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ITEM NO.43                  COURT NO.5                  SECTION III

           S U P R E M E   C O U R T   O F   I N D I A                          RECORD OF PROCEEDINGS                      Petition(s) for Special Leave to Appeal (Civil) No(s).21040/2008

(From the judgment and order dated 16/05/2008 in WPC No. 3691/2007   of The HIGH COURT OF ORISSA AT CUTTACK)

M/S INDIAN OIL CORP.LTD.                             Petitioner(s)

                     VERSUS

COMMR.OF SALES TAX & ANR.                            Respondent(s)

(With prayer for interim relief and office report )

WITH  SLP(C) NO. 19799 of 2008 – With appln. for permission to file lengthy list of dates and with prayer  for interim relief

Date: 09/04/2009  This Petition was called on for hearing today.

CORAM :         HON'BLE MR. JUSTICE S.H. KAPADIA         HON'BLE MR. JUSTICE AFTAB ALAM

For Petitioner(s) Mr. Shyam Diwan, Sr.Adv. Mr. Hrishikesh Baruah, Adv. Mr. Anjun V. Bobde, Adv. Mr. Balvir Dosanjh, Adv.

                    Mr. Jagjit Singh Chhabra,Adv.

                    Mr. Saurav Agrawal, Adv. Mr. Amit Pawan, Adv.

For Respondent(s) Mr. M. Chandrasekharan, Sr.Adv. Mr. Tara Chandra Sharma, Adv. Mr. Rupesh Kumar, Adv. Ms. Neelam Sharma, Adv. Ms. Pankhuri, Adv.

                    Mrs. Kirti Renu Mishra,Adv.

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      UPON hearing counsel the Court made the following                            O R D E R  

SLP(C) No. 21040 of 2009

Leave granted.

The Civil Appeal stands allowed with no order as to costs.

SLP(C) No. 19799 of 2008

Stand over for two weeks.

         (S. Thapar)         PS to Registrar

(Madhu Saxena) Court Master

The signed order is placed on the file.

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IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2438 OF 2009 (Arising out of SLP(C) No.21040 of 2008)

M/S INDIAN OIL CORPORATION LIMITED ...APPELLANT (S)

VERSUS

COMMISSIONER OF SALES TAX & ANOTHER  ...RESPONDENT(S)

O R D E R

Leave granted.

Appellant-Indian  Oil  Corporation  is  inter  alia  engaged  in  the  business  of  

refining  and  selling  of  petroleum  products  including  High  Speed  Diesel  (HSD)  and  

Superior Kerosene Oil (SKO).  Appellant-corporation is a  registered dealer in the State of  

Orissa for the purpose of Central Sales Tax Act, 1956 (for short, “CST Act”).

Appellant-corporation sells HSD and SKO by despatching the said goods from  

various refineries like Jamnagar Refinery, Vizag Refinery and Chennai Refinery to Haldia  

Port, West Bengal.   Since,  Big Ocean Tankers cannot be sent to the Haldia Port, West  

Bengal, the entire load of SKO and HSD which are carried by the Big Ocean Tankers are  

unloaded in the appellant-corporation’s Terminal at Paradeep Port, Orissa.  Out of the  

said stock a certain portion of the goods is used for local sales inside the State of Orissa and  

sales tax under Orissa Sales Tax Act, 1947 is paid.  The remaining portion is moved to  

Haldia Port in West Bengal by way of Small Tanker Vessels on “stock transfer” basis.

During the assessment year 2001-02 the appellant-corporation moved HSD and  

SKO from Paradeep Port,  Orissa to Haldia  Port,  West Bengal  in the total  quantity  of

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2,69,846.277 KL of SKO and 4,40,150.791 KL of HSD respectively.  The ownership and  

title  of  the goods remained with appellant-corporation as  can be seen from the Bill  of  

ladings.  The appellant-corporation furnished a declaration in terms of Form-F declaring  

that  the movement of  the subject-goods stood occasioned by stock transfer and not  by  

inter-State Sale.

