is also Kerosene and is one of the many constituents of Kerosene. 5. According to RIL, N-Paraffin is easily obtained from kerosene by using a molecular sieve. This, according to RIL, is only a physical activity not involving any chemical reaction. The molecular sieve would absorb the N-Paraffin only and the rest of the Kerosene would simply pass through the said Sieve. Subsequently, the N-Paraffin is de-absorbed from the molecular Sieve. 6. According to RIL, BPCL is having a refinery at Mahul for many years prior to 1992. One of the products produced by BPCL in the said refinery is Kerosene. Kerosene is as such sold by BPCL through the Public Distribution System (involving a dealer network) to its final consumers. ....
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.... Ltd., a Company registered under the Companies Act 1956, having their Registered office at Maker Chambers IV, 3rd Floor, Nariman Point, Bombay 400 021 (hereinafter called the 'Buyers' which expression shall, unless it be excluded by or repugnant to the subject or context, be deemed to include its successors and permitted assigns) of other part. WHEREAS the Buyers have erected at Patalganga, Raigad District, Maharashtra, a Petrochemical Plant for the manufacture of LAB, and are desirous of entering into an agreement for the purchase from the Sellers of KO (LABS) in bulk as a feedstock, for the manufacture process of N-­‐Paraffin at the aforesaid Petrochemical Plant. AND WHEREAS pipeline (hereinafter called as the said pipeline) had been laid down by Chembur Patalganga Pipelines Ltd (hereinafter called as CPPL) between Sellers' Refinery at Mahul and the Buyers' Petrochemical Plant at Patalganga. AND WHEREAS the Buyers have requested for supplies of KO (LABS) to be pumped to their Patalganga Plant through their pipeline. AND WHEREAS the Buyers hereby represent, confirm and certify that i. The aforesaid pipeline had been laid down by the ....
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....nd pay on the terms and subject to the conditions hereinafter specified a quantity of KO (LABS) for the aforesaid processes. The Buyers undertake to deliver to the Sellers Return Stream after consuming suitable quantity of KO (LABFS) supplied by Sellers, for production of LAB. This is subject to any terms and conditions which may be imposed by Government of India and Ministry of Petroleum and Natural Gas from time to time. 3. QUANTITY a. The Sellers undertake to supply KO (LABFS) to meet the Buyers installed production capability of LAB which is currently 100,000 Metric Tonnes per annum. b. Save as provided in Clause 14 hereof, the nett quantity of KO (LABFS) that the sellers shall be obliged to deliver hereunder during the continuance of this Agreement shall be at the rate of approximately 91,000 Metric Tonnes for each twelve month period at an even rate to the extent possible, commencing from the date of first delivery, subject to Clause (c) hereunder. c. Notwithstanding the foregoing, it is expressly agreed by the parties hereto that the quantity of KO (LABFS) to be supplied by the Sellers shall be restricted to meet the Buyers actual requirement to....
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....llers end as per laid down procedures, the Sellers reserve the right to charge the Buyers processing cost as incurred by the Sellers to bring the Return Stream on specification and also the right to suspend or reduce the KO (LABFS) supply as found appropriate by the Sellers. The reprocessing charge to be made by the Sellers shall be reasonable and will be advised to the Buyers in advance to the extent possible. 9. PAYMENTS a. The payment terms agreed by the parties hereto will be as stated hereunder. b. The Buyer shall indicate to the Seller the estimated requirement for each month on or before the last week of the previous month. The offtake during the month, as far as possible, will be uniformly spread over. i. The Buyer shall make to the Seller an 'on account' payment for the supplies to be made in the first fortnight of the month (on net basis i.e. after considering the return stream) on 8th of the month and similarly for the supplies made in the 2nd fortnight of the month payment will be on the 23rd of the month. The aforesaid 'on account' payment for supplies made by the Seller and received by the Buyer for the fortnig....
