CWP No. 13131 of 2009 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. CWP No. 13131 of 2009 Date of decision 15 .10.2009 Indian Oil Corporation ... Petitioner Versus The Union Territory of Chandigarh and another ... Respondents. CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JASWANT SINGH Present: Mr. K.L.Goyal, Sr. Advocate with Mr. Sandeep Goyal, ,Advocate for the petitioner Mr. Rajesh Garg, Advocate for the respondents 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. The Indian Oil Corporation Ltd. (for brevity 'the Corporation') has approached this Court with a prayer for issuance of directions to implement the Foreign Aircraft (Exemption from Taxes and Duties on Fuel and Lubricants) Act, 2002 (for brevity ' the 2002 Act') which has been enacted in pursuance to mandate of Article 253 of the Constitution. A further prayer made is for quashing order dated 8.5.2009 (P.5) passed by the Assessing Authority- respondent no.2 which is claimed to be without jurisdiction and against the mandate of 2002 Act. Few facts may be noticed. The petitioner- corporation is an undertaking of Government of India and is engaged in the business of processing, distribution and marketing of petroleum products throughout the country. The corporation is registered in all the States with the local sales tax authorities/ VAT authorities for the purposes of payment of tax. In the CWP No. 13131 of 2009 2 present case, it is registered with Excise and Taxation Department, UT Chandigarh under the VAT Act. It was also registered under the Punjab General Sales Tax Act, 1948 (for brevity 'the 1948 Act') and the Central Sales Tax Act,1956 prior to enforcement of VAT Act. The assessment year involved in the present case is 2004-05. According to the sale made by the Corporation to various dealers in the Union Territory, Chandigarh tax was paid in respect of assessment year 2004-05. The petitioner had claimed that the gross turnover included the amount concerning the sale of Air Turbine Fuel (ATF) to the aircrafts of other countries who had made their non scheduled flights from Chandigarh Airport. The details of the fuel is given in Annexure P.1 which reads as under: 2004-05 Customer Count -ry PROD INV No. QTY. OIL AMT S.Tax Total AVIAPP RAD Airlines USSR ATF 1954 15.7.04 48-80 921400.12 0-00 921400 AIRBP VOLGA DNFER UK ATF 2031 23.9.04 15-00 1343895.1 0-00 343895 AIR BP UK ATF 2051008 B000267 15.2.05 18-68 391462 0-00 391462 Total 82.48 1656757.22 0-00 1656757 The claim made by the petitioner is that the aforesaid sales have to be treated as exempted from payment of tax as per 2002 Act and accordingly the Corporation had filed its return for the assessment year 2004-05 which was processed by the Assessing Authority. For the purposes of assessment, notice in statutory form ST XIV under Section 11(2) of the 1948 as applicable to Union Territory, Chandigarh was issued. The Assessing Authority rejected the claim in respect of sale of ATF and included the same as part of the total turnover. The view of the Assessing Authority is CWP No. 13131 of 2009 3 discernible from the following portion of the order disallowing the sales in respect of ATF to the tune of Rs. 16,66,857/- which reads as under: “ The books are kept in normal course of business. Test checks ofmultiople natures have been applied on them. Total sale and purchases for two months have been checked. The dealer under local Act, has claimed exempted Sales of ATF to the tune of Rs.1666857/- made to the international AIR flights supported by a notification issued by the Ministry of Law, Justice and Company. Copy of the notification is placed on the file. The notification has not been extended to U.T., Chandigarh. Also, as per the provisions of the Pb. General Sales Tax Act, 1948 as applicable to U.T., Chandigarh and rules made thereunder there is no such provision providing exemption. Therefore, exemption claimed by the dealer is rejected...............” Before reaching the aforesaid conclusion the Corporation had made a claim stating the sale of ATF to the foreign aicrafts is exempt from any kind of tax and duty in view of 2002 Act. As per Section 3 of the 2002 Act, the Central Government was empowered to issue a notification for granting exemption from levy of taxes and duties on fuel/ lubricants filled into receptacles form part of any aircraft. Accordingly a notification on 18.11.2002 (P.3) has been issued as published in the Gazette of Government of India on 23.11.2002. The notification was also brought to the notice of all the Assessing Authorities by circulating the same to all the Chief Secretaries and Union Territories by the Ministry of Petroleum and Natural Gases vide letter dated 10.2.2003 (P.4). The letter clearly stipulates that supply of fuel CWP No. 13131 of 2009 4 and lubricants to foreign aircrafts covered under the aforesaid notification was to be exempted from any kind of tax/ duty in India. In response to the notice of motion having been issued, Mr. Rajesh Garg, learned counsel for the Union Territory has stated that no reply would be necessary as the petition involves a pure question of law. Having heard the learned counsel for the parties, after perusing the statutory provisions and the record we first feel it necessary to point out that India is a signatory to Convention on International Civil Avitation signed at Chicago on 17.9.1944. In order to implement such like agreement entered into by our country with other countries in pursuance of Convention of International Civil Aviation our constitution made a special provision in Article 253 which reads thus: “ 253. Legislation for giving effect to international agreements.- Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body.” A perusal of the aforesaid provision shows it uses non obstante clause and confers exclusive power on the Parliament to make laws for the whole or any part of the territory in India in pursuance of implementing any treaty, agreement or convention with any other country or countries or any decision taken at international levels etc. It is undisputed that our country is a signatory to the convention of International Civil Aviation held at Chicago on 7.12.1944 but our country had signed it on 1.3.1947.According to the list CWP No. 13131 of 2009 5 provided by the petitioner ( Mark “A”) there are number of other countries who have signed the aforesaid convention. The Russian Federation had signed that convention on 30.4.1965. Another country which is relevant for the instant petition is United Kingdom who had signed it on 1.3.1947. In order to give effect to the aforesaid International Convention, the Parliament enacted 2002 Act which was published on 12.6.2002 (P.2). Section 3 of the 2002 Act reads as under: “ Where, in pursuance of the Convention or Agreement with any other country or countries, it is necessary to grant exemption from levy of taxes and duties on fuel and lubricants filled into receptacles forming part of any aircraft of any other country or countries under any law of a State or Union Territory in India, the Central Government may, by notification in the official gazette, make such provisions as may be necessary for giving effect to the said Convention or Agreement and thereupon the said provision shall apply accordingly and, not withdstanding anything contrary contained in any other law, shall in such application have the force of law in India.” A perusal of the aforesaid provision makes it evident that a notification in the official gazette is required to be issued by making such a provision as may be necessary for giving effect to the aforesaid convention in respect of fuel and lubricants filled into receptacles forming part of any aircraft of any other country. On the issuance of notification the provision as such is to apply notwithstanding any view contained contrary in any other law. Accordingly a notification has been issued on 18.10.2002 by the CWP No. 13131 of 2009 6 Ministry of Civil Aviation which was published in the official gazette on 23.11.2002 which is addressed to all the Chief Secretaries of the States and Union Territories. The aforesaid notification has been circulated by addressing separate letter dated 10.2.2003 by the Government of India, Ministry of Petroleum and Natural Gas to all the Chief Secretaries and Union Territories clarifying that fuel and lubricant filled in receptacle of any foreign country which is a party to the convention of International Civil Aviation or which has entered into the said agreement with India, and operating a scheduled or non scheduled international sir service to or from India, shall be exempted from levy of all taxes and duties in India whether levied by the Central Government or the State Government, as the case may be. Accordingly it was directed that no tax /duty whether levied by the Central Government or State Government are leviable on the supply of fuel and lubricants to the aircrafts of foreign countries and the oil marketing companies were entitled to seek refund/ adjustment from the Central/State Government against future payments of any tax/duty if any paid for such transaction of ATF to aircrafts after 22.11.2002. It is thus evident that the sale of ATF made by the petitioner-corporation to the foreign aircrafts belonging to USSR air craft and the air craft of U.K., is to be exempted. It cannot constitute part of total turnover and has to be excluded. The stand of the respondent that a separate notification for Union Territory, Chandigarh is required to be issued would not require any detailed consideration in view of the fact that notification issued by the Ministry of Civil Aviation under Section 3 of the Act on 18.11.2002 would extend to all the States and Union Territories It is further made clear that by letter dated 10.2.2003 (P.4) circulated by the Ministry of Petroleum and CWP No. 13131 of 2009 7 Natural Gases intimating all the States and Union Territories the entitlement of the corporation like the3 petitioner stipulating that no tax/ duties whether levied by the Central or State Government are leviable on the supply of fuel/ lubricants on the air crafts of foreign countries. Even the refund has been permitted as the notification has come into force w.e.f. 23.11.2002. As a sequel to the above discussion, this petition succeeds and order dated 8.5.209 (P-5) is set aside. Respondent no. 2 is directed to exclude the sale concerning ATF made to foreign aircrafts by the petitioner- corporation and re-determine the tax liable of the petitioner in accordance with law. The petition stands disposed of accordingly. (M.M.Kumar) Judge (Jaswant Singh) 15.10.2009 Judge okg