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, the opposite party directed the petitioner to produce the 'tankerwise ocean loss report', bill of lading and 'proration report' in respect of all receipts/dispatches made at /from Lighterage Terminal at Paradeep including complete accounts of receipts and disposal of goods received at the terminal and all the documents and records relating thereto. Pursuant to such letter, the petitioner appeared before the opposite party on various dates. The petitioner by its letters dated 23.04.2007, 21.06.2007 and 10.09.2007 intimated the opposite party regarding the movement of product from Paradeep to Haldia Port and the petitioner also explained to the Sales Tax Officer regarding the safe keeping arrangement and submitted that the petroleum products were kept by BPCL under the safe keeping agreement with other Oil Companies for safe keeping. Since the product belongs to the storing Oil Companies and was taken delivery at Haldia by them, the question of paying any tax by treating the aforesaid arrangement as inter- state sales does not arise at all. On 10.09.2008, it was submitted by the petitioner orally that if the learned STO is not satisfied with the clarifications or the points agitated earlier, the petitioner should be given an opportunity of personal hearing so that there would be no levy of tax on the transactions claimed by the petitioner. The petitioner also submitted the sample copies of safe keeping statement jointly signed by HPCL and BPCL for the product of HPCL which was kept at BPCL tanker and subsequently loaded into cargo charted HPCL as an illustration as to understanding between different Oil Companies regarding the storage and movement of goods from Paradeep. As the opposite party was very much busy no oral hearing has taken place on 10.09.2008. Thereafter, the opposite party passed the order of reassessment on 24.12.2008 under Rule 12(8) of the CST(O) Rules by holding that the returns filed by the petitioner under the OST and CST Act during the period under assessment as well as the documents/statement furnished at the time of assessment, the transaction effected through Paradeep Terminal have never been reflected in the return nor disclosed at the time of assessment. The learned STO also held that the movement of goods from Paradeep in Orissa to Haldia in West Bengal having inextricable link in order to supply or sale of the goods by the receiving Oil Companies in the manner that the movement cannot be dissociated without breach of mutual understanding between the BPCL and the receiving Oil Companies and thus, the aforesaid transaction involving such goods from one State to another pursuant to the prior agreement is an inter-state sale falling under Section 3(a) of the CST Act. With the above observations, the opposite party came to the conclusion that delivery of 38,881 KL of HSD and 29,728 KL of SKO by BPCL ex-tanker at the Port of destination at Haldia to other Oil Companies, i.e., IOC/IBP/HPC though are clearly inter-state sales falling under Section 3(a) of the CST Act, have not been reflected in the return filed for the respective return period by the petitioner. Therefore, the petitioner is liable to pay tax for such inter-state transaction and accordingly the impugned assessment order was passed raising levy of demand of Rs.45,28,82,697/- including penalty to the tune of Rs.27,17,29,618.27. Hence, the present writ petition.

9. In view of the safe keeping agreement, the alleged transaction does not fall within the ambit and/or sphere of Section 3(a) of the CST Act. In the present case, there was no contract for sale of goods between the petitioner and HPCL or the petitioner with other Oil Companies and therefore in absence of contract of sale, the movement of goods from one state to another was of no consequence. The goods had never moved from Paradeep to Haldia pursuant to any contract of sale and no sale was concluded at any point of time at Haldia. The learned STO failed to bring home the charge of inter-state sale between the parties against a money consideration. The movement of goods from Paradeep to Haldia cannot be linked to any supply or sale of goods and the said finding of opposite party is based on surmise and presumption.

Hence, the case is reopened u/r.12(8) of the CST (O) Rules for re-assessment. Accordingly, notice u/r.10 of the CST (O) Rules is issued to the dealer-Company along with a letter disclosing the facts for reopening the case, fixing the date to 07.02.2007."

31. Thus, from the above order dated 30.12.2006, it is ample clear that the Assessing Officer applying his mind and being satisfied that the alleged turnover had escaped from assessment, initiated reassessment proceeding. Further perusal of the assessment order passed under Rule 12(8) of the CST (O) Rules also reveals that on receiving report from the Additional Commissioner, the Assessing Officer applied his mind, examined the case of the assessee with reference to the copy of the hospitality arrangement between BPCL and HPCL and the statement of inter-state sale of petroleum products dispatched by HPCL from Lighterage Terminal at Paradeep to other oil companies outside the State filed by the petitioner, documents and previous order of assessment and referring to all the relevant provisions of the CST Act came to the conclusion that there has been evasion of tax by the petitioner-assessee. The delivery of 38881 KL of HSD and 29728 KL of SKO by BPCL from Lighterage Terminal of Paradeep to outside State oil companies, i.e., IOC/IBP/HPC are clearly inter-state sales falling under Section 3 (a) of the CST Act and the same have not been reflected in the return filed for the respective return periods and have been kept away from the knowledge of the statutory assessing authorities. The returns don't reflect the true and correct picture of the business transactions although it has been so declared in the returns itself. The declarations furnished don't also appear to have been truthfully made.

In view of the position so stated, despatches of goods outside the State of Orissa by sea through Paradeep terminal by BPCL, claimed ambiguously as safe keeping of the product of HPCL in BPCL storage tanks and loading of the said product on behalf of HPCL in the tanker, based on advice from HPCL, is contrary to material evidence and substantial part of the said transactions is inter state sale liable to tax in the hands of BPCL in the State of Orissa.