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....rs shall extend to the Buyers representatives all reasonable facilities for being present and for witnessing the drawing of the said samples. The samples thus drawn shall be composited and divided into three sets and sealed. One such set shall be handed to the Buyers or their representatives and two shall be retained by the Sellers-­‐ one for their own use and one to be retained for the use of the Arbitrator in the event of any dispute. b. Should the Buyers dispute the accuracy of the Sellers Certificate of Quality in respect of any delivery hereunder, they shall so notify the Sellers in writing not later than seven (7) days after the receipt of the said Certificate of Quality. Should the parties be unable to resolve such dispute, the matter shall be submitted to and determined by the Arbitrator pursuant to Clause 15 hereof. c. The quality of the Return Stream received hereunder shall be certified in a Certificate of Quality which shall be drawn and signed by the Sellers and submitted to the Buyers within seven (7) days of receipt of each parcel. The quality to be certified shall be ascertained from the samples drawn from the Sellers tankage. The sample ....
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....for the manufacture of LAB and a write up indicating the distinguishing features of Kerosene simplicitor and Kerosene intended for manufacture of LAB. Vide its letter dated 28th June, 1993, BPCL replied to the aforesaid queries of the Commissioner. In this letter, BPCL confirmed the manufacturing process of Kerosene oil intended for manufacture of LAB and further stated that Kerosene used for the manufacture of LAB and Kerosene used for other purposes are meeting the same standards, namely BIS:1459 of 1974 as amended and there are no real distinguishing features between the two. Thereafter, vide a further letter dated 8th October, 1993, the Commissioner asked for certain clarifications and inter alia queried as to why the product despatched to RIL was described as KO (LABFS). Further query put up to BPCL was that if what was returned by the purchaser was Kerosene, then, what was supplied by BPCL could not be Kerosene. The Commissioner further enquired about the process of manufacture of N-Paraffin, manner of use etc. in the form of a Written Statement from RIL and also enquired why BPCL insisted for returning the unconsumed portion. Further query put by the Commissioner, and whi....
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....ueries were raised by the Commissioner to BPCL vide its letters dated 20th January, 1995 and 9th March, 1995. These were replied to by BPCL vide its letters dated 20th February, 1995 and 20th April, 1995 respectively. 14. Be that as it may, after all the aforesaid queries, the learned Commissioner of Sales Tax decided the three questions raised in BPCL's application dated 21st April, 1992 (as reproduced earlier) by passing a DDQ order dated 14th March, 1996. As far as question Nos.1 and 3 were concerned, the learned Commissioner came to the conclusion that the Kerosene KO (LABFS) sold by BPCL to RIL was nothing but Kerosene falling under Entry 26 in Part I of Schedule C of the BST Act read with the Notification Entry No.160 issued under Section 41 of the said Act. Since the transaction put for determination was dated 25th April, 1992, it would be covered by said Notification. As far as Question No.2 is concerned, namely, "whether the return of Kerosene as described in the credit note is a purchase in law or it is good returned", the Commissioner is paragraph 7 held as under:- "7. The second question posed is whether the return of kerosene is described in the credit note a....
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.... Kerosene supplied to RIL by BPCL was different from the Kerosene returned back to BPCL by RIL, it could not be termed as a "goods return". The Commissioner held that the Kerosene supplied by BPCL was not certainly returned in the same form in which it was sold. He held that for the purpose of Kerosene it could be treated as Kerosene but it certainly had no potentiality to be used for the manufacture of N-Paraffin as the same was extracted by RIL. In other words, the Kerosene returned by RIL to BPCL could not be again sent by BPCL to another Petrochemical company for extraction of NParaffin as the same was already extracted by RIL. It is, in these circumstances that the Commissioner took the view that the "return stream" was not "goods returned" but was a purchase by BPCL from RIL. 16. Being aggrieved by this DDQ order, BPCL challenged the same before the MSTT. This Appeal was rejected by the MSTT vide its order dated 21st April, 2001. However, Since RIL was not a party to the said Appeal and its rights were likely to be affected, RIL thereafter filed a rectification application before the MSTT urging that RIL was directly affected by the aforesaid decision and therefore they sh....
