MADRAS REFINERIES LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) Civil Appeals Nos. 6243-6245 of 1998

(2.) The undisputed facts are that the appellant has a refinery and major portion of its products are sold to different oil companies. According to the Solicitor General, the main sales of the appellant are of oil to the Indian Oil Corporation Ltd. (IOCL). In respect of the sales so made, according to a prescribed formula and in order to achieve equivalisation of price of petroleum products produced by the appellant and other similar companies, the money is paid to it from the industrial pool account in cases where the retention price of the appellant is more than the sale price (equivalent to exrefinery price) received from the oil companies.

(3.) Under the Tamil Nadu General Sales Tax Act, sales tax is payable on the sale of all kinds of mineral oils as per the Schedule. The point of levy of tax is at the point of first sale in State. Explanation 1 after Item No. 159 provides that "for the purposes of items 151 to 159, a sale by an oil company to any other oil company shall not be deemed to be first sale in the State and accordingly any sale by one oil company to another person (not being an oil company) shall be deemed to be the first sale in the State." Explanation 2 makes it clear that for the purpose of Explanation 1, oil company would mean the Madras Refineries Ltd., Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd., Hindustan Petroleum Corporation Ltd., and such other oil company as may be notified by the Government of Tamil Nadu.