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A- 48
GUJARAT NATIONAL LAW UNIVERSITY
INTRA ROUND MOOT COURT COMPETITION 2022
IN THE HON’BLE HIGH COURT OF DELHI
Civil Appeal No. 2938 of 2022 Under Article 226 of the constitution of
Atlantis
In the matter of
Petro Tera Ltd ………………………………………… Appellant
v.
O&G Ltd.
& ……………………… Respondent
Central Government of Atlantis
Contents
INDEX OF AUTHORITIES .................................................................................................................................. 3 LIST OF ABBREVIATIONS ................................................................................................................................. 5 STATEMENT OF JURISDICTION ...................................................................................................................... 7 STATEMENT OF FACTS ..................................................................................................................................... 8 ISSUES RAISED ................................................................................................................................................. 10
- Whether the writ petition filed by Petro Tera Ltd. Against O&G Ltd. & the Central Government of Atlantis is maintainable. ................................................................................................................................... 10
- Whether the Issue of Writ of Mandamus to perform legal duty against the Central Government for the refund of Sales tax is valid................................................................................................................................ 10
- Whether the clause 1.6 mentioned is unreasonable, arbitrary and violative of Article 14 of the Constitution of India.............................................................................................................................................................. 10 SUMMARY OF ARGUMENTS .......................................................................................................................... 11 ARGUMENTS ADVANCED .............................................................................................................................. 13 1. 1. Whether the writ petition filed by Petro Tera Ltd. Against O&G Ltd. & the Central Government of Atlantis is maintainable. ............................................................................................................................ 13
- 2. Whether the Issue of Writ of Mandamus to perform legal duty against the Central Government for the refund of Sales tax is valid. ................................................................................................................ 17 3. Whether the clause 1.6 mentioned is unreasonable, arbitrary and violative of Article 14 of the Constitution of India. ...................................................................................................................................... 22 PRAYER ............................................................................................................................................................. 24
- Dharam Chand Gupta V. Indian Oil Corprn. Ltd., 130(2006) DLT 102.
- Harbansal Sahnia & Anr. V. Indian Oil Corpn. Ltd. & Ors., AIR 2003 SC 2120. STATUTES Central Sales Tax (Levy on Petroleum Products) Act, 1991. CONSTITUTION ARTICLE 12 OF CONSTITUTION OF INDIA. ARTICLE 14 OF CONSTITUTION OF INDIA. ARTICLE 226 OF CONSTITUTION OF INDIA.
LIST OF ABBREVIATIONS
And Rs. Rupees Hon’ble Honourable Ltd. Limited i.e That is Anr Another Ors. Others CAL Calcutta Bom Bombay SC Supreme Court ALL Allahabad AIR All India Reporter Art. Article UOI Union Of India Mfg. Manufacturing MANU Manupatra SCC Supreme Court Cases HC High Court
STATEMENT OF JURISDICTION
The counsels for the petitioner have approached this Hon’ble Court under Article 226 of the Constitution of Atlantis (The laws and constitution of the Republic of Atlantis are Pari material to the laws and Constitution of the Republic of India.) to file a writ petition challenging the change in the price of goods for reasons other than taxes and refund of taxes.
STATEMENT OF FACTS
- Petrol is subject to sales tax by the Central Government of Atlantis under the statutory provision of Central Sales Tax (Levy on Petroleum Products) Act, 1991.
- Sales tax are levied only on the first sale of Petrol and Diesel and the subsequent/ retail sales are exempt.
- Petrol prices are not controlled by the Central Government under any law.
- Section 11 of the above act mentions that “ Any person claiming refund of any tax may make an application with jurisdictional tax authority before the expiry of three years from the date of payment of tax. ”
- Here, Petro Tera Limited (Appellant) entered into a dealership agreement with O&G Ltd. (Respondent 1 ). O&G Ltd is a state-owned company and distributor in this agreement and Appellant is the dealer.
- Respondent 1 will deliver goods at the dealer’s premises at the rate prevalent as of the date of delivery. The corporation will sell goods at a price of 50 paise per litre less than the retail price as per clause 1.5.