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....fter perusing the evidence and submissions, the Commissioner of Sales Tax, vide his order dated 11th September, 2006 inter alia held that the return stream, namely, the Kerosene returned by RIL to BPCL (after extraction of N-Paraffin) was a "sales return" and not a purchase of Kerosene by BPCL from RIL. This of course was contrary to both the earlier DDQ orders. 21. Being aggrieved by this DDQ order dated 11^th September, 2006, the State of Maharashtra filed an Appeal before the MSTT. Along with this Appeal, an application for condonation of delay was also filed. When this Appeal first came up before the MSTT, both BPCL and RIL contended before the Tribunal that since the DDQ order was passed by the Commissioner of Sales Tax and who is highest executive authority of the State Government for the purpose of sales tax, it was not permissible for the State to challenge the order of the Commissioner of Sales Tax. This submission of BPCL as well as RIL was accepted by the MSTT and the Appeal of the State was rejected as being not maintainable. 22. Being aggrieved thereby, the State of Maharashtra approached this Court by filing Writ Petition No. 4098 of 2009. A division bench of th....
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....s not a "sales return". The Tribunal further dismissed the Petitioner's written application to hear the prospective effect separately. In other words, it was the contention of RIL that under Section 52 (2) prospective effect should be given to the judgement of the MSTT and it should not affect the liability of any person in respect of any sale or purchase effected prior thereto. It is the case of RIL as well as BPCL that the MSTT rejected the plea of prospective effect being given to the judgment of the Tribunal, without assigning any reason or without hearing RIL or BPCL. It is in these circumstances that the present matters are before us. 26. It is on the basis of the aforesaid facts and pleadings that the learned counsels have addressed us. Mr. Venkatraman, the learned Senior counsel appeared on behalf of RIL and Mr. Rafiq Dada, the learned Senior counsel appeared on behalf of BPCL. As far as the Revenue is concerned, the same was represented by Mr. Sonpal (Special Counsel) for Respondent Nos.1 and 4 in the Writ Petitions and for all the Respondents in the Sales Tax References. The contentions in a nutshell that were canvassed before us were as follows:- (i) the MSTT g....
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....d 9th September, 2014 wherein the said fact was duly recorded in paragraph 24 thereof. According to the learned counsel, there was absolutely no explanation given in the application for condonation of delay that would have justified the Tribunal to condone the delay of 11 months and 15 days. They submitted that on this ground alone the order of the MSTT dated 9th September, 2014 and the subsequent order dated 20th January, 2015 ought to be set aside. 28. On the other hand, Mr. Sonpal, the learned counsel appearing for the State, submitted that the DDQ order passed by the Commissioner of Sales Tax under Section 52 of the BST Act is not required to be communicated to the Government of Maharashtra. Section 55 (4) of the BST Act provides for a period of limitation of 60 days from the date of the order appealed against. In the facts of the present case, the DDQ order passed under Section 52 was admittedly never communicated to the State Government, and therefore, in fact there was no delay in filing the Appeal. Without prejudice to the aforesaid argument, Mr. Sonpal submitted that considering that the DDQ order passed by the Commissioner of Sales Tax under Section 52 was highly preju....
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....e exercised on the facts of each individual case which may differ drastically from case to case. The MSTT held that in the facts of the present case, the DDQ order passed under Section 52 of the BST Act, was not required to be communicated to the Government. This being the case, the running of time against the Government did not arise in the present situation. In any event, it held that the delay for presenting the present Appeal was reasonable in the facts and circumstances of the present case. It, therefore, went on to hold that they were inclined to exercise their discretion to condone the delay. On going through this order, we are in entire agreement with the MSTT. As mentioned earlier, the facts of this case clearly show that it is a peculiar situation where the order passed under Section 52 was never communicated to the Government of Maharashtra. It is only when they came to know of this order that they decided to file the Appeal before the MSTT. Though it is true that no specific date is mentioned as to when this order came to the knowledge of the Government, that by itself cannot be a ground for holding that they were not entitled to condonation of delay or that the finding....
