DST Vs. COMMERCIAL TAX OFFICER ARYAPURAM RAJAHMUNDRY

JUDGEMENT

(1.) THE petitioner which is a West German company carrying on drilling operations for ONGC (Oil and Natural Gas Commission) in Krishna-Godavari basin, has challenged in these writ petitions the assessments made under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as "the Act"), for the years 1985-86, 1986-87 and 1987-88.

(2.) THE petitioner has been subjected to tax under section 5-E of the Act on the amounts received from ONGC in respect of the drilling units employed by the petitioner-company for the purpose of exploration of oil wells. Section 5-E provides for levy of tax on the transfer of right to use the goods for any purpose whatsoever whether or not for a specified period, to any lessee or licensee for cash, deferred payment or other valuable consideration. This section was introduced into the Act with effect from July 1, 1985, as a sequel to the Constitution (Forty-sixth) Amendment Act. The respondent-Commercial Tax Officer held on a consideration of the terms of the contract between the petitioner and the ONGC that the drilling rigs were hired by ONGC for the purpose of exploration of oil wells and the rigs are practically at the disposal of the ONGC for their use wherever and whenever they want and the contractor has just to keep the rigs operational by their technical personnel as per the requirements and instructions of the ONGC. The writ petitions were filed at a stage when the assessments were made and demands raised. The reasons for not filing the appeals and for invoking the jurisdiction of this Court under article 226 of the Constitution have been stated in the writ petition thus : "though usually thirty days time is given, in the instant case, only 15 days time is given. The petitioner apprehends that coercive steps will be taken to recover the tax. They reliably understand that the assessments have been made after consultation with and according to the instructions of authorities superior to the assessing authority. The appellate authorities are not granting stay pending the appeal as a rule. They do not pass orders even. An appeal to the Deputy Commissioner in such circumstances would be an exercise in futility. Further, the petitioner is challenging the constitutionality of section 5-E and the connected provisions of the Act. The appellate authority is not competent to adjudicate on the vires of these provisions. " The writ petitions were filed on December 9, 1988, soon after the assessment orders were communicated. This Court initially directed show cause notice before admission, by an order dated December 12, 1988. Thereafter, the writ petitions were admitted on July 17, 1989. During the pendency of the writ petitions, stay was granted on condition of furnishing bank guarantee for the disputed amount of tax.

(3.) THE learned Government Pleader supported the conclusion of the assessing and appellate authorities by referring to the clauses in the agreement and also submitted that an effective alternative remedy being available to the petitioner under the statute, this Court ought not to adjudicate upon the factual and legal questions in the writ proceedings under article 226 of the Constitution. He relied upon the judgment of the Supreme Court in Titaghur Paper Mills Co. Ltd. v. State of Orissa [1983] 53 STC 315; AIR 1983 SC 603 and Assistant Collector of Central Excise v. Dunlop India Ltd. [1985] 154 ITR 172 (SC); AIR 1985 SC 330. In Titaghur Paper Mills' case [1983] 53 STC 315 (SC); AIR 1983 SC 603, which is arising under the Orissa Sales Tax Act, the Supreme Court held thus :