Latest Updates: Amendment in Andhra Pradesh VAT Schedule | Analysis of latest judgements [see 'Notes & News'] | Maharashtra Value Added Tax (Amendment) Rules, 2015 | Jharkhand Value Added Tax (Amendment) Act, 2015 | Himachal Pradesh Value Added Tax (2nd Amendment) Rules, 2015 | Service Tax Notification: New tax rate of 14% effective from 1st June '15 + Analysis in 'Notes & News' | Excise & Service Tax Notifications | Gujarat VAT (Amendment) Rules, 2015 | West Bengal: Change in rate of tax on Cigarettes | Extract of The Finance Act, 2015 - Indirect Taxes | Summary for the month of April [see 'Notes & News']|

Recent Updates

2015-VIL-241-CESTAT-MUM-CE|CENTRAL EXCISE |CESTAT Cases | 25.05.2015

... he factory premises without payment of duty on the ground of shortage of space – Denial of request of appellant for extension of permission to store the goods outside the factory premises – HELD - The request for extension of permission cannot be rejected on the ground that exceptional circumstances cannot be perpetual - The Commissioner’s interpretation of sub-rule 4(4) that the ‘exceptional circumstances’ cannot continue in perpetuity is not correct, as he has read this expression in isolation and if the ‘exceptional circumstances’ caused by the nature of the goods or shortage of storage space continue, the permission fo... [Read more]

... he factory premises without payment of duty on the ground of shortage of space – Denial of request of appellant for extension of permission to store the goods outside the factory premises – HELD - The request for extension of permission cannot be rejected on the ground that exceptional circumstances cannot be perpetual - The Commissioner’s interpretation of sub-rule 4(4) that the ‘exceptional circumstances’ cannot continue in perpetuity is not correct, as he has read this expression in isolation and if the ‘exceptional circumstances’ caused by the nature of the goods or shortage of storage space continue, the permission for outside storage under this sub-rule has to be granted subject to the conditions for safeguarding the interest of Revenue – The impugned order is set aside with direction to the CCE, Nagpur to extend the permission for storing the finished goods outside the factory premises – Appeal allowed [Read less]

2015-VIL-50-SC-CE|CENTRAL EXCISE |Supreme Court Cases | 25.05.2015

... hrome pigments in bulk from a manufacturer in bulk quantities in bulk packing – Process of repacking and / or labelling thereupon - Manufacturing process or not - Chapter Note 11 of Chapter 29 and Chapter Note 3 of Chapter 32 – HELD - It is clear from the plain language of the aforesaid Chapter Notes which use both the expression 'or' as well as 'and' at different places. Thus, by using the two expressions, the intention of the legislature is manifest that insofar as the process of label or relabeling of containers is concerned, it would amount to manufacture only if the other condition, viz., repacking from bulk to retail... [Read more]

... hrome pigments in bulk from a manufacturer in bulk quantities in bulk packing – Process of repacking and / or labelling thereupon - Manufacturing process or not - Chapter Note 11 of Chapter 29 and Chapter Note 3 of Chapter 32 – HELD - It is clear from the plain language of the aforesaid Chapter Notes which use both the expression 'or' as well as 'and' at different places. Thus, by using the two expressions, the intention of the legislature is manifest that insofar as the process of label or relabeling of containers is concerned, it would amount to manufacture only if the other condition, viz., repacking from bulk to retail pack is also satisfied - hough the show cause notice covered all the three products, viz., dyes & dye bases, napthols & fast bases, as well as chrome pigments, the final order which was passed by the adjudicating authority, did not levy any excise duty on dyes and dye bases - Insofar as the napthols & fast bases is concerned, even from the order of the Commissioner, it becomes clear that though there was repacking and even relabeling, the repacking of bulk was not into retail packing as the goods after repacking were supplied to industrial consumers on wholesale basis. It is specifically stated so by the assessee which fact is not denied by the Commissioner. Therefore, both the conditions mentioned in the Chapter Notes are not satisfied - Insofar as the chrome pigments are concerned, the assessee only obliterated the name which was appearing on containers and the name of the assessee along with the logo is stenciled on such container that may amount to relabeling. However, the process of repacking was not undertaken at all by the assessee. Thus, here also both the eligibility conditions which are to be fulfilled have not been satisfied – No merit in this appeal which is accordingly dismissed [Read less]

