Ahmedabad judges confirm â€کgas' is also â€کmineral oil'

Vol 12, PW 2 (12 Jun 08) Midstream & Downstream
     

Judges at the Ahmedabad income tax tribunal hearing the Niko case also put to rest another misconception floating around.

During his budget speech, finance minister Chidambaram sowed the seeds of confusion when he told MPs there might be some doubt about whether the term â€کmineral oil’ included â€کgas’. On the same day but several hundred miles away in Gujarat, Judges RP Garg and DT Garasia were in no doubt.

Relying heavily on Indian and foreign oil and gas laws plus widely accepted dictionaries and global industry reference books, they concluded that the term â€کmineral oil’ includes â€کgas’. “All the material including relevant provisions dealing with the business of exploration and production have used the word â€کmineral oil’ in the same context while introducing provisions under the head â€کoil and gas’ which are always used together,â€‌ said the judges.

“Since there is cabinet and parliament approval for NELP and consequently various contracts based on NELP have been entered into by the government of India, it makes it absolutely clear that treatment of â€کoil and gas’ is inseparable for all purposes including tax provisions.â€‌ To back their case the judges cited the following Indian laws where the term â€کmineral oil’ clearly includes the term â€کgas’: آ· The Oilfields (Regulation and Development) Act, 1948 آ· Mines Act, 1952 آ· Mines and Minerals (Development and Regulation) Act, 1957 آ· Petroleum and Natural Gas Rules, 1959 آ· Petroleum and Minerals Pipelines (Acquisition of Right of User in Land) Act, 1962 آ· Oil Industry (Development) Act, 1974.

Judges Garg and Garasia admitted there is no definition of â€کmineral oil’ in the Income Tax Act, 1961 but suggested using common sense for the obvious definition. “Various statutes refer to petroleum and natural gas as â€کmineral oil’,â€‌ said the ruling.

“None have excluded natural gas from the concept of â€کmineral oil’ (and) hence there should not be any element of doubt on this issue.â€‌