CENTRAL SALES TAX ACT, 1956 – Ss. 3, 4, 9, 14 and 15 – U.P. VALUE ADDED TAX ACT, 2008 – Inter-State sale – Natural gas – Production Sharing Contract (PSC) – Gas Sales and Purchase Agreement (GSPA) – Situs of sale – Legislative competence – Fiscal federalism – State taxation – Levy of VAT by State of U.P. – Validity.

 APEX COURT HELD THAT 

CONSTITUTION OF INDIA – Arts. 245, 246, 248, 265, 269, 286 – Seventh Schedule, List I Entry 92-A and List II Entry 54 – CENTRAL SALES TAX ACT, 1956 – Ss. 3, 4, 9, 14 and 15 – U.P. VALUE ADDED TAX ACT, 2008 – Inter-State sale – Natural gas – Production Sharing Contract (PSC) – Gas Sales and Purchase Agreement (GSPA) – Situs of sale – Legislative competence – Fiscal federalism – State taxation – Levy of VAT by State of U.P. – Validity.

Respondent-company extracted natural gas from KG-D6 Basin situated off coast of Andhra Pradesh under Production Sharing Contract entered with Union of India pursuant to New Exploration and Licensing Policy – Gas supplied to buyers under Gas Sales and Purchase Agreements – Delivery point fixed at Gadimoga, Andhra Pradesh – Gas thereafter transported through pipelines to various States including Uttar Pradesh – State of U.P. levied VAT treating transaction as intra-State sale on ground that gas being fungible and unascertained goods became ascertainable only upon delivery at buyers’ plants in Uttar Pradesh – High Court quashed assessment holding transaction to be inter-State sale – Validity.

Held : Constitutional scheme relating to fiscal federalism maintains strict demarcation between taxing powers of Union and States and overlapping taxation is constitutionally impermissible. Article 269 read with Entry 92-A of Union List confers exclusive legislative competence upon Parliament in respect of taxes on sale or purchase of goods in course of inter-State trade and commerce. Once transaction falls within ambit of Section 3 of Central Sales Tax Act, State Legislature lacks competence to levy VAT under Entry 54 of State List.

Inter-State sale under Section 3(a) CST Act is established where movement of goods from one State to another is occasioned by covenant or incident of contract of sale. In present case, GSPA specifically provided for delivery of gas at Gadimoga, Andhra Pradesh and transportation thereafter pursuant to agreements entered by buyers with transporters. Movement of gas from Andhra Pradesh to Uttar Pradesh was integral consequence of contract of sale and therefore transaction constituted inter-State sale.

Co-mingling of natural gas during transportation or minor variation in quantity does not alter inter-State character of transaction. Subsequent processing or re-metering at Auraiya, Uttar Pradesh was legally irrelevant since transfer of title, possession and risk had already occurred at delivery point in Andhra Pradesh. State of Uttar Pradesh could not disregard genuine contractual arrangements under GSPA and GTA in absence of any finding that agreements were sham transactions.

Constitutional provisions relating to taxation are to be construed in manner preserving exclusivity of legislative fields and preventing multiple taxation. Stability and certainty in fiscal regime are essential in matters involving international consortiums and foreign investment.

State of Bombay v. United Motors (India) Ltd., (1953) 1 SCC 514; Bengal Immunity Co. Ltd. v. State of Bihar, (1955) 1 SCC 763; Hoechst Pharmaceuticals Ltd. v. State of Bihar, (1983) 4 SCC 45; Synthetics and Chemicals Ltd. v. State of U.P., (1990) 1 SCC 109; Jindal Stainless Ltd. v. State of Haryana, (2017) 12 SCC 1, referred to.