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....ng of the memorandum of appeal. He brought to our attention the said authority letter which states that the Government of Maharashtra had taken a decision to prefer an appeal against the DDQ order dated 11th September, 2006 passed in the case of M/s Bharat Petroleum Corporation Ltd. In this respect, Shri Shashank D. Mathane, officer on Special Duty, Finance Department, Government of Maharashtra was authorized to prepare and file the appeal memo before the MSTT. This authority letter is signed by Mr. Subodh Kumar, Principal Secretary (Finance), Government of Maharashtra. Looking to all this material, Mr. Sonpal submitted that there was absolutely no merit in the aforesaid contention and the appeal filed by the State before the MSTT and which was signed by the said Mr. Shashank Mathane (OSD), was competent and entertainable by the MSTT. 32. We have heard the respective counsel on this issue. Firstly, at the out set, we must state that though a feeble ground was raised that the appeal is not maintainable because the Commissioner of Sales Tax was not joined as a party, we find this objection to be wholly unmeritorious. The Commissioner of Sales Tax, while determining the DDQ applica....
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....officers subordinate to him in accordance with the Constitution. When one reads Article 154 with the Rules of Business made by the Governor of Maharashtra along with the decision of the Government of Maharashtra to prefer the Appeal, we are left with no doubt that the MSTT was fully justified in entertaining the Appeal filed by the State of Maharashtra. In any event, on going through the order passed by the MSTT dated 9th September, 2014 on this issue, we do not think that the same suffers from any perversity or patent illegality that would entitle us to interfere with the same either in our writ jurisdiction or reference jurisdiction. This being the case, we do not find any merit in this contention also and hold that the appeal filed by the State of Maharashtra through the Principal Secretary, Finance Department and which was signed by Shri Shashank D. Mathane (OSD) was competent and correctly entertainable by the MSTT. Contention (iii):- The supply of Superior Kerosene [KO (LABFS)] by BPCL to RIL under the Agreement dated 24th August, 1992 itself was not a sale, and therefore, there was no question of there being a "sales return" 34. As mentioned earlier, this argument was ....
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....this regard, he brought to our attention the order passed by this Court on 18th February, 2003 which set aside the order of the MSTT dated 21st April, 2001 as well as the order dated 16th April, 2002 and restored the matter back to the file of the Commissioner of Sales Tax only to decide Question No.2 afresh. As far as Question Nos.1 and 3 are concerned, Mr. Sonpal submitted that the same had attained finality and there was no question of allowing Mr. Venkatraman to now canvass that the first leg of the transaction (namely the supply of Kerosene by BPCL to RIL), was not a sale but was only a contract of bailment. Mr. Sonpal further submitted that this contention cannot be allowed to be raised by RIL in view of the fact that BPCL itself has treated the first leg of this transaction as a sale, and therefore, Question No.2 arose as to whether the return of Kerosene by the RIL to BPCL would amount to a "sales return" or whether it would be a sale by RIL to BPCL. He submitted that in fact if the first leg of this transaction was not a sale of Kerosene by BPCL to RIL, there would have been no question of framing Question No.2 at all in the DDQ application filed by BPCL in April, 1992. It....
