Bombay High Court
Petroleum Dealers Association , Dadra ... vs Union Of India And Ors on 3 May, 2019
Author: Sarang V. Kotwal
Bench: Akil Kureshi, Sarang V. Kotwal
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.5714 OF 2019
Petroleum Dealers Association .. Petitioner
Versus
Union of India & Anr. .. Respondents
Mrs. Nikita R. Badheka for petitioner
Mr. Chirag Mody with mr. Ashok Purohit & Ms. Raveena Yadav I/b.
Ashok Purohit & Co. for respondent No.2.
CORAM : AKIL KURESHI &
SARANG V. KOTWAL, JJ.
DATE : 3rd May 2019. P.C.
The petitioner is an association of petroleum dealers. The petitioner has challenged various communications issued by the respondent Nos. 2 and 3, Indian Oil Corporation Ltd. and its authorities asking the members of the petitioner association to provide bank guarantee equivalent to the amount calculated on the basis of average historical sales or previous month's sales, whichever is higher. One such communication dated 7 th February 2019 is produced at Annexure "B". In such communication, the Indian Oil Corporation has conveyed to the petrol pump dealers that there are instances in the past when some of the dealers had ::: Uploaded on - 03/05/2019 ::: Downloaded on - 04/05/2019 04:42:53 ::: YBG 2 916-wp-5714-19 defaulted in remitting tax collections to the Government, resulting in the Union Territory of Dadra, Nagar Havbeli not issuing "C" form. In the result, the Indian Oil Corporation was held liable to pay differential tax liability of these dealers to the Government of Gujarat. Such liability runs into crores of rupees. Therefore, in order to avoid similar defaults in future guidelines have been issued for obtaining bank guarantee from retail outlet dealers to cover any possible taxes.
2] The case of the petitioner is that insistence of demanding bank guarantee from dealers is wholly illegal and impermissible. The policy is arbitrary and is violative of rights of the dealers to carry on business and trade. The petitioner relies upon a decision of Gujarat High Court in the case of Manan Autolink Pvt. Ltd. Vs. State of Gujarat (Special Civil Application No.4518 of 2017) decided on 14/17th July 2017 to contend that even in case of default of payment of tax, "C" forms cannot be withheld. The petitioner relies upon interim orders passed by Madras High Court staying such policy of Indian Oil Corporation in support of interim prayers.
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916-wp-5714-19 3] This petition is taken out by urgent circulation. The respondents have appeared on advance notice. They would require time for filing reply. Without gathering full facts and response from the respondents, we do not find this fit case for grant of reliefs as prayed for. Prima facie it would appear that the action taken by the Indian Oil flows from historical background, mentioned in the impugned communication and noted above. Further, essentially, the relationship between the dealers and Indian Oil Corporation is one of contractual nature. It may be that Indian Oil being a State within the meaning of Article 12 of the Constitution of India would have to act reasonably, even in course of such contractual relation. Nevertheless, the law always recognises a degree of latitude even in State player while entering into private contracts. Naturally for such ground, at this stage no interim relief can be granted. S.O. 13 th June 2019. Respondents to file reply before such date.
(SARANG V. KOTWAL, J) (AKIL KURESHI, J)
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