(Paras 1, 24 to 54 and findings of High Court approved)

HELD

Taxation powers under Constitution are mutually exclusive and any construction resulting in overlapping of taxing jurisdictions must be avoided. (Paras 26 to 37)

Article 265 mandates that levy and collection of tax must be supported by legislative competence and authority of law. (Paras 44 to 46)

Article 269 and Section 3 CST Act govern inter-State sales and once movement of goods from one State to another is occasioned by contract of sale, State VAT legislation cannot be invoked. (Paras 47 to 54)

Where natural gas was delivered at Gadimoga in Andhra Pradesh and movement to Uttar Pradesh occurred pursuant to pre-existing contractual obligations under GSPA and GTA, transaction constituted inter-State sale not amenable to levy of VAT by State of U.P.

RESULT

Appeals against judgment of High Court dismissed. Assessment orders levying VAT by State of Uttar Pradesh on transactions relating to supply of natural gas held unsustainable.

ADVOCATEMMMOHAN: CIVIL PROCEDURE CODE, 1908 – Or. XV R. 5 – Strikin...

ADVOCATEMMMOHAN: CIVIL PROCEDURE CODE, 1908 – Or. XV R. 5 – Strikin...: advocatemmmohan APEX COURT HELD THAT  CIVIL PROCEDURE CODE, 1908 – Or. XV R. 5 – Striking off defence of tenant – Scope and nature of power ...

APEX COURT HELD THAT 

CIVIL PROCEDURE CODE, 1908 – O. XV R. 5 – Striking off defence of tenant – Scope and nature of power – Judicial discretion – Meaning of “first date of hearing” – Delay in deposit of rent – Wilful default – Remand.

Tenant failed to deposit arrears of rent within stipulated time in eviction suit – Trial Court struck off defence under O. XV R. 5 CPC – High Court interfered and granted time to deposit rent and subsequently extended time despite earlier conditional order – Validity.

Held : Provision under O. XV R. 5 CPC, though mandatory in form, confers judicial discretion and penal consequence of striking off defence cannot be invoked mechanically. Court is required to examine whether there has been substantial compliance and whether default is wilful, deliberate or contumacious. Expression “first date of hearing” means date on which Court applies its mind to controversy involved in suit, ordinarily at stage of framing issues, and not merely any procedural date fixed in proceedings. Trial Court failed to conclusively determine first date of hearing and mechanically invoked drastic consequence of striking off defence. High Court, while granting extension of time, also failed to reconcile earlier conditional order with subsequent indulgence granted to tenant. Procedural law is intended to advance cause of justice and not defeat it. In circumstances, matter required fresh adjudication by Trial Court on question of compliance with O. XV R. 5 CPC and nature of default committed by tenant.

Bimal Chand Jain v. Sri Gopal Agarwal, (1981) 3 SCC 486; Santosh Mehta v. Om Prakash, (1980) 3 SCC 610; Siraj Ahmad Siddiqui v. Prem Nath Kapoor, (1993) 4 SCC 406; Salem Advocate Bar Association v. Union of India, (2005) 6 SCC 344, relied on.

(Paras 15 to 29)

HELD

Power to strike off defence under Order XV Rule 5 CPC is discretionary and not automatic merely because default has occurred. Court must consider surrounding circumstances and determine whether conduct of tenant discloses wilful or contumacious default. (Paras 15 to 17)

Expression “first date of hearing” refers to date on which Court applies its mind to controversy between parties for purposes of framing issues and not any earlier procedural date. (Paras 18 to 20)

Rules of procedure are handmaid of justice and procedural provisions should receive interpretation advancing justice rather than defeating it. (Paras 21 and 22)

Where Trial Court invoked penal consequence mechanically and High Court failed to comprehensively address relevant aspects while extending time, remand for fresh adjudication was warranted. (Paras 23 to 29)

RESULT

Impugned orders set aside. Matter remanded to Trial Court for fresh adjudication of application under Order XV Rule 5 CPC in accordance with law.

Bharatiya Nyaya Sanhita, 2023 — Section 108 read with Section 3(5) — Alleged abetment of suicide — Mere admonition or objection to relationship — Prima facie ingredients of instigation not disclosed. Petitioners, being cousin brothers of girl allegedly in relationship with deceased, were accused of taking deceased to town, beating and threatening him, resulting in mental distress leading to consumption of pesticide. Petitioners contended that at most they only admonished deceased for allegedly harassing girl in name of love and that allegations, even if accepted at face value, did not disclose ingredients of abetment, instigation or intentional aid required under Section 108 BNS. — Paras 2 & 4.