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....oth BPCL as well as RIL. This is absolutely clear on an ex-facie reading of the order dated 18th February, 2003. What is important to note is that in paragraph 6 of this order, this Court has set out three questions that were for determination before the Commissioner of Sales Tax in the DDQ application filed by BPCL. The answers to these questions, as given by the Commissioner of Sales Tax, have been set out in paragraph 7 of the order. Thereafter, this Court has specifically recorded that the Commissioner held that all the above three transactions were sale transactions but the sale of Kerosene being exempted under Entry No.160 of Notification issued under Section 41 of the BST Act, there would be no requirement to pay sales tax. It is in these circumstances that the decision of the Commissioner on Question Nos.1 and 3 had become final and the same could not be disturbed, was the finding. However, this Court set aside the order of the Tribunal dated April 21, 2001 as well as 16th April, 2002 and restored the matter to the file of the Commissioner of Sales Tax only to decide Question No.2, namely, "whether the return stream i.e. return of Kerosene by RIL to BPCL (sales return credi....
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....r SKO (LABFS) is sold as 'kerosene' by you, to your distributor or agent if so then at which rate it is sold. Answer: That which is sold to Reliance and sold to the dealer is the same kerosene. We have stated in paragraph 12 of our letter dt.2.12.93 that the term LABFS has been used for easy identification when sold to Reliance. The same kerosene from the same tank is sold to the dealers by our clients and also to Reliance. Question 2: The rate at which normal kerosene is sold by you. Answer:- The price of kerosene sold to dealers is fixed by the Central Government and is sold at that price. We enclose an invoice for sale of the kerosene to the dealers. The rate at which kerosene is sold to Reliance is higher because it is based on demand and supply. The price here is not controlled by the Government. The control rate is applied when sold to the dealers. Price is controlled by "Kerosene (Restriction on use and fixation of Ceiling Price) Order, 1993", a copy of the order is enclosed herewith for ready reference. Could I request you to be good enough to make order at a very early date." (emphasis supplied) 41. What can be seen from this letter is that the BPCL ....
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....undertake to purchase from the Sellers and to take delivery of and pay on the terms and subject to the conditions a specified quantity of KO (LABFS) for the processes mentioned thereunder. In fact how the sale price was to be determined is set out in Clause (5) and how payment is to be made is also stated in clause (9) thereof. Looking to these clauses and reading the agreement as a whole, we have no hesitation in holding that the first leg of the transaction was clearly a sale of Kerosene, namely KO (LABFS), by the BPCL to RIL. Having come to this conclusion, we therefore do not feel it necessary to elaborate any further and burden this judgment with the submissions of RIL as more particularly set out in paragraphs 7,8 and 9 of the Written Submissions dated 8th February, 2017. This issue also therefore is answered against RIL and in favour of the Revenue. Contention (iv):- the "return stream" of Kerosene (from RIL to BPCL) is only a "sales return" as contemplated under the provisions of the BST Act and not a sale from RIL to BPCL. 43. Mr. Venkatraman submitted that even if it was to be assumed that the first leg of the transaction between BPCL and RIL was a sale and not a co....
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....was also a common fact that the return stream Kerosene taken by BPCL from RIL was mixed in the original tank of BPCL containing Superior Kerosene and then was sold under the public distribution system. They submitted that when experts confirm that post the denudation of N-Paraffin, the return stream Kerosene retains the name, character and use as Superior Kerosene which was supplied by BPCL in the first leg of the transaction, the Revenue had not led any evidence to discredit or disprove this position. Looking to this, Mr. Venkatraman as well as Mr. Dada submitted that what was explicitly clear was that the Kerosene supplied by BPCL to RIL in the first leg of the transaction as well as the return stream of Kerosene supplied by RIL to BPCL were one and the same product, and therefore, the return stream certainly qualified as a "sales return" and not a purchase of Kerosene by BPCL from RIL. 44. Mr. Venkatraman as well as Mr. Dada submitted that even though the return stream was subjected to some processes, the same made no difference as long as goods received by RIL in the first instance and the processed goods returned by RIL to BPCL retained the same name, character and use. The....