- The retail price of petrol will be determined daily by Respondent 1 only and the dealer cannot sell the corporation’s goods at a higher price set by Respondent 1 as per clause
- Disputes arising out of or in relation to this contract shall be decided by arbitration comprising of an arbitral tribunal of three members.
- The state increased the applicable sales tax on petrol from Rs. 15 per litre to Rs. 25 per litre. On each increase in sales tax, the corresponding increase in retail price was not done immediately.
- Elections were scheduled for several states in Atlantis in April and May 2022. On 5.01.2022 the Central Government of Atlantis (Respondent 2) announced a reduction in sales tax on petrol from Rs. 25litre to Rs. 20 per litre from 6.01.2022.
- Respondent 2 from their official Twitter handle said that “ We have taken swift actions to ease the burden of rising petrol prices and we are confident that such benefit will be passed on at the earliest. ”
- On 6.01.2022, Respondent 1 Reduced the retail price of petrol by Rs. 5 per litre. Appellant had procured a significant volume of petrol on 4.01.2022 unsold.
- The Appellant had to sell the existing Petrol at a lower price than the procured price at the cost of an unbearable amount of losses.
ISSUES RAISED
- Whether the writ petition filed by Petro Tera Ltd. Against O&G Ltd. & the Central Government of Atlantis is maintainable.
- Whether the Issue of Writ of Mandamus to perform legal duty against the Central Government for the refund of Sales tax is valid.
- Whether the clause 1.6 mentioned is unreasonable, arbitrary and violative of Article 14 of the Constitution of India.
SUMMARY OF ARGUMENTS
- Whether the writ petition filed by Petro Tera Ltd. Against O&G Ltd. & the Central Government of Atlantis is maintainable. The writ petition filed by appellant under Article 226 of the Constitution is maintainable. It has been held by Supreme Court by various judgement that even if there is the presence of arbitration clause the petition can be entertained before the High Court. The arbitration clause is not absolute and the appellant can approach absolute bar to availing remedies under article 226 of the Constitution. As the appellant felt that the State could misuse it’s power over the appellant company as stated by the Hon’ble Supreme Court “The writ jurisdiction under Article 226 was held to be a valuable constitutional safeguard against an arbitrary exercise of state power or misuse of authority.” Since there is violation of fundamental Rights and non- performance of legal duty, the appellant can rightfully approach the Hon’ble High Court.
- Whether the Issue of Writ of Mandamus to perform legal duty against the Central Government for the refund of Sales tax is valid. The appellant has rightfully issued a writ of Mandamus to perform legal duty against the Central Government for the refund of Sales tax as itself the authorities of Central Government published a written statement in twitter from their official website that they should be returning the sales tax levied. But they didn’t performed their promise. Furthermore, here comes the doctrine of Legitimate Expectation where person may have a reasonable expectation of being treated in a certain way by administrative authorities owing to some consistent practice in the past or an express promise made by the concerned authority. And further the Doctrine of Promissory estoppel means a party may recover on the basis of a promise made when the party's reliance on that promise was reasonable, and the party attempting to recover detrimentally relied on the promise. These 2 Doctrine compel the Government to return the sales tax as promised.
ARGUMENTS ADVANCED
1. 1. Whether the writ petition filed by Petro Tera Ltd. Against O&G Ltd. & the Central Government of Atlantis is maintainable. 1. Both the Central Government of Atlantis and the O&G Ltd. Are under the state as mentioned in paragraph 5 of the above facts that Respondent 1 (‘O&G Ltd) is a State-owned company and Respondent 2 (Central Government) is the state authority. The term “State” has been defined under article 12 of the Constitution of India i.e “ The state” includes the Government and the parliament of India and the Government and Legislature of each of the States and all local or other authorities within the territory of India or under the control of Government of India.”^1 Here, both the Respondent 1 And respondent 2 are under the definition of State.
- It is being contended in case of General Manager, Kisan Sakhari Chini Mills Ltd., Sultanpur, U.P. v. Satrughan Nishan^2 it was held that this corporation is not included in State as it only holds 50% share in the company. Since, Government owns more than 75% of share in O&G Ltd. It comes under the state. 3.Further it was contended that according to Article 226 of the Constitution of India “ Notwithstanding anything in Article 32 every High Court shall have powers, throughout the territories in relation to which it exercise jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibitions, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose. The power conferred by clause ( 1 ) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories .”^3 1 (^1) INDIA CONST. art. 12. (^2) General Manager, Kishan Sakhari Chini Mills Ltd., Sultanpur, U.P V. Satrughan Nishan & Ors., MANU/SC/0795/2003. (^3) INDIA CONST. art. 226.
