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Chhatar Extractions Pvt. Limited Vs. the Excise and Taxation Commissioner and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax;Constitution
CourtPunjab and Haryana High Court
Decided On
Case Number Civil Writ Petition No. 1972 of 1983
Judge
Reported in[1986]61STC374(P& H)
AppellantChhatar Extractions Pvt. Limited
RespondentThe Excise and Taxation Commissioner and anr.
Appellant Advocate S.C. Sibal and; R.K. Handa, Advs.
Respondent Advocate D.S. Brar, Assistant Adv.-General
DispositionPetition dismissed
Cases ReferredMoradabad v. Sales Tax Commissioner
Excerpt:
- - whereas the government of punjab is satisfied that it is necessary in the public interest so to do; it is clearly prescribed under item a. similarly, it becomes edible after it is mixed with refined sesame oil and undergoes the process for the manufacture of edible vegetable oil products like vegetable ghee. the alternative remedy of two appeals against the impugned assessment order being available to the petitioner, the present writ petition is liable to fail on this ground. the writ petition is liable to fail on this ground.j.m. tandon, j.1. the petitioner is engaged in the business of extracting oil from rice bran. the rice bran is the outer covering of the rice grain which stands peeled off during rice polishing. the rice bran is mixed with a chemical known as hexene for the purpose of extracting oil. the state government issued notification dated 11th january, 1979 (p. 6), regarding sales tax payable in respect of the sale of edible oils and it reads :no. s. 0. 1/c.a. 74/56is. 8/ei79.whereas the government of punjab is satisfied that it is necessary in the public interest so to do;now, therefore, in exercise of the powers conferred by sub-section (5) of section 8 of the central sales tax act, 1956 (central act 74 of 1956), and all other powers enabling him in this behalf, the governor of punjab is pleased.....
Judgment:

J.M. Tandon, J.

1. The petitioner is engaged in the business of extracting oil from rice bran. The rice bran is the outer covering of the rice grain which stands peeled off during rice polishing. The rice bran is mixed with a chemical known as hexene for the purpose of extracting oil. The State Government issued notification dated 11th January, 1979 (P. 6), regarding sales tax payable in respect of the sale of edible oils and it reads :

No. S. 0. 1/C.A. 74/56IS. 8/EI79.

Whereas the Government of Punjab is satisfied that it is necessary in the public interest so to do;

Now, therefore, in exercise of the powers conferred by Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), and all other powers enabling him in this behalf, the Governor of Punjab is pleased to direct that the tax payable by any dealer having his place of business in the State of Punjab in respect of the sales made by him, of edible oils from any such place in the course of inter-State trade or commerce to any registered dealer having his place of business in any other State or Union Territory of India, shall be calculated at the rate of one per cent of his turnover in so far as the turnover or any part thereof relates to such sales, subject to the production by him of declaration in form C as prescribed under Sub-section (4) of Section 8 of the Central Sales Tax Act, 1956.

2. The petitioner sold rice bran oil of the value of Rs. 45,90,357 in inter-State sales during the assessment year 1980-81 against C forms and deposited tax voluntarily at the rate of 1 per cent. The Assessing Authority vide order dated 1st February, 1983 (P. 12), held that the rice bran oil sold by the petitioner is not edible and should, therefore, be taxed at the general rate, i.e., 4 per cent instead of 1 per cent. In other words, the Assessing Authority held that the rice bran oil sold by the petitioner of the value of Rs. 45,90,357 in inter-State sales against C forms being not edible oil was not covered by the notification dated 11th January, 1979 (P. 5). The tax liability of the petitioner was accordingly raised. The petitioner has assailed the assessment order (P. 12) of the Assessing Authority in the present writ.

3. The Excise and Taxation Commissioner addressed communication dated (sic) in relation to taxability of rice bran oil in the course of inter-State trade and commerce. The relevant part of this communication reads :

During the course of verification of transactions of edible oil by the Central Enforcement Wing, Punjab, it was noticed that Central sales tax is being deposited at the rate of 1 per cent on rice bran oil. This is perhaps being done under the impression that rice bran oil sold by Punjab dealers in the course of inter-State trade is an edible oil. Our enquiries have, however, established that only a negligible proportion of this oil falls in the category of edible grade oil. That is to say that rice bran oil produced in Punjab is not edible grade and should, therefore, be taxed at the general rate, i.e., at the rate of 1 per cent or 4 per cent, if it is sold to a registered dealer of other State against C form.