 AP HIGH COURT HELD THAT 

Bharatiya Nagarik Suraksha Sanhita, 2023 — Section 482 — Anticipatory bail — Liberty to approach jurisdictional Court — Interim protection against coercive steps.

Where petitioners/accused directly approached High Court seeking anticipatory bail in crime registered for alleged abetment of suicide under Section 108 read with Section 3(5) of Bharatiya Nyaya Sanhita, and petitioners submitted before Court that they may be permitted to approach jurisdictional Court by filing appropriate application, the High Court disposed of Criminal Petition granting liberty to petitioners to move concerned Court within four weeks and directed police not to take coercive steps till such application is filed and decided.
— Paras 6 & 7.

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Bharatiya Nyaya Sanhita, 2023 — Section 108 read with Section 3(5) — Alleged abetment of suicide — Mere admonition or objection to relationship — Prima facie ingredients of instigation not disclosed.

Petitioners, being cousin brothers of girl allegedly in relationship with deceased, were accused of taking deceased to town, beating and threatening him, resulting in mental distress leading to consumption of pesticide. Petitioners contended that at most they only admonished deceased for allegedly harassing girl in name of love and that allegations, even if accepted at face value, did not disclose ingredients of abetment, instigation or intentional aid required under Section 108 BNS.
— Paras 2 & 4.

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Anticipatory bail — Investigation at nascent stage — Interim balancing approach adopted.

Learned Assistant Public Prosecutor opposed grant of anticipatory bail on ground that investigation was at initial stage. High Court adopted balanced approach by not granting anticipatory bail outright but protecting petitioners from coercive steps for limited period enabling them to approach jurisdictional Court.
— Paras 5 & 7.

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Abetment of suicide — Essential ingredients — Instigation, intentional aid or active participation necessary.

The petitioners contended that prosecution allegations lacked essential ingredients constituting abetment of suicide since there was no allegation of intentional instigation, active provocation or aiding commission of suicide by deceased.
— Para 4.

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Exercise of inherent powers — Protection from arrest pending approach to competent Court.

While disposing Criminal Petition, High Court exercised inherent jurisdiction to protect petitioners from coercive action temporarily so as to facilitate filing of regular anticipatory bail application before competent jurisdictional Court.
— Para 7.

---

Held :
Petitioners/accused were granted liberty to approach concerned jurisdictional Court within four weeks by filing appropriate bail application and, till such application is filed and decided, respondent-police were directed not to take coercive steps against petitioners in FIR No.17 of 2026 registered for offence under Section 108 read with Section 3(5) BNS.

Penal Code, 1860 — Sections 299, 300, 302 & 304 Part I — Sudden quarrel after intoxication — Attribution of unchastity to female family members — Exception 1 and Exception 4 to Section 300 attracted. Where accused and deceased, who were friends, consumed alcohol at birthday function and quarreled over missing mobile phone and exchanged allegations touching chastity of female family members, followed by sudden fight on way back home culminating in accused inflicting knife injury on head of deceased, High Court held that though death was homicidal and intentional injury was caused, incident occurred in heat of passion upon sudden quarrel without premeditation. Conviction under Section 302 IPC was altered to Section 304 Part I IPC by extending benefit of Exception 1 and Exception 4 to Section 300 IPC. — Paras 27 to 35.

 AP HIGH COURT HELD THAT 

Penal Code, 1860 — Sections 299, 300, 302 & 304 Part I — Sudden quarrel after intoxication — Attribution of unchastity to female family members — Exception 1 and Exception 4 to Section 300 attracted.

Where accused and deceased, who were friends, consumed alcohol at birthday function and quarreled over missing mobile phone and exchanged allegations touching chastity of female family members, followed by sudden fight on way back home culminating in accused inflicting knife injury on head of deceased, High Court held that though death was homicidal and intentional injury was caused, incident occurred in heat of passion upon sudden quarrel without premeditation. Conviction under Section 302 IPC was altered to Section 304 Part I IPC by extending benefit of Exception 1 and Exception 4 to Section 300 IPC.
— Paras 27 to 35.

