Decided on November 27,2006

STATE OF ASSAM Respondents

Referred Judgements :-



- (1.)This appeal is directed against the judgment dated 3.5.2001 passed by the High Court of Assam, Nagaland, Meghalaya, Manipur, Tripura, Mizoram and Arunachal Pradesh, in Writ Appeal No.36 of 1999. The appellant Indian Oil Corporation Ltd. is a limited company incorporated under the Companies Act, 1956 and a registered dealer under the Assam General Sales Tax Act, 1993 (hereinafter referred to as "the Act"). The appellant company has been engaged in the business of sale and supply of petroleum products in the country including the State of Assam.
(2.)The appellant company has been purchasing various petroleum products from Bongaigaon Refinery & Petrochemicals Ltd. (hereinafter referred to as the "the BRPL") on payment of sales tax as per the provisions of the Act. On the recommendation of the Oil Prices Committee set up by the Government of India, Resolution dated 16.12.1977 was adopted by the Government which required a dealer to sell its products at the prices fixed by the Central Government and the prices so fixed by the Central Government included surcharge to be collected from the buyers and deposited to the 'Oil Pool Account'. The appellant company - a dealer, therefore, had no alternative but to sell the products at the prices so fixed inclusive of surcharge and transfer the surcharge to the said 'Oil Pool Account'. The appellant company was entitled to retain only the basic price, the sales tax paid at the time of purchase of the products in Assam from the BRPL and the profit margin specified by the Central Government. According to the appellant, the amount of surcharge collected and remitted to the 'Oil Pool Account' did not form part of the turnover of the appellant and the said amount of surcharge was immediately remitted to the 'Oil Pool Account' by way of pool account settlement.
(3.)According to the appellant, under Section 8 of the Act, tax was levied in respect of the goods specified in Schedule II at the first point of sale within the State. Items 63 to 73 of Schedule II enumerate various petroleum products. As per Explanation 1 to Section 8(1)(a) of the Act read with Rule 12 of the Assam General Sales Tax Rules, 1993 (hereinafter referred to as "the Rules"), if the resale price of a dealer exceeded 40% of the purchase price, the resale was deemed to be first point sale within the State. At this stage, in order to properly appreciate the issues involved in the case, we deem it appropriate to set out Section 8(1)(a) of the Act, Rule 12 of the Rules and Section 2(34) of the Act as under:
"Section 8. Charge of Tax and Rates

(1) The tax leviable under section 7 for any year shall be charged on the taxable turnover during such year-

(a) in respect of goods specified in Schedule II, at the first point of sale within the State, at the rate or rates specified in that Schedule;

Explanation I : Where a person sells a substantial part of the goods manufactured by him or imported by him to another person for sale under the brand name or such other person or for resale as distribution or selling agent or for resale after repacking or subjecting the goods to any other process not amounting to manufacture and the price charged on resale exceeds the sale price by more than such percentage as may be prescribed in respect of such goods or class of goods, the resale by such other person shall, subject to rules if any, framed in this behalf, be deemed to be at the first point of sale within the State;

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