4. It may be mentioned here that the dealers/manufacturers take shelter for depositing less tax under the plea that rice bran oil is a vegetable oil and the Government of India has allowed this oil to be used in some measure in the manufacture of what is commonly known as vegetable ghee. Whereas this argument may appear correct superficially this does not make rice bran produced in Punjab an edible oil. According to the technical advice received from the Government of India only that oil is used in the manufacture of vanaspati which has lower than 5 F.F.A. or 10 Acid Value. However, according to the information gathered at the State level it has been noticed that rice bran oil manufactured here contains more than 8 F.F.A. (16 Acid Value) and is, therefore, not permissible for use in manufacture of vanaspati. It means that rice bran oil is not an edible oil as being presently manufactured in Punjab, although it continues to be a vegetable oil. It may be kept in mind that many vegetable oils are unfit for human consumption. A D. O. letter No. ETD (E) IV-81/72-85 dated 13th March, 1981, has already been addressed to you by the Chief Enforcement Officer, Punjab, on this topic.

5. In this context, it is relevant to point out that the Assistant Excise and Taxation' Commissioner, Sangrur, issued a notice to Messrs. Vee Kay Oil Pvt. Ltd., Ahmedgarh, to pay tax at the rate of 4 per cent on inter-State sales. The dealer went in a writ petition before the Punjab and Haryana High Court, which was subsequently dismissed as withdrawn. Copies of the points raised in writ petition and the reply filed by the department are enclosed for your information.

6. It is, therefore, suggested that thorough scrutiny of cases be made in the light of facts narrated above before finalising assessments in such cases. It may be ensured that pending assessments are finalised in the light of these instructions within the current financial year and tax wherever due is recovered.'

7. The petitioner has also prayed that the communication P. 11 be quashed.

8. The learned counsel for the petitioner has argued that rice bran oil is edible and the Assessing Authority has wrongly held in the impugned assessment order that it is not edible. Reliance has been placed on the orders of the Ministry of Commerce and Civil Supplies, Government of India, dated 29th August, 1979 (P. 1), dated 26th December, 1980 (P. 2), and 27th October, 1977 (P. 3), issued under Sub-clause (1) of clause 4 and Sub-clause (1) of clause 48 of the Vegetable Oil Products Control Order, 1947, wherein a specified percentage of rice bran oil has been permitted to be used in the manufacture of vegetable oil products by making a mixture thereof with specified percentage of refined sesame oil. The argument proceeds that vegetable oil products other than products manufactured for non-edible industrial use are edible. In view of the fact that the Government of India has permitted the use of rice bran oil in the manufacture of edible vegetable oil products, it should be inferred that the rice bran oil is edible. A contrary view taken by the Assessing Authority in the impugned order is liable to be set aside.

9. The learned Assistant Advocate-General has contended that the rice bran oil in its crude form without the removal of impurities and free fatty acids is not edible. The rice bran oil becomes edible when it is refined and the impurities and free fatty acids, etc., therefrom are removed. The petitioner did not effect sale of refined rice bran oil nor had it means to produce it. The petitioner having sold rice bran oil which is not edible against C forms as detailed in the assessment year 1980-81 it is liable to pay tax at the rate of 4 per cent and not at the rate of 1 per cent in terms of the notification dated 11th January, 1965. Reliance has been placed on item A. 17.23 of appendix B of the Prevention of Food Adulteration Rules, 1955 (hereafter the Rules).

10. Rule 6 of the Rules reads :

Standards of quality of the various articles of food specified in appendix B to these rules are as defined in that appendix.

11. Item A. 17.23 of appendix B reads:

Rice bran oil means the oil obtained from the layer around the endosperm of rice obtained from paddy of oryza sativa linn, jam graminea, which is removed during the process of rice milling and is generally known as rice bran.

Refined rice bran oil shall be obtained from solvent extracted oil, neutralised with alkali, bleached with bleaching earth or activated carbon or both and deodorised with steam. Alternatively deacidification, bleaching and deodorisation may-be done by physical means.

The oil shall be clear and free from rancidity, adulterants, sediments, suspended and other foreign matters, separated water and added colouring and flavouring substances. The clarity of the oil shall be judged by the absence of turbidity after keeping the filtered sample at 35C for 24 hours. Rice bran oil shall be sold for human consumption only after refining. It shall conform to the following standards, namely:

(i) ...

