2005 (9) TMI 651 - HC - VAT and Sales Tax

Classification of Used Mobile Oil as 'All Kinds of Oil' Upheld by High Court

The Commissioner, Trade Tax Versus S/S Agarwal Oil Refinery

The High Court held that used mobile oil should be classified under the broader category of 'All kinds of oil' and not as 'old, discarded, unserviceable ... - Issues:1. Whether used mobile oil falls under the category of 'old discarded unserviceable goods' and is taxable at the point of sale to consumersRs.Analysis:The revision under Section 11 of the U.P. Trade Tax Act challenged the Tribunal's order related to the assessment year 1990-91. The primary issue raised was whether the Tribunal was justified in rejecting the appeal of the department regarding the taxability of used mobile oil under the category of 'old discarded unserviceable goods.' The Standing Counsel argued that the used oil purchased by the dealer was considered burnt oil and should be taxed under Section 3AAAA of the Act. He relied on a previous court decision to support this contention. On the other hand, the dealer's counsel argued that the used oil still retained its characteristics as oil and should not be taxed under the same provision. He cited a different court decision to support this argument, emphasizing that the used oil was still considered oil even after processing.The High Court analyzed the arguments presented by both parties and reviewed the orders of the Tribunal and lower authorities. The assessing authority did not find that the purchased used oil lost its characteristic of oil. The first appellate authority noted that the dealer purchased used oil, refined it, and produced fresh mobil oil, indicating that the used oil retained its essential characteristics even after processing. The Court referred to a relevant notification and a Supreme Court decision to interpret the term 'old' in the context of taxability, emphasizing that if the used oil still possessed the characteristics of oil and was usable as oil, it could not be categorized as 'old discarded or unserviceable.'Referring to previous court decisions, the High Court concluded that used oil should be considered under the broader category of 'All kinds of oil' and not as 'old, discarded, unserviceable goods.' The Court distinguished a previous case where mobil oil that had outlived its utility was considered unserviceable, which was not the case with the used oil in the present matter. Additionally, a Bombay High Court decision was cited to support the argument that used lubricating oil, after processing, retained its essential characteristics as oil. Ultimately, the Court upheld the Tribunal's order, dismissing the revision for lack of merit.