2015-VIL-11-MSTT|VAT |Miscellaneous | 25.05.2015

... t-off against purchase of Duty Free Import Licences - clause (f) of the Rules 54 of the MVAT Rules – HELD - Import license is neither defined under the MVAT Ac t nor under the MVAT Rules. Hence DFIA Licenses would be understood in the manner a common man would understand them – DFIA Licence was excluded for the purposes of set-off under rule 41 (f) of the MVAT Rules, and therefore, the Ld. Commissioner has rightly concluded that, the appellant is not entitled to claim set-off on the purchases of DFIA Licence. No fault can be found in the order of determination passed by the Ld. Commissioner - In view of the separate entry ... [Read more]

... t-off against purchase of Duty Free Import Licences - clause (f) of the Rules 54 of the MVAT Rules – HELD - Import license is neither defined under the MVAT Ac t nor under the MVAT Rules. Hence DFIA Licenses would be understood in the manner a common man would understand them – DFIA Licence was excluded for the purposes of set-off under rule 41 (f) of the MVAT Rules, and therefore, the Ld. Commissioner has rightly concluded that, the appellant is not entitled to claim set-off on the purchases of DFIA Licence. No fault can be found in the order of determination passed by the Ld. Commissioner - In view of the separate entry and separate notification issued by the Government from time to time regarding “Duty Free Replenishment Certificate” (DFRC), and “Duty Free Import Authorization” (DFIA) Licenses, there was no confusion at all that, both the Licences were not held to be identical for the purposes of claiming set-off. The fact that, DFIA Licence was not included in Rule 54 (f) of the MVAT Rules, 2005 for the availability of set-off which clearly goes to show that, this is not the fit case for giving the prospective effect to the determination order passed by the Ld. Commissioner – Appeal dismissed [Read less]

2015-VIL-204-GUJ|VAT |High Court Cases | 25.05.2015

... t cannot be said to be payment in accordance with sub-section (1)(2) or (3) Section 47, the appellant is held liable to pay interest on such ad-hoc payment – However, the interest so levied, would be limited form the date of expiry of the time prescribed to the date when the ad-hoc payment is made, subject to however that the difference of the tax paid and tax assessed exceeds 10% of the tax paid – Revenue appeal dismissed

2015-VIL-242-CESTAT-AHM-ST|SERVICE TAX |CESTAT Cases | 25.05.2015

... ng Services, Security Services, Telephone Services & Chartered Account Services – Packing of Tea by availing the services of packer - Appellant contention activity has to be undertaken to protect their ownership right over the Trade Mark – HELD – In the certificate / opinion produced by appellant no provision of the Trade Marks Act/Rules is mentioned under which it is not obligatory on the part of the appellant to compulsorily use the Trade Mark himself. Lending its trade mark, getting royalty & paying service tax on the part of appellant should be sufficient to establish that his Trade Mark has been used. Under the presen... [Read more]

... ng Services, Security Services, Telephone Services & Chartered Account Services – Packing of Tea by availing the services of packer - Appellant contention activity has to be undertaken to protect their ownership right over the Trade Mark – HELD – In the certificate / opinion produced by appellant no provision of the Trade Marks Act/Rules is mentioned under which it is not obligatory on the part of the appellant to compulsorily use the Trade Mark himself. Lending its trade mark, getting royalty & paying service tax on the part of appellant should be sufficient to establish that his Trade Mark has been used. Under the present factual matrix it can not be held that packaging Services are availed by the appellant directly for protecting their Trade Mark/Brand Name. Therefore, the packaging Services availed by the appellant has to be considered to have been utilized for making of tea bags and can not be considered to be availed directly or indirectly in maintaining/protection of appellant’s Trade Mark – Security Services - As per Rule 6 (5) of the CCR, 2005 credit of service tax on security services is correctly availed by the appellant - Credit of Chartered Accounts Services & Telephone Services were availed both for undertaking trading activity and for providing ‘Intellectual Property Right Services’ - As no separate figures are available for such services it will be appropriate that appellant only takes proportionate value wise credit on such services and pay the remaining amounts with interest - Invocation of extended period - Improper credit taken was detected by the department officers only. At no stage of appellant approached the department for any guidance that there was any confusion in admissibility of credit on the impugned services. Therefore, extended period will be applicable - Appellant’s case is thus covered by the provisions of Section 80 of the Finance Act, 1994 and accordingly penalties imposed are set aside - Appeal is partly allowed [Read less]

