1. The petitioner in this case seeks a writ of certiorari for quashing an order of the Sales Tax Officer, Ujjain, dated the 6th August, 1957, assessing it to sales tax under the Madhya Bharat Sales-tax Act, 1950, in the assessment year 1954-55. It also prays that the notice of demand calling upon it to pay Rs. 1671-9-9 in respect of the assessment be quashed and the opponent be restrained from recovering that amount.
2. The petitioner-Company carries on the business of extracting oil by mechanical process from oil seeds, such as ground-nut, Tilli etc., and of selling the oil so extracted. During the material period the petitioner sold vegetable oil to the Indore Oil Mills Private Ltd., the turnover of which was determined by the Sales Tax authorities at Rs. 106983/-for the purpose of assessment of a sales tax. On this turnover the amount of sales tax imposed was Rs. 1671-9-9. The Indore Oil Mills Private Limited, own a factory where they manufacture refined oil and other products. The petitioner-Company was liable to pay sales tax in respect of the sale of oil to the Indore Oil Mills Private Limited, under item No. 2 of the notification dated the 24th October, 1951 issued under Section 5 of the Act. The charging provision imposing sales tax at the rate of Rs. 1-9-0 per cent ad valorem is as follows :
'2. All types of Vegetable Oils (exclud- On sale by ing Hydrogenated Oils which in- importer orelude Cocogem), with the excep- by manu-tion of Oils extracted from Gha- facturer. nees by human or animal labour.'
The petitioner did not dispute that under the aforesaid provision the oil sold to the Indore Company was subject to sales tax. The petitioner, however, contended before the taxing authorities that inasmuch as the oil sold to the Indore Company was for the manufacture of refined oil in their industry, namely, Vanaspati Industry (Vegetable Oil), the transactions in question were exempt from sales tax under notification No. 75/7 S. R./55 (51) dated the 24th November, 1953, published in the Madhya Charat Government Gazette dated the 3rd December, 1953, exempting from sales tax the sale of certain goods required in the industries enumerated in the schedule read with the notification. Item No. 23 of the Schedule read with the notification exempted 'steam coal and all oils' required in Vanaspati Industry (Vegetable Oil).
The contention of the assessee was negatived by the Sales Tax Officer, who took the view that under item No. 23 the sale of goods and raw materials required only in Vanaspati Industry was exempt from tax and that the oil refining industry was not Vanaspati Industry.
3. Shri Sanghi, learned counsel for the petitioner, argued that having regard to the fact that by the notification dated the 11th September, 1950, issued under Section 4(3) of the Act, which was cancelled by the subsequent notification No. 75/7 S. R./55(51) dated the 24th November, 1953, sale of oil to the manufacturer of refined oil was exempt from tax, and regard being had to the fact that whenever it was intended to connote a narrow meaning of the words Vegetable Oil' it was done by using express qualifying words, the Sales Tax Officer was not Justified in giving a narrow meaning to the words 'Vegetable oil' while construing the exemption provision.
It was said that the words 'Vanaspati Industry' (Vegetable Oil), as used in the exemption provision, meant an industry manufacturing not only Vanaspati ghee or hydrogenated vegetable oil but also an industry manufacturing any product with vegetable oil as the chief raw material; that the refin-ed oil was a product produced after subjecting crude vegetable oil to a chemical process or refining; and that, therefore, the oil sold by the petitioner to the Indore Company was exempt from any sales tax.
4. The only question that arises for consideration in this case is as to the true and proper construction of the expression Vanaspati Industry (Vegetable Oil)' used in item No. 23 of the schedule of the notification issued on 24th November, 1953. The Sales Tax Officer has not indicated what according to him is an industry falling within the description Vanaspati Industry (Vegetable Oil)'. All that he did was to say that it meant Vanaspati Industry and that the oil refining industry was not Vanaspati Industry.
This is begging the question. It is not known whether (he Sales Tax Officer regarded only Vanaspati ghee industry as Vanaspati industry or an industry manufacturing hydrogenated vegetable oil as Vanaspati Industry (Vegetable Oil)'. In order to find the true meaning of the expression, we must turn to the provision under which sales tax is leviable on vegetable, oil and to the other provisions in the Act where the expression Vegetable oil' is used and take into consideration the object of granting exemption to certain industries as disclosed by the schedule to the notification of the 24th November, 1953.