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....rt in the case of Citibank, N. A. v/s TLC Marketing PLC and Another reported in (2008) 1 SCC 481 and more particularly paragraph 52 thereof. Further, reliance was also placed on a decision of the Supreme Court in the case of Bharat Sanchar Nigam Ltd and Anr. Vs. Union of India & Ors reported in (2006) 3 SCC 1 and more particularly paragraph 50 thereof. Placing reliance on these decisions, it was submitted that when one reads the agreement as a whole even if there was a transfer of title in the Kerosene from BPCL to RIL, the true nature of the transaction was only one whereby sale by BPCL to RIL was of a net quantity, namely the quantity retained by RIL before returning balance. It was submitted that RIL has no option but to return the balance Kerosene under the contract. This being the case, it was abundantly clear that this particular transaction and namely the return stream would clearly fall within the concept of a "sales return" rather than a sale by RIL to BPCL. 47. On the other hand, Mr. Sonpal, the learned counsel appearing on behalf of the Revenue, submitted that the submissions made on behalf of RIL and BPCL are wholly misconceived. He submitted that N-Paraffins are use....
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....araffin from the Kerosene and then returns the same to BPCL. The product that is returned to BPCL, though as per the BIS Standards is also known as Kerosene, is denuded of the N-Paraffin. It can therefore never be termed as the same product that was supplied by BPCL to RIL in the first leg of the transaction, was the submission. 49. To further fortify this argument, Mr. Sonpal submitted that the return stream Kerosene (from RIL to BPCL) could never be given/sold by BPCL to another Petrochemical plant for the purposes of extraction of N-Paraffin. This clearly shows that the product that was supplied by BPCL to RIL in the first leg of the transaction was different from the return stream that was given back by RIL to BPCL. If this be the case, Mr. Sonpal submitted that there was no question of then the return stream being classified as a "sales return". He submitted that even according to Mr. Venkatraman and Mr. Dada the concept of a "sales return" would arise only when the goods returned were the same in character and use as the goods originally sold. In the facts of the present case, it is amply clear that the Kerosene returned by RIL to BPCL in the return stream were different i....
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.... deferred payment or other valuable consideration, and include any supply by a society or club or an association to it members on payment of a price or of fees or subscription, but does not include a mortgage, hypothecation, charge or pledge, and the words "sell" "buy" and "purchase" with all its grammatical variations and cognate expressions, shall be construed accordingly. The definition of word "sale" reads thus:- "2(28) "sale" means a sale of goods made within the State for cash or deferred payment or other valuable consideration, and includes any supply by a society or club or an association to its members on payment of a price or of fees or subscription, but does not include a mortgage, hypothecation, charge or pledge; and the words "sell", "buy" and "purchase", with all its grammatical variations and cognate expressions, shall be construed accordingly. Explanation : For the purpose of this clause - (a) a sale within the State includes a sale determined to be inside the State in accordance with the principles formulated in sub-section (2) of section 4 of the Central Sales Tax Act, 1956 (LXXIV of 1956). (b) (i) every disposal of goods referred to in the....
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.... on which the cancellation becomes effective, received or receivable after such date, and;" 53. What can be discerned from the aforesaid definitions and as even correctly submitted by Mr. Venkatraman as well as Mr. Dada is that for there to be a sales return, the goods originally supplied and the delivery of the return stream should be one and the same goods. If the goods that are sought to be returned are a product which is different from the one that was originally supplied, the same can never be termed as a sales return. 54. In the facts of the present case, we are clearly of the view that the product that was supplied by BPCL to RIL in the first leg of the transaction was different from the return stream that was supplied/returned by RIL to BPCL. As mentioned earlier, the Kerosene that was supplied by BPCL to RIL was rich in N-Paraffin. It comprises of Hydrocarbons C9 to C14. The Kerosene that was sought to be returned by RIL to BPCL was after the extraction of N-Paraffin. In other words, Hydrocarbons C9 to C14 were specifically denuded from the Kerosene that was returned by RIL to BPCL. In fact, it is not in dispute that the returned Kerosene is denuded by more than 50% ....