2015-VIL-239-CESTAT-MUM-CE|CENTRAL EXCISE |CESTAT Cases | 22.05.2015

... e supply of goods to the SEZ located in India, whether the appeal lies before Tribunal or a Revision Application is to be filed before the Jt. Secy. (Revisionary Authority) to GOI – Divergence of views – HELD - We are of the view that in the present case where refund/rebate is related to supplies made to SEZ within India, this Tribunal has jurisdiction to entertain the appeal. However as per judgment cited by rivals it is observed that in some of the judgments this Tribunal has entertained the appeals and disposed on the merits, and in some of the cases this Tribunal has viewed that this Tribunal does not have jurisdiction... [Read more]

... e supply of goods to the SEZ located in India, whether the appeal lies before Tribunal or a Revision Application is to be filed before the Jt. Secy. (Revisionary Authority) to GOI – Divergence of views – HELD - We are of the view that in the present case where refund/rebate is related to supplies made to SEZ within India, this Tribunal has jurisdiction to entertain the appeal. However as per judgment cited by rivals it is observed that in some of the judgments this Tribunal has entertained the appeals and disposed on the merits, and in some of the cases this Tribunal has viewed that this Tribunal does not have jurisdiction in the identical cases. It is also seen that even the Joint Secretary - Revisionary Authority to GOI also entertained the identical cases and disposed of the same on merits. This shows that there are clearly divergent views among Benches of this Tribunal as well as the JS (Revisionary Authority) to Government of India. Therefore, we are of the considered view that the matter should be placed before the Larger Bench to decide the preliminary issue that in the matter of refund/rebate against the supply of goods to the SEZ located in India, whether the appeal lies before this Appellate Tribunal or a Revision Application before the Joint Secretary (Revisionary Authority) to GOI - Matter referred to Larger Bench [Read less]

2015-VIL-203-UTR|VAT |High Court Cases | 22.05.2015

... arehouse or godowns situated in the other States, other than by way of sale – Stock Transfer - exemption to goods locally produced – HELD - Section 6 of the Act would demonstrate that Legislature, at its wisdom, has not considered the transfer of stock to other States, other than by way of sale, as sale, therefore, transfer of stock by manufacturer to other States, should not be considered as inter-State sale - Moreover, bare reading of proviso of sub-Section (3) of Section 6 and sub-Section (4) (a) (ii) of Section 6 shall demonstrate that sub-Section (3) speaks about stock transfer to other State, other than by way of sal... [Read more]

... arehouse or godowns situated in the other States, other than by way of sale – Stock Transfer - exemption to goods locally produced – HELD - Section 6 of the Act would demonstrate that Legislature, at its wisdom, has not considered the transfer of stock to other States, other than by way of sale, as sale, therefore, transfer of stock by manufacturer to other States, should not be considered as inter-State sale - Moreover, bare reading of proviso of sub-Section (3) of Section 6 and sub-Section (4) (a) (ii) of Section 6 shall demonstrate that sub-Section (3) speaks about stock transfer to other State, other than by way of sale while sub Section 4 (a) (ii) speaks about sale outside the State coupled with dispatch or stock transfer of goods. Both sub-Sections cover different fields - Raw material, consumables, containers, packing materials are different components used for the purpose of manufacturing finished goods. Therefore, packing material cannot be treated at par or as part of the goods or capital goods or raw material - Since transfer of stock to other States, other than by way of sale, is not being treated as inter-State sale in the State of Uttarakhand and petitioner-company was never asked to pay Central Tax thereon, therefore, petitioner cannot claim ITC, as a matter of right on stock transfer, other than by way of sale – Contention that sub Section (3) of Section (6) of the Act is hit by Articles 301 and 304 of the Constitution of India - In the present case, State has not imposed any tax on the goods imported from outside the State rather Legislature, at its wisdom, has given extra benefit of ITC over 2% on the raw materials purchased, in the event of transfer of stock other than by way of sale - Giving extra benefit in favour of registered trader does not amount to violation of Articles 301 and 304 of the Constitution of India. Consequently, all the petitions fail and are dismissed [Read less]