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Murder — Distinction between murder and culpable homicide not amounting to murder — Principles reiterated.

The Court reiterated that for application of Exception 4 to Section 300 IPC, prosecution evidence must establish that incident occurred:
(i) without premeditation;
(ii) in sudden fight;
(iii) in heat of passion upon sudden quarrel;
(iv) without accused taking undue advantage; and
(v) without accused acting in cruel or unusual manner.
— Paras 28 to 30.

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Homicidal death — Medical evidence corroborating ocular version.

Evidence of treating doctor and postmortem evidence established that deceased sustained fatal head injury caused by knife and death occurred due to respiratory and circulatory failure consequent upon brain injury. Medical evidence corroborated prosecution version regarding homicidal death.
— Paras 9 to 11.

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Oral dying declaration — Admissibility and reliability — Principles discussed.

Statement made by deceased to his father and other witnesses immediately after incident regarding accused attacking him was accepted as oral dying declaration. Court reiterated that truthful and voluntary dying declaration can form sole basis for conviction if found reliable after careful scrutiny.
— Paras 26, 31 & 32.

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Dying declaration — Improvements in ocular testimony — Effect.

Though witnesses claimed during trial that they directly witnessed accused attacking deceased, such version was not reflected in earliest report Ex.P1. High Court treated such portion as improvement, but held that embellishment in one aspect does not render entire prosecution case false and Court must separate truth from falsehood.
— Paras 22, 25, 26 & 33.

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Falsus in uno, falsus in omnibus — Doctrine not applicable in India.

The Court reiterated that falsehood or exaggeration in one part of witness testimony does not mandate rejection of entire evidence. Duty of Court is to separate truthful portion from embellishments and assess intrinsic reliability.
— Para 33.

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Voluntary intoxication — Not a complete defence in absence of plea under General Exceptions.

Though evidence disclosed that both accused and deceased were in drunken condition at relevant time, benefit of intoxication under General Exceptions was denied since neither voluntary nor involuntary intoxication was specifically pleaded or established by defence.
— Paras 27 & 35.

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Last seen circumstance — Immediate presence of accused after incident — Evidentiary value.

Evidence of prosecution witnesses established that accused and deceased were together shortly before incident after quarrel at birthday function and accused was seen immediately after attack holding blood-stained knife. Such circumstances supported prosecution case regarding participation of accused.
— Paras 16, 19, 24 & 34.

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Delay in lodging FIR — Medical emergency — Delay explained.

Court rejected defence contention regarding delay in registration of FIR observing that immediate priority of family members was to shift injured to hospital and secure treatment. Delay under circumstances was not fatal to prosecution case.
— Paras 5(vii) & 6(ii).

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Sentence — Conversion from Section 302 IPC to Section 304 Part I IPC — Ten years rigorous imprisonment imposed.

Having found that accused acted in heat of passion during sudden quarrel but possessed intention and knowledge regarding consequences of attack, Court modified conviction from Section 302 IPC to Section 304 Part I IPC and reduced sentence from life imprisonment to ten years imprisonment while maintaining fine amount.
— Paras 34 to 36.

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Bail during appeal — Benefit under Batchu Rangarao principles — Direction to surrender.

Since appellant had earlier been enlarged on bail during pendency of appeal under principles laid down in Batchu Rangarao v. State of Andhra Pradesh, Court directed accused to surrender before trial Court to serve remaining sentence after modification of conviction.
— Para 36(ii). 

Specific Relief — Suit for specific performance — Limitation under Article 54 of Limitation Act — Actual knowledge of refusal — Triable issue. Where plaintiff specifically pleaded that he acquired knowledge of registered sale deeds and gift deed executed behind his back only in January, 2010 and suit was filed within three years thereof, question whether plaintiff had earlier knowledge or deemed notice was held to be a triable issue requiring evidence and not a ground for rejection of plaint at registration stage. — Paras 4, 5, 9, 35 & 36.