- It is being stated above that Hon’ble High Courts have been conferred the power to exercise Jurisdiction to issue writ under Article 226 of the Constitution of India. Since Both the Respondent 1&2 fall under the definition of state, issue of writ can be filed against them for the violation of Fundamental Rights or Principles of Natural Justice or else which deemed fit.
- In Harbanslal Sahnia v. Indian Oil Corpn. Ltd.^4 it was held that the rule of exclusion of writ jurisdiction by reason of availability of an alternative remedy, is a “rule of discretion” and not one of “compulsion”. The Supreme Court held that in spite of the availability of an “alternate remedy”, the High Court may still exercise its writ jurisdiction in the event that: (i) the writ petition seeks enforcement of fundamental rights; (ii) there is a failure of the principles of natural justice; and (iii) the orders or proceedings are wholly without jurisdiction or the vires of an Act is under challenge. In the facts of that case, the Supreme Court took the view that the High Court ought to have exercised its jurisdiction under Article 226.
- It is being stated in the above Facts by the appellant that there is violation of Article 14 of the constitution of India in the above mentioned clause 1.6 of the agreement in facts of the case as arbitrary, unreasonable and Excessive authority. Since, there is a violation of Fundamental right the appellant has the jurisdiction to file a writ under 226 in the High Court irrespective of the arbitration clause mentioned.
- In the above stated facts of the case, the arbitration clause cannot absolutely bar the remedy to invoke writ jurisdiction under Article 226 of the constitution of India when one party is a state instrumentality. This has been reiterated in the Judgements given below by the Hon’ble Supreme Court of India.
- The Hon’ble Supreme Court said in the judgement in ABL International Ltd. V. Export Credit Guarantee Corporation of India^5 that in ABL International, reliance was placed upon the long line of precedents that held that writs under Article 226 are maintainable for asserting contractual rights against the state, or its instrumentalities, as defined under Article 12 of the (^4) Harbanslal Sahnia & Anr. V. Indian Oil Corpn. Ltd. And Ors., AIR 2003 SC 2120. (^5) ABL International Ltd. V. Export Credit Guarantee Corporation of India, (2004) 3 SCC 553.
The Central Government also made the State from their official twitter handle saying that “you should not be worried. We will refund the tax paid on the goods held in stock and an appropriate will be issued in this regard.” as mentioned in the facts of the case. It clearly seems that Central Government is not performing its Duties. And holding the State Owned Company O&G Ltd. Liable for the clause 1.6 and price changes which is unreasonable, arbitrary and violative of Article 14. Hence it can be clearly seen that the appellant have enough reasons to approach this Hon’ble High Court. As the appellant felt that the State could misuse it’s power over the appellant company as stated by the Hon’ble Supreme Court “ The writ jurisdiction under Article 226 was held to be a valuable constitutional safeguard against an arbitrary exercise of state power or misuse of authority ”.^9 3 (^9) UNITECH Limited & Ors. v. Telangana State Industrial Infrastructure Corporation (TSIIC) & Ors. 2021 SCC OnLine SC 99.
- 2. Whether the Issue of Writ of Mandamus to perform legal duty against the Central Government for the refund of Sales tax is valid.
- Mandamus literally means a command. The essence of mandamus s in England was that it was a royal command issued by the King’s Bench directing performance of a legal duty.^10
- Mandamus lies against authorities whose duty is to perform certain acts and they have failed to do so. Under following circumstances mandamus can be issued : (i) The applicant must have a legal right to the performance of a legal duty^11. It will not issue where to do or not to do an act is left to the discretion of the authority^12. It was refused where the legal duty arose from an agreement which was in dispute^13. The duty to be enforced by a writ mandamus could arise by a provision of the Constitution^14 or of a statute^15 or of the common law.^16
- As stated above in the Facts of the case the Central Government increased the sales tax on Petrol and diesel by Rs 20 on 5.01,2022. Appellant had procured significant amount of petrol on 4.1.2022 and moat of the stock was still unsold. Therefore the appellant had to sell the rest of the petrol at loss.