The Assessing Authority vide its  order dated 31.3.05 held that the appellant-

corporation could not provide any evidence in support of Form-F and consequently the  

Assessing Authority recorded a finding of escapement of turnover from tax.  Aggrieved by  

the  decision  of  the  Assessing  Authority,  the  appellant-corporation  preferred  statutory  

appeal  before the first  appellate authority which dismissed its  appeal  vide order dated  

15.2.06 on the ground that no relevant documentary evidence has been produced to prove  

that  the  goods  stood  despatched  to  outside  the  State  on  stock  transfer  basis.   Being  

aggrieved, the appellant-corporation preferred Second Appeal to the Tribunal.  Similarly,  

the appellant-corporation approached the Commissioner for stay of the recovery which  

was granted vide its order dated 12.6.06.

No  sooner  the  Commissioner  granted  stay  of  the  recovery,  the  Assessing  

Authority  gave  notice  to  the  appellant-corporation  on  29.12.06  seeking  to  reopen  the  

assessment on the ground that a portion of  the total  turnover had escaped assessment.  

Vide order dated 19.2.07, the Assessing Authority passed re-assessment order rejecting the  

request for adjournment made by the representative of the appellant-corporation.  The  

Assessing Authority held that the entire transaction in relation to the movement of goods  

from appellant-corporation’s  Terminal  at  Paradeep  Port,  Orissa  to  Haldia  Port,  West  

Bengal amounted to inter-State sale(s).  Suffice it to state that against the reopening of  

assessment, the appellant-corporation moved the High Court in Writ Petition (C) No.3691  

of 2007 seeking to challenge the reopening of assessment by the Assessing Authority raising

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additional tax demand of Rs.299,05,07,587/- including penalty of Rs.179,43,04,552/-.  By the  

impugned judgment dated 16.5.08 the Division Bench of the Orissa High Court dismissed  

the said writ petition hence this civil appeal by way of petition for special leave is filed by  

the appellant-corporation.

At the outset, we may state that Section 6A of Central Sales Act, 1956 is in two  

parts.  The first part mandates that the burden of proof is on the dealer to prove that the  

movement of the goods to any other place of his business is occasioned otherwise than by  

way of sale(s).  The second limb of Section 6A of the CST Act stipulates that the dealer is  

permitted to  discharge  the  burden of  proof  by  furnishing  declaration as  prescribed  in  

Form-F along with evidence of despatch of such goods.  Under Section 6A(2) of the CST  

Act it is inter alia provided that if the Assessing Authority is satisfied after making such  

enquiry as he may deem necessary that the particulars contained in the declaration are  

true  he  may,  at  the  time  of  the  assessment  of  tax,  make  an  order  to  that  effect  and  

thereupon the movement of goods to which the declaration related shall be deemed to have  

been  occasioned  otherwise  than  as  a  result  of  sale(s).   In  this  case,  as  stated  above,  

appellant-corporation had furnished Form-F.  In the said writ petition what was submitted  

by the appellant-corporation was that  the notice for  re-assessment was wholly  without  

jurisdiction and that the Assessing Authority could not have reopened the assessment in  

invoking Rule 10 and Rule12(8) of the Orissa Rules in relation to transactions for which  

Form-F was furnished.  Further, the High Court has failed to consider the challenge to the  

order of re-assessment by the appellant-corporation on the ground that it was a case of  

change of  opinion.   Lastly,  we  find  merit  in  the contention  advanced on behalf  of  the  

appellant-corporation that looking to the magnitude of the matter including the demand  

the Assessing Authority ought to have given more time to the appellant-corporation for  

producing the relevant documents.  In this case the impugned order of re-assessment dated

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19.2.07 is virtually an ex-parte order.

In the aforestated circumstances,  we set aside the impugned judgment of  the  

High Court dated 16.5.08 in Writ Petition (C) No.3691 of 2007 as also the order of re-

assessment dated 19.2.07 passed by the Assessing Authority.  Accordingly, we remit this  

case to the Assessing Authority with the direction to give full opportunity to the appellant-

corporation and decide the re-assessment proceedings including the jurisdictional fact as to  

whether reopening of assessment was at all  maintainable,  in accordance with law.  The  

Assessing Authority will also consider the effect of Form-F declaration submitted by the  

appellant-corporation.

Accordingly, the civil appeal stands allowed with no order as to costs.

....................J. [ S.H. KAPADIA ]

New Delhi, ....................J April 09, 2009 [ AFTAB ALAM ]