M/S LIPTON INDIA LTD. ETC. ETC. versus UNION OF INDIA AND ORS.

Citation: [1994] SUPP. 3 S.C.R. 600 · Decided: 16-09-1994 · Supreme Court of India · Bench: M.N. VENKATACHALIAH · Disposal: Case Allowed

Judgment (excerpt)

A 
MIS LIPTON INDIA LTD. ETC. ETC. 
v. 
UNION OF INDIA AND ORS. 
SEPTEMBER 16, 1994 
B 
[M.N. VENKATACHALIAH, CJ AND B.P. JEEVAN REDDY, J.] 
U.P. Sales Tax Act, 1948 : Section 4-B-Scope of. 
U.P. Sales Tax Rules, 1948: Rule 25-B-Sales Tax Refund-Declara-
C tion fonn for. 
Vanaspati Manufacture~'All India Voluntary Price Control 
System '--Obligation to sell vanasapati at a unifonn J!!ice-Supply of Raw 
Material 'Oil' to manufacturers at unifonn price-Variation in rates of sales 
tax on oft-Appointment of Committee for equalisation of incidence of sales 
D tax-Committee's recommendation for reimburesment of sales tax subject to 
furnishing the necessary declaration f onns under the relevant statutes-Accep-
tance by Government-Claim for refund of sales tax without furnishing the 
declaration fonn in respect of 50% of production sold outside Uttar Pradesh 
held pemiissible-Held claim for reimbursement is not founded upon a 
E Statutory provision but under the fomula suggested by a Committee-Held 
writ for claim for refund of tax after 5 years does not suffer from /aches as to 
merit dismissal on that ground. 
With a view to ensuring supply of Vanaspati at uniform rate 
throughout the country, the Government of India evolved 'All-India:Volun· 
p 
tary Price Control System', wbereunder the manufacturers of vanaspati 
were obliged to sell vanaspati at a uniform price throughout the country. 
Consequently, the imported oil-raw material required by such manufac· 
turer-was to be supplied to them at a uniform price. The import of oil 
was canalised through State Trading Corporation which alone was supply-
G ing it to various manufacturers. However, the rates of sale tax on the sale 
of oil were not uniform throughout the country and this variation brought 
out differential treatment to vanaspati manufacturers. Complaining of 
discrimination on this score a number of vanaspati manufacturers filed 
petitions and pursuant to an order dated February 8, 1982 passed by this 
Court, the Government of India constituted 'Parmeshwaran Committee' 
H for evolving a formula to ensure that every manufacturer in the country 
600 
LIPTON (I) LID. v. U.0.1. 
601 
wherever he may be located and subject to whichever sales tax enactment A 
shall get the oil at the same price. For this purpose, two alternate formula 
were suggested to the Committee. The first was that the State Trading 
Corporation should charge varying price for oils so that the price and the 
sales tax on that price always sums ~o a uniform value throughout the 
country while the second was that the State Trading Corporation should B 
charge sales tax on release price and give discount of an amount equivalent 
to the sales tax. 
On the basis of the Committee's recommendation the second alter-
native on sales tax reimbursement by STC through credit notice facility 
was accepted by Government of India. The sale tax as paid by the parties C 
was to be reimbursed to them at actuals, subject to their furnishing 
necessary declaration forms etc. as required under the relevant sales tax 
acts. The petitioner filed a writ petition in this Court in June, 1988 . 
claiming refund of tax for the period commencing from December, 1984 to 
May, 1988. Its was that half of the vanaspati manufactured by it is sold D 
within the State of Uttar Pradesh while the other half is taken out of Uttar 
Pradesh to its depots for sale in different States. For this reason it used 
to furnish certificates/declarations contemplated by Section 4-B of the U.P. 
Sales Tax Act, and Rule 25-B of the Uttar Pradesh Rules, only to the extent 
of half the quantity of oil purchased by it and not for the full quantity 
purchased. Where it furnished the 'declaration',. the State Trading Cor-
E 
poration did not, charge tax to it. The petitioner claimed that it was 
entitled to refund of the sales tax amount paid by it to State Trading 
Corporation in respect of sales for which it did not furnish the 'declara-
tion' by virtue of the Parmeshwaran Committee formula and the insistence 
upon furnishing of declaration as a condition for reimbursement, F 
amounted in effect to denial of the benefit of the 'formula'. 
On behalf of the State Trading Corporation it was contended that 
(i) since the petitioner had not furnished the 'declaration' contemplated 
by the Uttar Pradesh Act, it was not entitled to any reimbursement in 
terms of the 'formula', and (ii) the writ petition was liable to be dismissed G 
on the ground of laches

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