Indian Oil Corporation Limited vs Commissioner of Trade Tax

Sudhir Agarwal, J.—Heard Sri Bharat Ji Agrawal, learned Senior Advocate assisted by Sri Shubham Agrawal, Advocate for revisionist and learned Standing Counsel for the respondent. The following questions of law have arisen in this matter:

Whether the applicant is not liable for payment of any entry tax on the imported machinery which has been imported from outside the country and also imported crude oil which have been purchased from the foreign seller and which have been imported from the foreign country within the local area of Mathura?

Whether the imported machinery having been admittedly used for erection and the construction of Mathura Refinery but was not meant for consumption, use and sale and no entry tax is payable in view of the decision of the Madhya Pradesh High Court in the case of Straw Products Limited v. Commissioner of Sales Tax, Madhya Pradesh (1997) 105 STC 391 (MP) (DB) ?

Whether the Trade Tax Tribunal was not justified in distinguishing the decision of the Kerala High Court in the case of Fr. William Fernandez Vs. State of Kerala and Others,

Whether in view of Section 2 read with Section 2(gg) of Uttar Pradesh Trade Tax Act, 1948 and Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007, the crude oil having been admittedly purchased from the foreign seller, only the amount paid or payable to the foreign seller is liable to be included in the value of the goods even if entry tax is payable on the crude oil purchased from the foreign country by the applicant?

Whether the Trade Tax Tribunal was not justified in holding that the custom duty, port charges and other amount paid by the Head Office of the applicant-Company shall be included in the purchase price merely because the head office has charged the said amount to Mathura Refinery Unit even though it was only for the purpose of cost allocation of the unit and for the purpose of accounting?

Whether in view of the definition of the words "value of goods" as given in Section 2(1)(e), crude oil having been purchased by the application from foreign seller and after its import from Wadinar Port through a specified pipe line, hence neither the port charges nor the freight which was separately paid nor insurance which was separately paid to the concerned authorities, can be legally included for the purpose of value of the goods as defined in Section 2(1)(e) of the Act much less the custom duty which was paid to the custom authorities after arrival of the crude oil in Mathura Refinery after several weeks at the time of consumption of the said crude oil which after its entry in Mathura local area?

It is stated at the Bar that question Nos. 1, 2 and 3 are squarely covered against the assessee in view of Sections 2(1)(c), 2(1)(d), 18(1) and 18(2) of Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007, which has been given effect from 1-11-1999 and in view thereof, the aforesaid questions are answered against assessee.

So far as question No. 4 is concerned, in view of change in statute, the same is no more involved in this matter.

So far as question Nos. 5 and 6 are concerned, in view of the judgment of this Court in Sales/Trade Tax Revision No. 158 of 2011, Gas Authority of India Limited v. The Commissioner of Commercial Tax, Uttar Pradesh, decided on 13-1-2014, it cannot be disputed that charges which are incurred by importer till the stage of bringing the goods in local area shall be part of the value of goods but those incurred inside the local area will not be a part thereof. Para 7 of the judgment dated 13-1-2014, reads as under:

The above observations are attracted squarely in the present case also. In view of the above discussion, otherwise view taken by Tribunal is clearly erroneous and unsustainable. The questions formulated above, therefore are answered by observing that the expenses incurred, if any, by revisionist-assessee after transporting the goods inside the local area where it has to be consumed, used or sold, would not be a part of "value of goods" for the purpose of tax liability under Act, 2007, but it shall confine upto the stage where the goods are brought inside the local area. In other words sale price" of the goods by importer, inside the local area, cannot be identified as "value of goods'' under Act, 2007. The price on which the goods are sold by revisionist-assessee to its ultimate consumers inside local area, therefore, cannot be taken as "value of goods" for the purpose of taxability under Act, 2007.

In view thereof question Nos. 5 and 6 are answered accordingly and the judgment of Tribunal is modified to the above extent and the matter is remanded to Tribunal to pass appropriate consequential order. The revision is partly allowed.