- According to the Central Sales Tax (Levy on Petroleum Products) Act, 1991, the sales tax is levied on petrol and diesel only on the first sale and all subsequent sales/retail sales are exempt. However, coming to the facts of the case the Appellant is rightful demanding the refund of the sales tax and it’s State’s legal duty to perform its obligation. 4 (^10) UOI & Anr V. S.B Vohra & Ors., A.I.R 2004 S.C 1402. (^11) Dr Rai Shivendra Bahadur V. Governing Body of the Nalunda College, AIR 1962 S.C 1210. (^12) Controller of Monghyr V. Keshav Prasad, AIR 1962 S.C 1 694. (^13) Carlsbad Mineral Water Mfg. Co. V. H.M Jagtiani, AIR 1952 CAL 315. (^14) Chintaman Rao V. State Of MP, AIR 195 2 SC 118. (^15) State of Bombay V. Hospital Mazdoor Subba, AIR 19 66 SC 334. 16 , (^) Juggilal kamalapat V. The Collector of Bombay, AIR 1946 BOM 280.
- Further, in the judgements namely Bacchittar Singh v. State of Punjab^22 and State of Bihar v. Kripalu Shankar^23 held that In Bacchittar Singh (supra), he relies upon paragraph 9 to argue that the said judgment clearly recognizes the proposition that until and unless there is a formal order modifying the decision or introducing a decision by the Government, the same cannot give rise to application of the doctrine of legitimate expectation. Relying on Bacchittar Singh (supra), it is urged that the cabinet form of government and the collective responsibility thereto, would mean that merely a statement of the Rajpramukh cannot have a binding nature on the government and its policy decisions. In Kripalu Shankar (supra), it has been laid down that internal notes are privileged documents Signature Not Verified Digitally Signed By:DINESH SINGH NAYAL Signing Date:22.07.2021 14:53:18 and even if internal notes may violate an order, until and unless the said decision is authenticated by the Government and communicated to the public, it does not have a binding nature.
- Therefore from this following case laws and judgements, it can be said that the Central Government is liable refund the taxes as the statement been made by the finance minister itself.
- Further, as contended the statement made by the Respondent 2 Give rise to Doctrine of Promisory Estoppel. The same has been explained the following judgement of Union of India V. Anglo Afghan Agencies^24 that Earlier promissory estoppel was never applied against the government. But with time, this case changed the position. To uplift export of woollen garments to Afghanistan, the government made a declaration about specific modifications regarding the import of specific raw materials. 5 (^22) Bacchitar Singh V. State of Punjab, AIR1963 SC 395. (^23) State of Bihar V. Kripalu Shankar, AIR 1987 SC1554. (^24) UOI V. Anglo Afgan Agencies,(1968) 2 SCR 366.
But later, only limited modifications were permitted, not all modifications as promised were permitted. The government was held liable by the Supreme Court as they were stopped by its promise. So, the promissory estoppel was applied against the Government by the courts. The doctrine of promissory estoppel was fully accepted in India devoid of notion of consideration and made it familiar as a reason of action to the parties to whom the promise was made.
- Further, The Supreme Court held: Signature Not Verified Digitally Signed By:DINESH SINGH NAYAL Signing Date:22.07.2021 14:53:18 • No pre-existing relationship between the parties is required for enforcement of such promise or an assurance. • If one of the parties had made, through its words or conduct, a clear and unequivocal promise intending to create legal relations, the said doctrine of promissory estoppel could be invoked. • If the person has acted on the strength of such promise, then the promise would be binding.
- Since We are fulfilling all the required criteria set by the Hon’ble Supreme Court , the appellant is deserve to get refund of tax. As its been observed by the Supreme court “ the true principle of promissory estoppel, therefore seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective whether there is any pre-existing relationship between the parties or not. ”^25 6 (^25) Motilal Padampat Sugar Mills Co. Ltd. V. State OF Uttar Pradesh, AIR 1979 SC 621.
