The mineral oil of Assam is contributing substantial amount of tax revenue to the State Exchequer. This is derived from crude oil, extracted from the oil fields of Assam. The crude oil- potentiality was there since centuries back, but no efforts or endeavour were there to unearth the said potential resources. After fall of the Ahom regime, the British Raj started its reign in this territory, consequent upon execution of Yandabu Treaty with the Mans in 1826 A.D. The British Raj had full conviction in mind that the soil of Assam bears acute potentiality in the field of agriculture, forest and mineral resources and there was ample scope for acceleration of economy.
The tea plants were discovered in abundance in the forest areas of Upper Assam. There was strong hunt to unveil such potential resources in other nearby areas. They started wide range of expedition giving priority to undivided Sivasagar and Lakshimpur districts. When achieved, this was extended to the western and southern part of the State. Gradually, they installed factories, adjacent to the tea garden areas and started commercial production keeping in mind to make growth of economy. The quality of Assam tea was excellent. Consequently, the Assam tea occupied a prominent place in the global market. The flow of income was by leap and bounds. There was no measure of tax on the sale or purchase of tea at the early stage. The same was introduced from the 24th December, 1947, when the Sales Tax Law came into operation in the State. Of course, a tax law on income of agriculture was introduced from the 1st April, 1939, which till now remains operative.
The British Raj equally felt that there was potentiality of mineral oil in the soil of Assam. The casual flame of fire was visible in soils, from time to time. A drilling operation was started in the year 1867. Ultimately, it yielded a positive result and for the first time in the history of Asian continent, crude oil field was discovered in Digboi area of the present Tinsukia district in the year 1889 A.D. Steps were taken to establish a mini oil refinery at Digboi and it was commissioned in 1901. Gradually, some more oil fields were discovered in and around Digboi including the Makum area. It is worthy to mention that this refinery used to feed fuel to the military convoy on its way to the war field in Burma area (now Myanmar), when Word War II was in full swing.
In the middle part of twentieth century, a good numbers of oil fields were discovered in a number of places in Sivasagar and Dibrugarh districts. The Government of India (Central Government) instead of installing a big-sized refinery in Assam, planned to pump out such crude oil to the Barauni Oil Refinery of Bihar. Naturally, a great irritation cropped up in the minds of the people Assam and they started agitation protesting against such odds depriving the people of Assam to get the legitimate benefit on the State resources. The decision of the Central Government was to give cognizance to the accrued anger of the people and pacify them by installing another medium sized refinery in Noonmati area in the heart of Guwahati city was an act of betrayal in as much as the Central Government simultaneously took decision to pump out a major quantity of such extracted crude oil to Barauni Refinery of Bihar. The Barauni refinery at earlier stage did not pay tax on such inter-State sales of crude oil to the State of Assam and challenged any act of levy. Fortunately, the Supreme Court of India (Apex court) delivered a historical judgment affirming the claim of the Government of Assam in getting its lawful revenue on such sales. Thereafter, during the regime of Mrs. Indira Gandhi, piloting the Indian Government, a refinery was installed at Dhaligaon of Bongaigaon to be fed by the crude oils, extracted from the soil of Assam. A big-sized oil refinery was as well installed at Numaligarh of Golaghat district, which is a product of six years’ long Assam movement on the foreigners’ issue at the behest of the All Assam Students Union (AASU), associated by many other like mined political and non-political organizations..
The Legislatures of Assam incorporated the item ‘crude oil’ in the tax schedule of the Assam Entry Tax Act, 2001(Entry Act) from the 4th October, 2004 making way to levy tax vis-à-vis to augment the State revenue of the State in respect of import of such goods from places out side the State of Assam to a local area in Assam as well as in respect of such import from one local area to another local area within the State of Assam. As a consequence, barring the Digboi refinery, all other refineries were roped in the tax net of the Entry Act. The Entry Act of 2001 met with a serious challenge and the Gauhati High Court declared the said Act as unconstitutional and held to be void. However, the said Act was reintroduced from 1st June, 2008 with a retrospective effect and validated the tax levy and realization including the tax to be realized in the interim period of non-existence and non-operation of any EntryAct. The matter is reported to be under sub-judice of the Apex Court.
Parliament introduced a provision in the Central Act in 1972, whereby any dispatch of taxable goods to places out side the State not by reasons of sales, but by way of stock transfer has been made admissible for exemption of tax under the said Act. Previously, such exemption of tax was conventional, but now it was legalized. As a matter of fact, such exemption of tax has a constitutional sanction in as much as sub-clause (a) of clause (1) of Article 286 of the Constitution restricted the State any levy of tax on the goods, so moved and sold out of the State. The provisions of Central Act, however, strictly laid down conditions that- (i) for such exemption, the burden of proof rested with the dealer, claiming such stock transfer vis-à-vis exemption of tax; (ii) the documents and evidences of dispatch and sales are to be produced; (iii) a declaration in Form ‘F,’ containing, the dispatch particulars, transfer invoices, value of the goods, so moved; (iv) the exemption of tax is not automatic and it is subject to enquiry by the competent taxing authority, allowing such exemption. As a part of inquiry, the said authority may insist on the compliance of the requirements, as laid down in sub-rule (4) of Rule 4 of the Central (Assam) Rules, 1957. Another, note worthy point, which is to be taken into consideration is that an ‘agreement’ in regard to such stock transfer and ‘sale’ out of the State and the ‘sale notes’ confirming, inter-alia, payment of tax in the respective State, as ought to have received by the transferor of the goods, is to be produced.
Form ‘F’ clearly specified that such movement of goods on stock transfer should be made by road transport, railway, steamer, air or post office and not other wise and furnishing the dispatch particulars in the said form viz consignment notes & dates etc. has been made imperative.
It has, of late, come to the light that some Oil refineries of Assam have been making the transfer of stock of ‘petrol’ and ‘diesel’ through pipe lines installed by them. This is a unilateral arrangement and the ball of such stock transfer remained at the court of such refinery. No organization for movement of such oil products was involved in the scenario. The taxing authorities might have entertained such claims of exemption. Whether such episode of stock transfer through pipe lines, has really any legal base? In such self-designed exercise, it is apprehended that the drainage of crore of State revenue has become obvious. A coparative study of the Central tax revenue collection for last three or four years may unveil the actual position.
We hope, this discussion will receive attention of the Government of India to find out a suitable remedy.