Legal

Texas Comptroller of Public Accounts details recent bunker tax refund decision

Spokesman points out to Manifold Times Texas Motor Fuels Tax Code leading to decision against US $2.4 million bunker tax refund of local oil player.

Published

6 years ago

February 12, 2019

Admin

A final decision by the Administrative Law Judge (ALJ) of the State Office of Administrative Hearings (SOAH) to not grant a Texas-based oil and gas pipeline and storage company a US $2.4 million tax refund on bunkers delivered to international vessels at a Texas port was due to rules implemented by the Texas Motor Fuels Tax Code.

A Texas Comptroller of Public Accounts spokesperson Wednesday summarised and pointed out to Manifold Times fuel oil in the U.S. being categorised into various numbers:

Number 1 fuel oil – Very light oils (Jet Fuels, Kerosene, Gasoline)
Number 2 fuel oil – Diesel, #2 Fuel Oil, and Light Crudes
Number 3 fuel oil – Most crude oils
Number 4 fuel oil – Usually commercial heating oil
Number 5 fuel oil – (Bunker Fuel) has a higher BTU content and requires preheating to 170 – 220 °F (77 – 104 °C). It cannot be used in a motor vehicle and therefore does not meet the definition of a motor fuel
Number 6 fuel oil – (Bunker Fuel) requires preheating to 220 – 260 °F. Bunker fuel is also called Heavy Fuel Oil, Furnace Fuel Oil, Bunker C Fuel Oil, Residual Fuel Oil, and Number 6 Diesel Fuel. It is what remains of the crude oil after gasoline and the distillate fuel oils are extracted through distillation.

“Fuel Oil numbers 1-4 are subject to the Motor Fuels Tax Code but Numbers 5-6, if clearly identified as bunker fuel on the sales invoice, would be subject to sales tax licensing and rules in the Texas Sales & Use Tax Code,” he told Manifold Times.

The unidentified tax claimant was selling bunker fuel to ships from various countries and filed franchise tax refund claims for the reporting years of 2011 through 2013 in 2015, according to the hearing document seen by Manifold Times.

The requested tax refund for fuel oil sales from a Texas port to a foreign registered ship are as follows:

Report Year	Requested Refund
2011	($635,880)
2012	($1,275,257)
2013	($464,453)
Total	($2,375,590)

The Texas Comptroller of Public Accounts (Comptroller) denied the requests because they did not include the necessary documentation.

The claimant later requested a refund hearing contending that its Texas receipts were overstated because they include sales of fuel oil that was used by foreign flagged vessels.

“In the instant matter, Claimant contends its original franchise tax returns erroneously included receipts from the sale of bunker fuel oil to foreign-registered vessels. It argues that the receipts at issue are not Texas receipts because the buyers’ business consisted of transporting goods and passengers across oceans but never between U.S. ports,” said ALJ Victor Simonds.

“It states that, though the product at issue was delivered to vessels that were in Texas, the buyers were not ‘in this state’ because they were not operating in Texas since the buyers could not use or sell the bunker fuel oil in Texas.

“Based on the plain meaning of the apportioning statutes, if tangible personal property is delivered or shipped to a buyer in this state, then the receipt is a Texas receipt.

“It is also clear that the Legislature anticipated that, in some instances, the delivery point and FOB point might not be the same. When they are not, it is the point of delivery that is determinative for apportionment purposes, not the FOB point. The statute does not stand for the proposition that the point of delivery should be disregarded when the FOB and delivery points are the same.

“Claimant delivered its product to purchasers that were in Texas ports and waters; i.e., the bunker fuel oil was purchased by and delivered to buyers that were in this state. Therefore, based on the plain meaning of the statute, Staff’s refund denials were proper because the receipts at issue were Texas receipts.”

The full Comptroller’s decision can be found here.

Published: 13 February, 2019

Legal

Helmsman on Inter-Pacific Petroleum legal battle: When ignorance meets fraud

Lester Ho, Associate Director of law firm Helmsman shared his timely key takeaways on the recent case of Goh Jin Hian against defunct Singapore bunker supplier Inter-Pacific Petroleum.

