M/S Bharat Petroleum Corpn.LTD vs. The State Of Bihar And Ors

Held

The Court did not decide the merits of the case. The learned counsel for the petitioners fairly stated that they wished to withdraw the present petition. They sought permission to file a fresh petition on the same and subsequent cause of action, if required, and to take recourse to other available remedies in accordance with law. The Court noted that no interim order had been passed. The Court granted liberty to the petitioners to file a fresh petition within a period of three months from the date of the order. Liberty was also reserved to make a mention for early hearing of the matter. The petition was disposed of with the aforesaid liberty. No specific finding was given on the constitutional validity of Section 16(3)(f) of the Bihar VAT Act, 2005, or the impugned notification, as the matter was withdrawn by the petitioners.

Facts

The petitioners, M/s Bharat Petroleum Corporation Ltd. and M/s Hindustan Petroleum Corporation Ltd., filed a writ petition before the Patna High Court. They challenged Section 16(3)(f) of the Bihar Value Added Tax Act, 2005, and Notification SO No. 260 dated 19.11.2009. The challenge was primarily against the denial of Input Tax Credit (ITC) on the sale of Kerosene Oil and LPG (domestic) when purchased from another Oil Marketing Company. The petitioners argued that this provision and notification led to double taxation and were arbitrary and discriminatory. The tax period in question is not explicitly stated, but the challenge pertains to the period when the said provisions were in force. The authorities against whom the challenge was made are the State of Bihar and the Principal Secretary cum Commissioner of Commercial Taxes, Bihar. The amount in dispute is not specified.

Key Issues

1. Whether Section 16(3)(f) of the Bihar VAT Act, 2005, is violative of Articles 14, 19(1)(g), and 265 of the Constitution of India by arbitrarily providing double taxation on Kerosene Oil and LPG (domestic) without authority of law? 2. Whether Section 16(3)(f) of the Bihar VAT Act, 2005, is unconstitutional for delegating essential legislative functions, including the complete denial of Input Tax Credit? 3. Whether Notification SO No. 260 dated 19.11.2009, which completely denied Input Tax Credit on the sale of Kerosene Oil and LPG (domestic) by one Oil Marketing Company after purchase from another, is ultra vires the Constitution due to being arbitrary and discriminatory? Petitioner's Arguments: The petitioners contended that Section 16(3)(f) of the Bihar VAT Act, 2005, and the impugned notification result in double taxation on the same commodity, which is arbitrary and discriminatory, violating constitutional provisions. They argued that the denial of ITC amounts to an unlawful levy. They also argued that the provision amounts to an unconstitutional delegation of essential legislative functions. Revenue's Arguments: The judgment does not record any specific arguments made by the revenue or state respondents.