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....y BPCL to RIL. It is one thing to say that the two products meet the same standard and wholly another to say that they are one and the same product. In fact, Professor K. K. Tiwari's opinion clearly states that although the N-Paraffin content of the returned Kerosene is expected to be lower than LAB feedstock Kerosene, the IS 1448 and 1459 do not specify the composition of aliphatics and aromatics. Hence, as per IS specifications, the feedstock Kerosene and return Kerosene may be treated as Superior Kerosene. 56. On going through these two opinions carefully, we do not find that these opinions would in any way support the contentions canvassed by Mr. Venkatraman as well as Mr. Dada. Though in common parlance the two products may be termed as Kerosene and may have many common uses, what is clear is that the product that is supplied by BPCL to RIL can be used for extraction of N-Paraffin whereas the Kerosene returned by RIL to BPCL cannot be used for the same purpose. Therefore, there is clearly a change in the character and use of the Kerosene supplied by BPCL to RIL on the one hand and the return stream (from RIL to BPCL) on the other. 57. We are also unable to accept the....
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.... using or applying any such process, as the State Government may, having regard to the impact thereof of any goods or to the extent of alteration in the nature, character or utility of any goods brought about by such process, by notification in the Official Gazette specify. From this definition, it is clear that at least for the purposes of the BST Act, the return stream of Kerosene had undergone the process of manufacture which will clearly again go to show that the Kerosene returned by RIL to BPCL was a different product than the one supplied by BPCL to RIL in the first leg of the transaction. We, therefore, have no hesitation in answering Question No.2 as decided by MSTT in favour of the Revenue and against RIL and BPCL. We find that not only was the MSTT justified in coming to the conclusion that it did on this issue, but we certainly do not find any perversity and/or patent illegality in the order which would entitle us to interfere with the same in our writ or reference jurisdiction. 59. Having said this, we shall now deal the judgements relied upon by RIL and BPCL. The reliance placed by Mr. Venkatraman as well as Mr. Dada on the decision of the Supreme Court in the case ....
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....h the beer was sold, it did not appear that UB also intended to sell the crates and bottles to the customers. The Supreme Court found that on the contrary, UB was very anxious to get back these crates and bottles in order to use them again for further supply. The fact that UB advised their customers to charge similar deposits from their customers and get back the bottles from them goes to show that an out and out sale of the bottles had not taken place. By taking the deposits, UB merely ensured the return of the bottles and crates. It was in these circumstances, that the Supreme Court came to the conclusion that the intention of UB did not appear to have been to sell the beer bottles along with the beer. 60. We find that this decision of the Supreme Court is wholly inapplicable to the facts of the present case. Looking to the scheme and the nature of the transaction before the Supreme Court and considering that it was the case of UB throughout, that it never sold the bottles to its customers in the first place that the Supreme Court came to the conclusion that there was no sale of the bottles or the crates. The facts before us are in fact quite different. Before us, it is clear ....
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.... answered accordingly. Furthermore, as held by this Court vide its order dated 18th February, 2003, this Question No.1 had attained finality. RIL as well as BPCL were both parties to the order passed by this Court on 18th February, 2003. Despite this, the said order was not challenged by either party before the Supreme Court. This being the case, we find that the factual matrix before us is totally and entirely different from the one before the Learned Judge of the Supreme Court in the case of CITIBANK, N. A. (supra). There can be no dispute with reference to the proposition laid down in the aforesaid decision. However, we find that in the present factual matrix, the same is wholly inapplicable. Hence, the reliance placed on this decision is also of no assistance to RIL or BPCL. 62. Even the reliance placed on the decision of the Supreme Court in the case of BSNL (supra) is wholly misplaced. Paragraph 50 of this decision and on which reliance was placed, states that what are 'goods' in a sales transaction, remains primarily a matter of contract and intention. The seller and purchaser would have to be ad-idem as to the subject matter of sale or purchase. The Court would h....