 AP HIGHC

Civil Procedure Code, 1908 — Order VII Rule 11(d) — Rejection of plaint — Limitation — Scope of enquiry at threshold stage.

For deciding rejection of plaint under Order VII Rule 11(d) CPC, Court must confine itself only to plaint averments and documents filed along with plaint. If on meaningful reading of plaint, suit is ex facie barred by law, plaint can be rejected. However, where determination of limitation involves disputed questions of fact or mixed questions of law and fact requiring evidence, plaint cannot be rejected at threshold.
— Paras 29 to 33.

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Specific Relief — Suit for specific performance — Limitation under Article 54 of Limitation Act — Actual knowledge of refusal — Triable issue.

Where plaintiff specifically pleaded that he acquired knowledge of registered sale deeds and gift deed executed behind his back only in January, 2010 and suit was filed within three years thereof, question whether plaintiff had earlier knowledge or deemed notice was held to be a triable issue requiring evidence and not a ground for rejection of plaint at registration stage.
— Paras 4, 5, 9, 35 & 36.

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Article 54, Limitation Act, 1963 — Two limbs explained.

The Division Bench reiterated that Article 54 of Limitation Act contains two distinct parts:
(i) where a date is fixed for performance, limitation runs from such fixed date;
(ii) where no date is fixed, limitation commences when plaintiff has notice that performance is refused.
The expression “date fixed for performance” denotes a definite and crystallized calendar date.
— Paras 15 to 24.

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Transfer of Property Act, 1882 — Section 3 — Constructive notice — Registration of document — Mixed question of fact and law.

Constructive notice under Section 3 of Transfer of Property Act cannot automatically be imputed merely because document is registered. To attribute deemed notice, Court must determine whether party would have known fact but for wilful abstention from enquiry/search or gross negligence. Such determination ordinarily requires evidence and trial.
— Paras 25 to 28 & 36 to 37.

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Registered documents — Deemed notice — Cannot override specific plea of actual knowledge at threshold stage.

Where plaint specifically disclosed date of actual knowledge of registered sale deeds/gift deed, Court held that deemed notice from date of registration under Explanation I to Section 3 T.P. Act could not be invoked at preliminary stage under Order VII Rule 11 CPC without evidence disproving plaintiff’s plea regarding actual knowledge.
— Paras 31 to 38.

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Order VII Rule 11 CPC — Drastic power — Strict compliance necessary.

Power to reject plaint under Order VII Rule 11 CPC being drastic in nature, conditions prescribed therein must be strictly satisfied. Sham litigation alone can be terminated at threshold; where adjudication requires evidence, suit must proceed to trial.
— Paras 30 & 31.

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Specific Performance — Refusal of performance — Reply notice — Relevant date for limitation.

Where plaint averments disclosed that plaintiff issued legal notice calling upon defendants to execute sale deed and refusal emerged through reply notice, such refusal constituted relevant point of time for computation of limitation under second limb of Article 54, and not necessarily date of registration of alienation deeds executed inter se family members.
— Paras 9, 35 & 38.

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Registration of document — Notice to world — Rebuttable presumption.

Though registration of document ordinarily constitutes notice to world, such presumption is rebuttable. Person alleging later actual knowledge may establish same by evidence during trial.
— Paras 32, 36 & 37.

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Limitation — Mixed question of law and fact — Cannot ordinarily be decided without evidence.

Court reiterated that when plea of limitation depends upon determination of actual knowledge, deemed notice, refusal of performance or surrounding circumstances, issue becomes mixed question of law and fact and requires full-fledged trial.
— Paras 31 to 38.

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Appellate Court — Rejection of plaint set aside — Direction to register suit.

The Division Bench allowed appeal, set aside order rejecting plaint under Order VII Rule 11(d) CPC and directed revival and registration of suit, leaving all questions relating to limitation open for adjudication during trial.
— Paras 39 to 41.