INDIAN OIL CORPORATION LTD. & ANR. versus UNION OF INDIA AND ORS.

INDIAN OIL CORPORATION LTD. & ANR. versus UNION OF INDIA AND ORS.

The sales of naphtha by Indian Oil Corporation Ltd. to Indian Explosives Limited pursuant to the agreement were inter-State sales because the movement of goods commenced from Barauni in Bihar to Kanpur in Uttar Pradesh as an incident of the contract of sale. The State of U.P. had no jurisdiction to assess sales tax under the U.P. Sales Tax Act; only Bihar authorities could assess and collect tax under the Central Sales Tax Act.

Parties
Petitioner: Indian Oil Corporation Ltd.; Petitioner: Managing Director of IOC; Respondent: Union of India; Respondent: Assistant Superintendent of Commercial Taxes, Central Circle, Bihar; Respondent: State of Bihar; Respondent: State of Uttar Pradesh; Respondent: Indian Explosives Limited
Jurisdiction
India
Judgment Date
10 September 1980
Procedural Posture
Writ Petition / Final Judgment
Outcome
Petition allowed
Legal Topics
Central Sales Tax, Inter State Sale, Jurisdiction, Sales Tax Assessment
Taxation Constitutional Law Central Sales Tax Inter State Sale Jurisdiction Sales Tax Assessment

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Parties

Indian Oil Corporation Ltd.

Petitioner

Managing Director of IOC

Petitioner

Union of India

Respondent

Assistant Superintendent of Commercial Taxes, Central Circle, Bihar

Respondent

State of Bihar

Respondent

State of Uttar Pradesh

Respondent

Indian Explosives Limited

Respondent

Procedural Posture

Writ Petition / Final Judgment

Legal Issues

  1. 1 Whether the sales of naphtha by Indian Oil Corporation Ltd. to Indian Explosives Limited are taxable under the Central Sales Tax Act as inter-State sales or under the U.P. Sales Tax Act as local sales
  2. 2 Jurisdiction of State authorities to levy sales tax on such transactions

Ratio Decidendi

The sales of naphtha by Indian Oil Corporation Ltd. to Indian Explosives Limited pursuant to the agreement were inter-State sales because the movement of goods commenced from Barauni in Bihar to Kanpur in Uttar Pradesh as an incident of the contract of sale. The State of U.P. had no jurisdiction to assess sales tax under the U.P. Sales Tax Act; only Bihar authorities could assess and collect tax under the Central Sales Tax Act.

Court Disposition

Petition allowed

Orders

  • Assessment orders for the years 1970-71, 1973-74, and 1974-75 passed by U.P. Sales Tax Officer and revision proceedings for 1971-72 and 1972-73 quashed.
  • State of Uttar Pradesh directed to refund sales tax collected from Indian Oil Corporation on sales of naphtha under agreement dated February 9, 1970.