Published

1 day ago

June 13, 2025

Admin

Lester Ho, Associate Director of multi-disciplinary law firm Helmsman LLC shared his timely key takeaways on the recent case of Goh Jin Hian v Inter-Pacific Petroleum when the Appellate Division of the High Court in Singapore overturned the High Court’s finding that Mr Goh’s breach had caused IPP to incur the losses:

The collapse of a company often prompts a search for blame, especially where the downfall stems from deliberate misconduct such as fraud that appears avoidable in hindsight. Unsurprisingly, a company’s directors are frequently perceived as the root of the problem and become prime suspects in the inevitable witch hunt for accountability. The recent case of Goh Jin Hian v Inter-Pacific Petroleum Pte Ltd (in liquidation) [2025] SGHC(A) 7 is a timely reminder of a director’s duties as well as the legal risks in the event of breach.

The downfall of Inter-Pacific Petroleum Pte Ltd (“IPP”) is well-documented. The Maritime Port Authority of Singapore suspended IPP’s bunker craft operator licence after discovering that the mass flow meter of a bunker tanker chartered by IPP had been tampered with. Concerns raised by IPP’s banks in relation to its business led its non-executive director, Mr Goh Jin Hian, to discover that it was heavily indebted to the banks. It was also discovered that the facilities had been used on sham sale and purchase transactions.

IPP was subsequently placed in compulsory liquidation, and Mr Goh was sued for breach of his director’s duties. It was alleged that the sham transactions could have been prevented had Mr Goh discharged his duties and that he was therefore responsible for IPP’s losses. At first instance, the High Court found that Mr Goh had breached his duty of care and ordered him to compensate IPP for approximately US$146 million in losses (Inter-Pacific Petroleum Pte Ltd (in liquidation) v Goh Jin Hian [2024] SGHC 178). Among other things, the High Court found that Mr Goh was in breach because he was entirely ignorant of IPP’s cargo trading business.

The Appellate Division of the High Court upheld the finding that Mr Goh had breached his duty for having been unaware of IPP’s cargo trading business. However, it overturned the High Court’s finding that Mr Goh’s breach had caused IPP to incur the losses. The Appellate Division found that IPP failed to prove that Mr Goh would have uncovered the sham transactions even if he had discharged his duty. Accordingly, Mr Goh was absolved of his liability to compensate IPP.

There are two broad takeaways from the decision.

The first takeaway is that every director, both executive and non-executive, is held to a minimum standard of care. This standard requires directors to take reasonable steps to put themselves in a position where they can guide and monitor the management of the company. Put simply, ignorance of a company’s business is no defence, even for non-executive directors that are not involved in everyday operations. Accordingly, although Mr Goh was a non-executive director, the fact that he was unaware that IPP was carrying on the business of cargo trading meant that he was in breach of his duties.

It may be surprising that a director could be entirely unaware of an important part of a company’s business. But the reality is that modern day companies have become commercial behemoths with complex and layered operations that makes it all too easy for directors (especially non-executive directors) to delegate oversight over critical business decisions and lose visibility of what their companies do. It is therefore important for directors, regardless of their formal titles, to ensure that there is a robust chain of reporting and command such that they have sufficient knowledge of the company’s operations to discharge their duties.

The second is that, while the law imposes high standards on directors, it does not demand unrealistic standards. As noted, the Appellate Division accepted that Mr Goh had breached his duties for having been unaware of IPP’s cargo trading business. However, it was not persuaded that, even if Mr Goh had discharged his duties and had been properly informed of IPP’s activities, the sham transactions could have been prevented. IPP was affected by what the Appellate Division considered a “deep-seated fraud” that had gone undetected even by IPP’s auditors. In the circumstances, it was far from clear that Mr Goh could have prevented the loss even if he had discharged his duty.