(ii)...

(iii)...

(iv) ...(v) Free fatty acids (as oleic acid) per cent by weight Not more than0.25ORAcid value Not more than0.5.

12. The word 'edible' was examined in Chandausi Oil Mitts, Chandausi, Moradabad v. Sales Tax Commissioner, U.P. [1961] 12 STC 310, and it was held that it should be interpreted to mean fit to be eaten as food. It is clearly prescribed under item A. 17.23 reproduced above that the rice bran oil shall be sold for human consumption only after refining. It means that the rice bran oil which is not refined is not fit for human consumption. The rice bran oil not fit for human consumption cannot be termed 'edible'.

13. It is true that the Government of India has permitted the use of specified percentage of rice bran oil by mixing it with specified percentage of refined sesame oil for the manufacture of edible vegetable oil products. The constituents of edible oil product are not necessarily edible. The rice bran oil becomes edible after it is refined. Similarly, it becomes edible after it is mixed with refined sesame oil and undergoes the process for the manufacture of edible vegetable oil products like vegetable ghee. It is, therefore, difficult to agree with the contention of the learned counsel for the petitioner that since a specified percentage of rice bran oil is permitted to be used for the manufacture of edible vegetable oil products it should also be treated edible in terms of the notification dated 11th January, 1979 (P. 5).

14. The learned counsel for the petitioner has argued that the Assessing Authority has not recorded a firm finding in the impugned assessment order that the rice bran oil sold by the petitioner in inter-State sales was not refined. The impugned assessment order is liable to be set aside on this ground. The contention is without merit. The petitioner had produced C forms of the value of Rs. 45,90,367 relating to inter-State sales of rice bran oil. The petitioner did not raise any plea before the Assessing Authority that the produce sold by them was refined rice bran oil and not rice bran oil. The petitioner wanted to avail the benefit under the notification dated 11th January, 1979 (P. 6). The onus to prove that the rice bran oil sold by the petitioner was refined rice bran oil and as such edible was on the petitioner. The petitioner has even laid no foundation in the writ petition that the oil sold was refined rice bran oil and not rice bran oil in its crude form.

15. The learned Assistant Advocate-General has urged that the impugned assessment order is appealable under Section 20 of the Punjab General Sales Tax Act and an appeal against the order of the appellate authority lies to the Sales Tax Tribunal under Sub-section (2f thereof. The alternative remedy of two appeals against the impugned assessment order being available to the petitioner, the present writ petition is liable to fail on this ground.

16. The learned counsel for the petitioner has contended that the Assessing Authority has passed the assessment order in pursuance of the instructions issued by the Excise and Taxation Commissioner in communication dated 4th February, 1982 (P. 11). The appeal against the impugned assessment order lies before the Deputy Excise and Taxation Commissioner who is likely to be influenced by the views expressed by the Excise and Taxation Commissioner in the communication P. 11. It is futile to file an appeal against the impugned assessment order because it cannot be treated an effective or meaningful alternative remedy. The contention of the learned counsel for the petitioner is without force.

17. The Assessing Authority has neither relied upon nor referred to communication P. 11 in the impugned assessment order. It is not disputed that the views expressed in the communication P. 11 are not binding either on the Assessing Authority or the Deputy Excise and Taxation Commissioner. This apart, second appeal lies to the Sales Tax Tribunal which is an independent authority. The petitioner, therefore, can avail of an effective and meaningful alternative remedy by filing an appeal against the impugned assessment order. The writ petition is liable to fail on this ground.

18. The learned counsel for the petitioner has argued that the communication dated 4th February, 1982 (P. 11), is liable to be quashed as instructions contained therein are adverse to the interest of the petitioner and have been issued by an unauthorised authority and without hearing the petitioner. It is, therefore, liable to be quashed. The learned Assistant Advocate-General has rightly conceded that the communication P. 11 has no force of law and is not binding on the Assessing Authority. It has further been argued that the Assessing Authority has in fact neither relied upon it nor has referred to it in the impugned assessment order. The grievance of the petitioner regarding the communication P. 11 is misplaced. The contention of the learned Assistant Advocate-General must prevail. The communication P. 11 has no force of law. It has neither been followed nor referred to by the Assessing Authority in the impugned assessment order. The petitioner, therefore, cannot make any grievance about it.

19. In view of discussion above, the writ petition fails and is dismissed with no order as to costs.


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