The charging provision uses the expression 'All types of Vegetable Oils (excluding Hydrogenated Oils)'. The word 'excluding' is significant. The use of the words 'excluding Hydrogenated Oils' shows that in that provision the words 'Vegetable oils' have a wide meaning and cover vegetable oil of any kind including hydrogenated oil. It is noteworthy that in another notification No, 59/7/S.R. 55(51) dated the 24th October, 1953 issued under Section 5 of the Act the words 'Vegetable Oil' have been expressly qualified by the use of the word 'Hydrogenated' while imposing sales tax at the rate of Rs. 6-4-0 per cent ad valorem. Item No. 33 of Schedule III of that notification runs as follows :
'Vegetable Oil (Hydrogenated) including Coco-gem'. It is thus clear that whenever the Government intended to restrict the wide and natural import of the expression Vegetable oil', it did so by express qualifying words. If in the charging provision the words Vegetable oil' have been used in a wide sense, it stands to reason that they must be so construed even, in the exemption provision when there is nothing to indicate that their natural meaning has been curtailed in any way. The word Vanaspati' used in item No. 23 of the schedule to the notification dated the 24th November, 1953 cannot in any way be regarded as meaning only Vanaspati ghee or Hydrogenated Oil. The ordinary and natural meaning of the word Vanaspati' is vegetable and the words Vanaspati Industry' as indicated by the words following them viz. 'Vegetable Oil' connote Vegetable Oil Industry'. On the language of item No. 23 referred to above there is, therefore, no justification for reading Vanaspati Industry* as meaning an industry engaged only in the production of Vanaspati ghee or Hydrogenated Oils. The words Vanaspati Industry', according to their natural import, mean an industry producing anythingwherein vegetable oils constitute the chief raw material.
5. That the expression Vanaspati Industry' is not confined to an industry producing a particular product from the vegetable oils and that the industry of refining crude vegetable oil is also Vanaspati industry becomes further clear when one bears in mind the numerous applications of vegetable oils in industries. Vegetable oils are used in paint and varnish industry, in soap industry, in biscuit industry and some medicinal preparations. Castor-oil is used for manufacture of lubricants on a large scale. Chalmoogra, and other allied oils are of medicinal value and have curative effects on leprosy.
Vegetable oils are also used in the manufacture of Salad oil, artists' oil and hair oils and other cosmetics, and as is well known these oils are also used in the manufacture of ghee and cooking fat. There is no chemical distinction between vegetable oils and fats. They consist primarily of glycerides which are the esters formed by three molecules of fatty acids with one molecule of glycerol. Oils are usually liquid at ordinary temperature when fats are solid at that temperature. The difference is one of physical state reversible merely by changing the surrounding environment.
The process of hydrogenation is merely the process of hardening of fats. When completely hydrogenated vegetable oils are converted into solids and partial hydrogenation yields fats of various consistencies and melting points. The process of refining crude vegetable oil is generally the first step in the industrial application of vegetable oils. By that process certain components of the oil, which contribute colour and flavour and undesirable properties for edible purposes, are eliminated by chemical process so that the refined oil may be used for industrial purposes or may be processed further to edible oils.
The refined oil is neutral, free of material thatseparates on heating, lower in colour, less viscousand shows less stability to rancidification. It isthus clear that an industry in which crude vegetableoil is refined is a vegetable oil industry. A glanceat the schedule to the notification dated the 24thNovember, 1953 shows that under items Nos. 20and 22 of the schedule vegetable oil used in paintand varnish industry, and in soap industry is exemptfrom sales tax. So also in the schedule of cottageindustry and goods required in them shows thatvegetable ghee and oil required for biscuit makingand bakery industry are also given the exemption.It is thus evident from the scheme of theschedule and the notification dated the 24th November 1953 that the object was to grant exemption tothe sales of vegetable oils for industrial purposesin order to promote the use of vegetable oils inindustries. The schedule no doubt specifies someindustries, such as paint and varnish industry, soapindustry, biscuit industry, in which vegetable oilsare used as one of the raw materials. As it isimpossible to enumerate the various industries inwhich vegetable oils constitute the chief raw material, the expression 'Vanasnati Industry (VegetableOil)' was adopted for covering all such industriesand for exempting the sale of vegetable oil requiredby them.
In our opinion, the expression 'Vanaspati Industry' is wide enough to include an industry engaged in the production of refined vegetable oil, and the sale of vegetable oil to such an industry would not be liable to sales tax by virtue of item No. 23 of the schedule of the notification dated the 24th November, 1953. The Sales Tax Officer was, therefore, not right in holding that the petitioner-Company was not entitled to exemption as the sales in question were not to a Vanaspati industry.
6. There was some debate at the bar whether the declarations filed by the assessee were strictly in terms of the notification of the 24th November 1953 so as to entitle the petitioner to claim the exemption granted by the notification. The Sales Tax Officer has not given any finding on this point and that is presumably because he rejected the claim for exemption on the view he took of the words 'Vanaspati Industry'. That question can now properly be decided in the fresh assessment proceedings.
7. For these reasons, the assessment orderdated 6-8-1957 of the Sales Tax Officer, Ujjain, asalso the demand' notice arising out of it for thepayment of sales tax amounting to Rs. 1671-9-9 bythe petitioner are quashed. .Having regard to thenature of the point for consideration, we think itwould be proper to leave the parties to bear theirown costs of this petition. The amount of Outstanding security deposit be refunded to the petitioner.