However, just because the law does not expect directors to be superhuman does mean that directors can afford to be complacent. Directors would still do well to take reasonable and diligent steps to ensure that they have a good grasp of the company’s operations and engage competent professionals (e.g., auditors) to help surface risks that they may otherwise miss. In a sense, Mr Goh avoided liability not because his breach was minor, but because the extent of the fraud perpetrated meant that the gravity of his breach cannot be said to have caused the loss. In other words, a less sophisticated or extensive fraud might have yielded a drastically different outcome – directors should take heed.

A timeline organised list of events preceding the current development of Inter-Pacific Petroleum has been recorded by Manifold Times below:

Photo credit: Helmsman
Published: 13 June, 2025

Biofuel

BIMCO subcommittee launched to develop bio bunker fuel clause for time charters

Newly formed subcommittee marks a proactive step toward addressing legal and operational challenges posed by the growing use of biofuels in shipping.

Published

5 days ago

June 9, 2025

Admin

International shipping association BIMCO on Wednesday (4 June) launched a new subcommittee to develop a Biofuel Clause for Time Charter Parties, marking a proactive step toward addressing the legal and operational challenges posed by the growing use of biofuels in shipping.

With regulatory frameworks like the EU ETS, FuelEU Maritime, and the upcoming IMO Net-zero Framework measures reshaping fuel strategies, biofuels are becoming an increasingly attractive option for reducing emissions. Yet, their integration into charter agreements remains complex, often raising questions around fuel quality, engine compatibility, and liability.

The newly formed subcommittee, comprising shipowners, charterers, P&I representatives and technical experts, met for the first time on 7 April 2025. Its work will focus on defining the scope and standards for biofuels, clarifying how they may be supplied and handled, and ensuring that their use aligns with performance expectations and regulatory obligations.

The clause will also consider the practical realities of biofuel use, such as blending with conventional fuels, onboard storage, and the implications for speed and consumption warranties. By addressing these issues, BIMCO aims to provide a flexible yet robust contractual solution that supports compliance without compromising vessel reliability.

A draft clause is expected to be presented at BIMCO’s Documentary Committee meeting in October 2025. Once adopted, it will offer much-needed clarity for charterers and owners navigating the transition to low-carbon operations.

Photo credit: BIMCO
Published: 9 June, 2025

Legal

Singapore: Ex-Director of Inter-Pacific Petroleum wins appeal against former company

Appellate Division of the High Court has found Dr Goh Jin Hian not liable to pay up to USD 146 million of the company’s total USD 156 million loss.

Published

1 week ago

June 6, 2025

Admin

The Appellate Division of the High Court on Thursday (5 June) has found a former Director of defunct Singapore bunker supplier Inter-Pacific Petroleum (IPP) not liable to pay up to USD 146 million of the company’s total USD 156 million loss.

The decision sets aside an earlier decision by the High Court that found Dr Goh Jin Hian responsible for the company’s financial loss.

The Appellate Division of the High Court found that even though it agreed that Dr Goh had breached his duty of care as a director, IPP has failed to show that his breach caused loss to the company.

In a judgment issued by the Appellate Division of the High Court, sighted by Manifold Times, it wrote: “While we agree with the Judge that Dr Goh had breached the Care Duty by reason of his ignorance of the cargo trading business, IPP has failed to show causation, ie, that the breach caused the loss in question.

“Also, we disagree with the Judge that the Care Duty was breached as regards the purported red flags. Finally, we find that Dr Goh did not breach the Creditor Duty in relation to the Cargo Drawdowns.”

The justices presiding the appeal were Tay Yong Kwang, Woo Bih Li and Kannan Ramesh.

IPP Judicial Managers (JMs) Deloitte Singapore, the plaintiffs, on April 2023 initiated a legal suit against Dr Goh, the defendant, suing him for over USD 156 million over losses due to alleged breach of his Director’s duties.

A timeline organised list of events preceding the current development of Inter-Pacific Petroleum has been recorded by Manifold Times below:

Photo credit: Manifold Times
Published: 6 June, 2025

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