DELHI PETROL DEALERS ASSOC Vs. COMMISSIONER NEW DELHI

JUDGEMENT

(1.) The writ petitioners claim directions for quashing of Circular No. 47/2005-06 dated 23.01.2006. The writ petitioners in the first writ petition, i. e. W. P. (C) 2921/2006 claim to be an association of petroleum dealers in Delhi. Similarly, the second petitioner - BPCL Petrol Dealers Association, another Association, is an individual petrol dealer and a partnership firm; it is represented by one of its partners.

(2.) Briefly the facts urged in both the proceedings are that the petitioners are petroleum dealers, who receive petroleum and other such supplies, and are engaged in retail dealership of such products sale. In terms of the Delhi Value Added Tax Act, 2004 (DVAT), Value Added Tax (VAT) is levied at the applicable rate on the entire sale on the turn-over in question at the point of sale. Apparently the product undergoes evaporation loss of around 0.6% for petroleum products. However, the tax at the point of purchase is paid on the value of entire goods as if the whole quantity of petrol is actually received. At the time of sale, when credit is claimed, the dealer adds the cost of purchase, - the commission (by the petroleum company or corporation, as the case may be) and administrative costs. It is argued that even the evaporation loss component is added as credit claim. In these circumstances, the impugned circular was issued in January 2006. It reads as follows:

(3.) The petitioners argue that the direction issued by the Commissioner is without authority of law since it encroaches on the power and functioning of quasi-judicial bodies who are enjoined to take into account all relevant circumstances and facts which include the claim for credit for the evaporation loss said to have been loaded on to the cost at the time of sale to customers. It was submitted that having once claimed tax credit for tax payable on the component despite evaporation loss, at the time of supply, the Commissioner could not have, consistent with logic and consistent with the right of the dealers, at one stroke, directed the assessing authorities to disallow such credit and make reversals.