Taxability of mobil oil and lubricants stayed at 8 per cent where the higher-rate entry was never brought into force.

Mobil oil and lubricants remained taxable at 8 per cent because the amended 20 per cent entry never became operative without the required commencement notification. Until Category XI was omitted, the goods continued under that specific 8 per cent entry; after omission, and with Category X still unenforced, they fell to the residuary entry, which also prescribed 8 per cent. The enhanced demand at 20 per cent was therefore unsustainable and the impugned notices could not stand.

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Issues: Whether mobil oil and lubricants were liable to sales tax at 20 per cent under Category X of Schedule A to the Punjab General Sales Tax Act, 1948, or at 8 per cent under Category XI and, after omission of Category XI, under the residuary entry.

Analysis: The amended Schedule A placed mobil oil and lubricants in Category X at 20 per cent, but the corresponding entry was not brought into force because the amendment made its commencement dependent on a future notification. Till such notification, the goods continued to be governed by Category XI, which fixed tax at 8 per cent. When Category XI was later omitted by notification, the goods were no longer specified in any operative category because Category X item 4 still had not been enforced. In that situation, the residuary category for goods not specified elsewhere applied, which again fixed the rate at 8 per cent.

Conclusion: Mobil oil and lubricants were liable to tax only at 8 per cent, and the demand at 20 per cent was unsustainable.

Final Conclusion: The challenged notices could not stand, and the petitioners were entitled to relief against the enhanced tax demand.

Ratio Decidendi: Where a taxing entry is inserted but its enforcement is made contingent on notification, the unnotified entry does not operate, and if the goods are thereafter not covered by any specific operative entry, the residuary rate applies.

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