2015-VIL-202-MAD|VAT |High Court Cases | 22.05.2015

... ground that the petitioner had made excess input tax credit on the purchase whereas the sellers have reported less sales in their returns – HELD - That sub-section (16) of section 19 states that the input-tax credit availed is provisional. It however, does not empower the authority to revoke the input-tax credit availed of on a plea that the selling dealer has not paid the tax. It only relates to incorrect, incomplete or improper claim of input-tax credit by the dealer - The liability had to be fastened on the selling dealer and not on the petitioner-dealer which had shown proof of payment of tax on purchases made - The im... [Read more]

... ground that the petitioner had made excess input tax credit on the purchase whereas the sellers have reported less sales in their returns – HELD - That sub-section (16) of section 19 states that the input-tax credit availed is provisional. It however, does not empower the authority to revoke the input-tax credit availed of on a plea that the selling dealer has not paid the tax. It only relates to incorrect, incomplete or improper claim of input-tax credit by the dealer - The liability had to be fastened on the selling dealer and not on the petitioner-dealer which had shown proof of payment of tax on purchases made - The impugned orders is set aside and the matters is remanded back to the authority concerned to consider the case of the petitioner afresh on merits [Read less]

2015-VIL-240-CESTAT-DEL-ST|SERVICE TAX |CESTAT Cases | 22.05.2015

... x on expenditure incurred in foreign exchange on taxable service namely Intellectual Property Right service received from its associate enterprises based abroad - Franchisee service on the income received by it in the form of subscription – Non-speaking order - HELD – Both sides have rightly agreed that the impugned adjudication order relating to the confirmation of service tax demand under intellectual property service is a non-speaking one - The impugned order to the extent it relates to the impugned demand under intellectual property service is required to be set aside and remanded to the primary adjudicating authority ... [Read more]

... x on expenditure incurred in foreign exchange on taxable service namely Intellectual Property Right service received from its associate enterprises based abroad - Franchisee service on the income received by it in the form of subscription – Non-speaking order - HELD – Both sides have rightly agreed that the impugned adjudication order relating to the confirmation of service tax demand under intellectual property service is a non-speaking one - The impugned order to the extent it relates to the impugned demand under intellectual property service is required to be set aside and remanded to the primary adjudicating authority with a direction to pass a speaking order after adverting to submissions of the appellants – Franchise service - The word franchise is defined in Section 65 (47) of Finance Act 1994 and therefore any reference to the meaning of the said word in other countries is of no direct relevance, because for the purpose of this case, we have to go only and only by the definition of franchise given in Section 65 (47) ibid. Therefore, it will be pointless to indulge in any analysis with regard to the meaning of the word franchise in other countries – The distributor, also known as an Amway Business Owner (ABO), is not merely having right to sell Amway product; he also does presentation of Amway’s Sales & Marketing Plan which inter alia also includes Amway’s system, procedures and policies regarding presentation of Amway’s products, the Amway’s business and Amway’s organization. The ABO is also required to conduct and behave in the manner prescribed so as not to jeopardize the reputation of Amway - Thus it again becomes evident that the ABO has been given right to represent Amway business and ABO/distributor is not merely granted right to sell Amway products but he has the representational rights to sell such products - The meanings of the word ‘represent’ are in fact far wider (in scope) than required to hold on the basis of aforesaid analysis that ABOs clearly had representational right to sell goods indentified with Amway - demand under franchise service is upheld and impugned order to the extent it relates to the demand under IPR service is set aside and matter remanded to the primary adjudicating authority for de novo adjudication and passing a speaking order [Read less]

2015-VIL-238-CESTAT-MUM-ST|SERVICE TAX |CESTAT Cases | 21.05.2015

... e-respondent has manufacturing unit at Akola while the documents pertaining to export were prepared by their registered office at Indore and hence the refund claims of the service tax paid on the services, which were utilised for export, would be required to be filed with the Indore Commissionerate – HELD – There is no dispute that the consignments which were exported were cleared from the Akola factory; the jurisdiction for claiming the refund of service tax paid on such services which are in connection with the export of goods cannot be shifted to their Indore Commissionerate as the registered office of the respondent-as... [Read more]

