Strict construction of tax concessions: bakery margarine used only in specialised production was not treated as edible oil.

Bakery margarine restricted by the manufacturer for use only in bakery and confectionery was held not to fall within the concessional category of "edible oil" under item 17A of SRO No. 1728 of 1993. Entry 90 of the First Schedule to the Kerala General Sales Tax Act, 1963, expressly covered oils, including margarine, and applied at the first sale point. Because the commodity was not shown to be suitable for the ordinary uses of edible oil and was materially different from edible oil, hydrogenated oil or vanaspati, it could not claim the concession. The ruling reiterates that exemption and concessional notifications must be strictly construed and confined to the class described.

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Issues: Whether bakery margarine sold for use only in bakery and confectionery industry was covered by the concessional rate applicable to edible oil under item 17A of the Second Schedule to SRO No. 1728 of 1993, or whether it fell under entry 90 of the First Schedule to the Kerala General Sales Tax Act, 1963.

Analysis: Entry 90 of the First Schedule covered oils, edible or inedible, including refined or hydrogenated oils and margarine, and attracted tax at the first sale point. The concession under item 17A was confined to edible oil. The product in question was expressly restricted by the manufacturer for use only as raw material in the bakery and confectionery industry and was not shown to be suitable for all uses for which edible oil is ordinarily used. The circular relied on for the concession, even if it used inclusive words, did not extend the notification to a product materially different from edible oil, hydrogenated oil or vanaspati. On the nature and restricted use of the commodity, bakery margarine could not be treated as edible oil.

Conclusion: The product was not eligible for concessional treatment as edible oil and was rightly assessable under entry 90 at eight per cent.

Final Conclusion: The revision succeeded and the assessment made on bakery margarine under the general taxable entry was restored.

Ratio Decidendi: A commodity claiming exemption or concessional tax under a notification must strictly fall within the class described in the notification, and a product manufactured for a limited specialised use cannot be treated as edible oil merely because it shares some characteristics with oils used in food-related processes.

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