LexB.P. OIL MILLS LTD. versus SALES TAX TRIBUNAL AND ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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B.P. OIL MILLS LTD.
v.
SALES TAX TRIBUNAL AND ORS.
SEPTEMBER 3, 1998
(S.P. BHARUCHA, M.K. MUKHERJEE AND
G.T. NANAVATI, JJ.)
U.P. Trade Tax Act, 1948: Sections 3(3)(b)(iii) and 2(e-1).
A
B
Sales Tax-Refi11ed oil-Manufacture of-Scope-Refined oil obtai11ed C
after processing of cmde oil such as li11seed oil, castor oil and mustard
oil-Liability to sales tax-Held : Such refined oil is "goods manufac-
tured''-Hence, liable to sales tax.
Sales Tax--Double Taxation-Refined oil obtai11ed after processing
cmde oil on which tax already paid-Refined oil-Liability to sales tax-Held: D
S.3(3)(b)(ii) a11d (iii) provide imposition of multistage taxation-Hence,
subjecti11g such refined oil to sales tax, pennissible.
Words and Phrases :
"Mamtf acture''-Meaning of-111 the co11text of S.2( e-1) of the U.P.
E
TI·ade Tax Act, 1948.
"Processing''-Mea11ing of
The appellant purchased crude nil of different varieties, such as
linseed nil, castor oil, and mustard oil and, after refining, sold as refined
F
oil. The refinement is brought about by first treating the nil with alkali to
remove the acid contents, then bleaching it with absorbent cotton or
activated carbon and lastly deodorising it with steam.
The Commissioner of Sales Tax held that the appellant was liable to G
pay sales tax on the sale of refined oil. The Sales Tax Tribunal dismissed
the appeal. The High Court also dismissed the writ petition filed by the
appellant. Hence this appeal.
On behalf of the appellant it was contended that mere processing of
crude oil for its conversion into refined oil was not "manufacturing" of new H
397
398
SUPREME COURT REPORTS [1998] SUPP.1 S.C.R.
A goods so as to make the appellant liable for tax thereupon under Section
3(3)(b) (iii) of the U.P. Trade Tax Act, 1948.
Dismissing the appeal, this Court
HELD : 1. Viewed in the context of the meaning given to the word
B "processing" by this Court in Chowgule's case there cannot be any manner
of doubt that the nature and extent of the process to which the crude oil
is subjected to make it refined oil brings the latter within the meaning of
the expression "goods manufactured" in Section 3(3)(b)(iii) of the U.P.
Trade Tax Act, 1948 so as to make the appellant liable to pay tax on its
C 'sale. [401-E]
Chowgule & Co. Pvt. Ltd. v. Union of India, [1981] 1 SCC 653, relied
on.
Tungabhadra lndustlies Ltd. v. CTO, [1961] 2 SCC 14; Sterling Foods
D v. State of Kamataka, [1986] 3 SCC 469 and State of Maharashtra v. Shiv
Datt & Sons, [1993] Supp. 1 SCC 222, held inapplicable.
E
F
G
Dy. CST v. Pio Food Packers Ltd. [1980] 3 SCR 1271, referred to.
Webster's Dictio11a1y, referred to.
2. Although the appellant had purchased the crude oil after payment
of tax yet subjecting refined oil to sales tax is permissible because Section
3(3)(b)(ii) and (iii) expressly provide imposition of multistage taxation.
[402-F-GJ
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10453 of
1995.
From the Judgment and Order dated 20.7.94 of the Allahabad High
Court in C.M.W.P. (Tax) No. 550 of 1987.
Pramod Swarup, Praveen Swarup and Ms. Prerna Swarup for the
appellant.
R.B. Misra and K. Misra for the Respondents.
H
The Judgment of the Court was delivered by
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B.P. OIL MILLS LTD. v. SALESTAXTRIBUNAL IM.K. MUKHERJEE, J.] 399
.
M.K. MUKHERJEE, J. The appellant carries on business in A
manufacture and sale of oils at Agra in the State of Uttar Pradesh (U.P.).
As a part of their business they purchase crude oil of different varieties,
such as linseed-oil, castor-oil, mustard-oil and, after refining, sell as refined
oil. The refinement is brought about by first treating the oil with alkali to
remove the acid contents, then bleaching it with absorbent cotton or
activated carbon and lastly deodorising it with steam.
To ascertain whether they were liable to pay tax on the sale of refined
B
oil as they had already paid tax for purchase of the crude oil and, if so,
what would be the rate thereof, the appellant approached the Commis-
sioner of Sales Tax, U.P. invoking the provisions of Section 35 of the U.P. C
Trade Tax Act, 1948 ('Act' for short). By his order dated .Tune 19, 1985,
the Commissioner held that the appellant was liable to pay sales tax
notwithstanding the fact that they had paid tax on the purchase of the crude
oil and that the rate of tax would be 4%. Assailing the order of the
Commissioner the appellant preferred an appeal before the Sales Tax
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