... e-respondent has manufacturing unit at Akola while the documents pertaining to export were prepared by their registered office at Indore and hence the refund claims of the service tax paid on the services, which were utilised for export, would be required to be filed with the Indore Commissionerate – HELD – There is no dispute that the consignments which were exported were cleared from the Akola factory; the jurisdiction for claiming the refund of service tax paid on such services which are in connection with the export of goods cannot be shifted to their Indore Commissionerate as the registered office of the respondent-assessee being at Indore cannot be a reason for shifting the jurisdiction to Indore. It is undisputed that the manufacturing activity has taken place at Akola and falls within the jurisdiction of the Commissionerate at Nagpur. Secondly, there is no dispute as to that the respondent is a manufacturer-exporter, a category which is covered under Notification No. 41/2007-ST - Assessee, being a manufacturer-exporter, goods cleared for export, are from the factory falling within the Nagpur Commissionerate and have correctly filed the refund claims at Nagpur Commissionerate and are eligible for the refunds. It is avowed policy of the Central Government that all exports should be of the goods and not taxes. Keeping in mind such a policy, the impugned orders upholding the claim of the assessee are correct, proper and legal and do not suffer from any infirmity – Appeal dismissed [Read less]

2015-VIL-237-CESTAT-MUM-ST|SERVICE TAX |CESTAT Cases | 21.05.2015

... gent - Appellant is providing services as a sole selling agent and discharged service tax on incentive received – Demand of tax on profit made in respect of the purchase and sale transactions of the raw materials – HELD - The charge against the appellant is that the profit generated from the sale of packaging and raw materials was the earning of the service provider and, therefore, since the appellant is providing the services of sole selling agent, it forms part of the consideration for the services rendered. This charge is quite absurd - Section 66 read with Section 67 of the Finance Act, 1994, as they stood at the relev... [Read more]

... gent - Appellant is providing services as a sole selling agent and discharged service tax on incentive received – Demand of tax on profit made in respect of the purchase and sale transactions of the raw materials – HELD - The charge against the appellant is that the profit generated from the sale of packaging and raw materials was the earning of the service provider and, therefore, since the appellant is providing the services of sole selling agent, it forms part of the consideration for the services rendered. This charge is quite absurd - Section 66 read with Section 67 of the Finance Act, 1994, as they stood at the relevant time, provided for charge of service tax on the gross amount charged for the services rendered in respect of a taxable service. It did not provide for charging of service tax on the gross profit involved in a sale and purchase transaction - The appellant is undertaking two functions - one as a sole selling agent on which service tax liability is discharged. The second transaction which the appellant undertakes is procuring raw materials and packing materials on which he has discharged VAT liability; thereafter, he has sold these packing materials and raw materials on a profit, again discharging VAT liability on the sale price. Thus, the profit earned is in respect of a trading transaction in respect of packing materials and raw materials and has nothing to do with the activity of sole selling agent. In fact, these two transactions could have been performed by two separate entities. Merely because one entity has performed both transactions, the distinct and different nature of the transactions does not get obliterated. Therefore, the profit earned in purchase/sale transactions cannot be subject to service tax in respect of a service rendered as a sole selling agent for the goods manufactured – The impugned demands are clearly unsustainable in law and, therefore, merits to be set aside – Appeal allowed [Read less]

2015-VIL-235-CESTAT-CHE-CE|CENTRAL EXCISE |CESTAT Cases | 21.05.2015

... gures indicated in the Account current as shown in ER-1 returns – Clerical mistake – HELD - It is evident from the e-receipts credit in the PLA account was available before the next clearance. Both the lower authorities confirmed the demand only on the ground that the appellant failed to produce sufficient evidence of payment details. Considering the proof of payment of e-receipts, which is on record and the same can be verified from the system ACES data base by the adjudicating authority, confirming the demand only on the basis of ER-1 entry is not justified. Accordingly, the impugned order is set aside and the matter is ... [Read more]

