Court: Refined rapeseed & mustard oils taxed at 1%. Refined oils retain identity post-refining. Revision overturns Tribunal decision.

JK. Enterprises Versus Commissioner of Trade Tax, UP., Lucknow

JK. Enterprises Versus Commissioner of Trade Tax, UP., Lucknow - [2008] 11 VST 390 (All) Issues:
Interpretation of Notification No. ST-II-1376/X-902(63)-50 for taxation of refined rapeseed oil and refined mustard oil under the Central Sales Tax Act.

Analysis:
The case involved a revision under section 11 of the U.P. Trade Tax Act, 1948 against the Tribunal's order concerning the taxation of refined rapeseed oil and refined mustard oil under the Central Sales Tax Act for the assessment year 1982-83. The primary issue was whether the turnover of these refined oils was liable to tax at one percent under Notification No. ST-II-1376/X-902(63)-50, dated April 1, 1968. The assessing authority had levied tax at 10 percent, contending that only rapeseed oil and mustard oil were covered under the notification, not the refined versions. Both the first and second appeals were dismissed, leading to the present revision.

Upon examination of the notification and relevant authorities, the court opined that the term "rapeseed oil and mustard oil" in the notification encompassed refined rapeseed oil and refined mustard oil. The court cited the case law of Tungabhadra Industries Limited, Kurnool v. Commercial Tax Officer, where the Supreme Court held that refining processes do not alter the essential nature of the oil, and refined oil retains its original identity. The court further referenced Commissioner of Sales Tax v. Prag Ice and Oil Mills, affirming that refining does not change the nature of the commodity. These precedents established that refining processes do not transform the oil into a different product for taxation purposes.

Additionally, the court referred to the case of ITC Agro-Tech Limited v. Commissioner of Trade Tax, where it was held that refined oils maintain their basic nature and are still considered the original oils. The court distinguished the case of B. P. Oil Mills Limited v. Sales Tax Tribunal, emphasizing that the issue of manufacturing did not apply in the present context. The court concluded that refined rapeseed oil and refined mustard oil should be taxed at one percent under the notification.

Consequently, the revision was allowed, setting aside the Tribunal's order, and directing the Tribunal to issue appropriate orders under section 11(8) of the Act. The judgment clarified that refined oils are included under the notification for taxation purposes based on established legal principles and precedents.