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....y its impugned order dated 20th January, 2015. This reversal has taken place at the instance of the State Government. According to Mr. Dada as well as Mr. Venkatraman, this is the only case in the history of Sales Tax Law in the State where the State has filed an appeal against a DDQ order passed by the Commissioner under Section 52. Since the DDQ order was in favour of RIL and BPCL, there was no question of them asking the Commissioner to give prospective effect to the order passed by him. It is in these circumstances that they both submitted that since the DDQ order of the Commissioner has been reversed by the Tribunal, prospective effect ought to be given from the date of the judgment of the Tribunal. 64. Mr. Venkatraman as well as Mr. Dada both submitted that this is more so in the facts of the present case considering that there has been a long and checkered litigation with reference to this issue that started way back in 1992 and was finally resolved by the decision of the Tribunal in 2015. Both counsels were at pains to point out that there was no delay either by RIL or BPCL. Both of them have acted as per statutory guidance under the Central Excise Act and the establishe....
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....submitted that RIL had prayed before the Tribunal that the issue of prospective effect be heard separately. However, no hearing was given to RIL on this issue by the Tribunal and no arguments were allowed to be advanced. This, according to the learned counsel, was ex-facie clear from a plain reading of the impugned order. They both submitted that the order of the Tribunal in this regard is in violation of the principles of natural justice and ought to be set aside on this ground alone. 67. On the other hand, Mr. Sonpal, the learned counsel appearing on behalf of the Revenue, submitted that no case whatsoever was made out for granting prospective effect. The counsel submitted that in the application dated 21st April, 1992, and which was the DDQ application filed by BPCL, there is no prayer for prospective effect. He submitted that moreover, in the two DDQ orders dated 14th March, 1996 as well as 16th October, 2004 the Commissioner has with elaborate reasons held that the goods return claim/sales return claim is not allowable. He submitted that in the facts of the present case there is no statutory misguidance and ambiguity of law to give room for misinterpretation of the law. He ....
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....y be, review. (2A) The Commissioner, for the reasons to be record in writing may, on his own motion, review the order passed by him under sub-section (1) or (2), and pass such order thereon as he thinks just and proper. The order of review shall not affect the liability of any person under this Act, in respect of any sale or purchase effected prior to the review: Provided that, no order shall be passed under this subsection unless the dealer or the person in whose case the order is proposed to be reviewed, has been given a reasonable opportunity of being heard: Provided further that, before initiating any action under sub-section (2A) the Commissioner shall obtain prior permission of the Government. (3) If any such question arises from any order already passed under this Act or any earlier law, no such question shall be entertained for determination under this section; but such question may be raised in appeal against, or by way of revision of, such order." 69. From the scheme of Section 52, what is ex-facie clear is that if any question arises, otherwise than in proceedings before a Court, or before the Commissioner has commenced assessment or re-assessment of a dea....
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....d to a situation that all past assessments would have to be reopened and which would be highly unfair and prejudicial not only to RIL but also to BPCL. 71. Furthermore, we find that the Tribunal has brushed aside this issue in just one paragraph of the impugned order. It is also not in dispute that no hearing was given to RIL on this issue at all which would clearly be in breach of the principles of natural justice. On this ground alone, we would be justified in setting aside the impugned order on this issue and remand the matter back to the MSTT. However, considering that there has been a long and checkered history between the parties, we think that it would be in the fitness of things, if the same was decided by us in the present proceedings especially when both parties have addressed us extensively on this issue. 72. Looking to the totality of the facts of the case and as narrated earlier, we think that the MSTT was unjustified in not granting the prospective effect to its judgment and order dated 20th January, 2015. Considering the long checkered history of the litigation between the parties, the assessment orders allowed earlier on the basis that the return stream Kerose....