... gures indicated in the Account current as shown in ER-1 returns – Clerical mistake – HELD - It is evident from the e-receipts credit in the PLA account was available before the next clearance. Both the lower authorities confirmed the demand only on the ground that the appellant failed to produce sufficient evidence of payment details. Considering the proof of payment of e-receipts, which is on record and the same can be verified from the system ACES data base by the adjudicating authority, confirming the demand only on the basis of ER-1 entry is not justified. Accordingly, the impugned order is set aside and the matter is remanded to the adjudicating authority with a direction to reconcile the figures in the account current of both the appellants by taking into account the e-receipts already made and to consider the amendment of ER-1 returns filed by the appellants to decide the issue afresh - Appeals are allowed by way of remand [Read less]

2015-VIL-236-CESTAT-DEL-CE|CENTRAL EXCISE |CESTAT Cases | 21.05.2015

... ntial parts of the system such as power plant required for producing 48V DC power on which the system is operated, inverter for power break down etc., and assembled these equipments into a digital local telephone exchange - Department alleged that the assembly, installation and commissioning of the switching equipments, power supply, inverter etc., has resulted into emergence of a new goods called ‘digital local telephone exchange’ and seeks to charge duty on the digital local telephone exchanges’ alleged to have been manufactured by classifying the same under heading 8517 of the Central Excise Tariff - Whether assembly in... [Read more]

... ntial parts of the system such as power plant required for producing 48V DC power on which the system is operated, inverter for power break down etc., and assembled these equipments into a digital local telephone exchange - Department alleged that the assembly, installation and commissioning of the switching equipments, power supply, inverter etc., has resulted into emergence of a new goods called ‘digital local telephone exchange’ and seeks to charge duty on the digital local telephone exchanges’ alleged to have been manufactured by classifying the same under heading 8517 of the Central Excise Tariff - Whether assembly installation and commissioning of switching system along with power plant, inverter etc. would amount to manufacture – HELD - In our view the main component of a telephone exchange is switching system which is an electrical apparatus for line telephony. The power plant and inverter are only auxiliary equipments. Power plant supplies the 48V DC current for functioning the switching system and inverter is required for standby period in case of power break down. Thus, the goods which have been purchased i.e. Switching systems have remained the switching systems only even after installation and in our view no new commodity with distinct commercial identity or character or use has emerged – From the technical literature produced by the appellant, it is clear that the switching systems are commonly called telephone exchanges and hence, on installation of a switching system, no new goods with distinct commercial identity and distinct characteristics or uses have emerged. The impugned orders, therefore, are not sustainable. The same are set aside. The appeals are allowed [Read less]

2015-VIL-201-GUJ|VAT |High Court Cases | 21.05.2015

... of oil and gas - Contracts for development and exploration of Panna-Mukta and Mid-South Tapti Oil and Gas fields, in the west-coast off shore, India - Location of the oil/gas fields is beyond the territorial waters of India - Production Sharing Contract (PSC) – Taxability under CST and GST Act on supply of Natural Gas by ‘Contractor’ to GAIL, the sole distributor appointed by Government of India – Various question of law answered as: i. On a conjoint reading of the Production Sharing Contract and the Interim Sales and Purchase Agreement, it is apparent that what was agreed to be sold and purchased was Natural Gas. ii. At ... [Read more]

