INDIAN OIL CORPORATION LTD. Vs. ADDITIONAL CHIEF SECRETARY AND PRINCIPAL SECRETARY TO GOVERNMENT, FINANCE DEPARTMENT AND ORS.

JUDGEMENT

(1.) Petitioner is a public sector entity of the Central Government engaged in the business of marketing of Petroleum products. Petitioner has assailed Notification SO No. 3720 dated 18.11.2002, issued by Central Government published in Gazette of India on 23.11.2002 which is in exercise of the power conferred by Section 3 of the Foreign Aircrafts (Exemption from Taxes and Duties on Fuel and Lubricants) Act, 2002 and Notification No.FD 120 CSL 2003 dated 3.12.2003 issued by the State Government. Petitioner has also assailed assessment order dated 19.12.2011 passed by the third respondent herein for the assessment year 2008-09 in so far as it concerns the tax of Rs.1,63,09,180/- levied on the turnover of Rs.5,82,47,070 relating to sale of Aviation Turbine Fuel (ATF) to foreign aircrafts and demand notice which is at Annexure H for payment of Tax of Rs.1,63,09,180/-.

(2.) Briefly stated the facts, as already noted above petitioner is a Public Sector undertaking of Government of India incorporated under the provisions of the Companies Act, 1956 and registered as a dealer under the provisions of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as 'KST Act 1957') and other Acts applicable to it in the matter of sale of petroleum products. It is stated that sale of ATF is a matter which is covered within the scope of the provisions of the KST Act, 1957. It is stated that in exercise of the power conferred under Article 253 of the Constitution, Parliament has enacted the Foreign Aircraft (Exemption from Taxes and Duties on Fuel and Lubricants) Act, 2002 ( hereinafter referred to as " The Central Act'). This Act was made by the Parliament to implement the agreements entered into by India with foreign countries, pursuant to Convention on International Civil Aviation held at Chicago in the year 1944. The Act received assent of the President of India on 11.6.2002 and published in the Gazette of India, Extra-ordinary Part-II on 12.6.2002. Section 3 of the Act prescribes that where in pursuance of the Convention or agreement with any 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 or any other country or countries under any law of a State or Union territory, the Central Government may, by notification in the Official Gazette make such provisions as may be necessary for giving effect to the Convention or Agreement and thereupon the said provision, notwithstanding anything contrary contained in any other law, shall in such application have force in India. That pursuant to the Central Act, 2002, the Ministry of Civil Aviation, Government of India in exercise of the power conferred under Section 3 of the said Act issued Notification dated 18.11.2002 notifying that fuel and lubricants filled into receptacles forming part of any aircraft registered in any other country which is a party to the Convention in International Civil Aviation held at Chicago on 7.12.1944 and the Air Services Agreements or Air Transport Agreements entered into by India which is a party to the Convention on International Civil Aviation which has entered into an Agreement with India and operating scheduled non-scheduled or International Air Services 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. Thereafter, the State Government issued impugned Notification dated 3.12.2003, a copy of which is produced at Annexure-E. Under that Notification issued under Section 8-A of the KST Act, 1957, the Government of Karnataka has exempted tax payable by a dealer on sale of ATF and lubricants made to aircrafts registered in any foreign country, which is a party to the said Convention which has entered into Air Services or Air Transport Agreements with India and operating scheduled or nonscheduled International Air Services to or from India, subject to production of declaration obtained from the airlines operator of the Foreign country in the specified form. That Notification is assailed by the petitioner while challenging assessment order dated 19.12.2011.

(3.) I have heard learned counsel for petitioner and learned Government Pleader for respondents and perused the material on record.