... of oil and gas - Contracts for development and exploration of Panna-Mukta and Mid-South Tapti Oil and Gas fields, in the west-coast off shore, India - Location of the oil/gas fields is beyond the territorial waters of India - Production Sharing Contract (PSC) – Taxability under CST and GST Act on supply of Natural Gas by ‘Contractor’ to GAIL, the sole distributor appointed by Government of India – Various question of law answered as: i. On a conjoint reading of the Production Sharing Contract and the Interim Sales and Purchase Agreement, it is apparent that what was agreed to be sold and purchased was Natural Gas. ii. At the stage when the PSC came to be executed, the gas was not discovered and was still in the wells and it was not even certain as to whether the Government of India would purchase all the Gas that is produced and delivered. Therefore, though under the PSC 100% of the deliverability of ANG and NANG and Condensate was agreed to be produced and delivered, the goods viz., natural gas cannot be said to be ascertained goods at the time when the Production Sharing Contract came to be executed. Clause (a) of section 4(2) of the Central Sales Tax Act, 1956 would not be applicable to the transactions in question. iii. On a combined reading of the PSC and the Interim Sales Purchase Agreement (ISPA), the delivery point is at the downstream weld at the underwater connection between the Sellers’ pipeline and ONGC’s underwater Gas transmission line/lines which transport Gas from the Bassein Field to Hazira area, viz., the “Delivery Point” as contemplated under clause (a)(iv) of Article 21.5.13 of the PSC and not downstream of the sweetening and separation facility owned and operated by ONGC. iv. The ISPA executed between the constituents of the Contractor and the GAIL cannot amend, modify, vary or supplement the PSC. The price clause as contained in the ISPA which provides for payment at the rate of 90% of the Gas price specified in Article 21.5.13(d) of the PSC for the net MMBtu of gas delivered at the downstream of ONGC facility at Hazira, would not modify the principal agreement between the parties, namely that the Gas is to be delivered at the Delivery Point as contemplated in clause (a)(iv) of Article 21.5.13 of the PSC nor can the same be read to mean that the parties had agreed to sell and purchase sweetened Gas. v. The price clause contained in the ISPA is only a mechanism by which the parties have decided the price of the goods and cannot be relied upon to decide the situs of the sale. Merely because the Sellers have decided to charge on the basis of what is ultimately received by the Buyer cannot be determinative of the fact as to where the sale takes place. vi. The goods, viz., Natural Gas were ascertained goods at the time when they came to be separated and measured at the Offshore Processing Facility. The ascertained goods upon being separated and measured came to be appropriated to the contract and delivered at the Delivery Point. In terms of Article 27.2 of the PSC, the title to the goods also passed to the Buyer at the Delivery Point. The situs of the sale is the Offshore Processing Facility where the goods were appropriated to the contract. Therefore, it cannot be said that the goods in question were within the State of Gujarat at the time of their appropriation to the contract of sale so as to fall within the ambit of clause (b) of section 4(2) of the Central Sales Tax Act, 1956. The transactions in question are, therefore, not amenable to tax under the provisions of the Gujarat Sales Tax Act, 1969. vii. Merely because the Natural Gas upon being delivered at the Delivery Point was commingled with other gases, does not mean that it was not in a deliverable state because having regard to its unique physical properties, large volumes of Natural Gas can be transported only in a continuous stream and once delivered in the pipeline for transportation, it becomes commingled with other natural gas. Individual molecules are not separately indentified and cannot be accurately tracked or traced. As a result, natural gas is sold and purchased on a “quality and quantity” basis. viii. The act of sweetening of natural gas, having taken place post appropriation, after the goods were delivered and the title had passed to the Buyer outside the State of Gujarat, merely because post appropriation the goods were subjected to the process of sweetening within the State of Gujarat it cannot be said that the sale of goods has taken place within the State of Gujarat. ix. Since the provisions of the Customs Act, 1962 have been extended beyond the designated area, the Panna Mukta oil fields from where the movement of goods is occasioned fall within the customs frontiers of India Consequently, the sale of goods cannot be said to have taken place in the course of import of goods into the territory of India as contemplated under sub-section (2) of section 5 of the Central Sales Tax Act, 1956. x. Since the the sale of goods has taken place outside the State of Gujarat, the question as to whether or not subjecting the Natural Gas to the process of sweetening amounts to manufacture becomes redundant, and hence, it not necessary to enter into the merits of the question as to whether or not the processing of the Natural Gas at ONGC’s sweetening and separation facility at Hazira, whereby the sour gas is converted into sweetened gas, amounts to manufacture. xi. The show cause notices which form the basis of the impugned assessment orders are without jurisdiction as the same have been issued without formation of the requisite opinion as required under the provisions of section 41 and 44 of the Gujarat Sales Tax Act, 1969 and are based on a mere change of opinion. xii. As the controversy involved in the present case goes to the very root of the jurisdiction of the Sales Tax Officer to levy sales tax under the provisions of the GST Act, 1969, the availability of an alternative statutory remedy would not preclude the petitioners from invoking the extraordinary jurisdiction of this court under Article 226 of the Constitution of India [Read less]