TaxTMI 
TaxTMI 
2011 (9) TMI 11
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....garine is not consumed directly, according to him, it is inedible oil. Entry 90 in the First Schedule specifically uses the phrase "and margarine" which establishes the fact that the same is neither edible nor inedible oil. Hence, margarine would come only under Entry 90 and, therefore, would be taxable at the rate of 8% and not at the concessional rate of 4%. Hence, the sale of margarine would be subjected to tax at 8%. 5. The appellant preferred an appeal before the Appellate Assistant Commissioner, Commercial Taxes, Ernakulam. The appeal was dismissed and the order of the Sales Tax Officer was upheld. Aggrieved by the above order, the appellant preferred an appeal against the said order before the Kerala Sales Tax Appellate Tribunal. The Tribunal set aside the order of the Appellate Assistant Commissioner in so far as it related to the rate of tax on margarine. According to the Tribunal: "..........margarine could be considered as "edible oil". According to New Webster's Dictionary, margarine is "a substitute for butter consisting of a mixture of prepared edible fats extracted from vegetable oils, and treated with lactic acid bacilli". According to Chambers T....
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....nt referred to the leaflet of Dalda produced in court and contended that vitamin addition is there in other hydrogenated oils also, we do not think Dalda sold by hydrogenated oil is similar to bakery margarine sold by the Respondent. From the product description and the limited use of the item in the bakery and confectionary industry, it is clear that the Respondent's product namely, bakery margarine is a product made for a specific purpose i.e. for use in bakery and confectionary industry and the manufacturer has specifically prohibited use of the item for any other purpose. Edible oil, on the other hand, whether in hydrogenated form or not, is used for all cooking purposes. Even though hydrogenated oil or refined oil also can be used in the bakery or confectionary industry, the reverse is not true. In other words, margarine exclusively make to use in bakeries or confectionary industry cannot be treated as edible oil as the same cannot be used for all purposes for which edible oil is used. In fact, the Tribunal has allowed respondent's claim on the ground that the circular clarifying the notification uses the word "such as" and so much so, the list is not exhaustive. Howev....
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....the First Schedule to the Act includes oils, edible or inedible, including refined or hydrogenated oils and margarine. It means that the concession is not granted to margarine as it is included in Entry 90 of the First Schedule. It was argued that as the intention of the legislature is clear, the appellant cannot claim the benefit of reduced rate by submitting that its product also comes within the ambit of edible oils. He further submitted that the BISBRI brand margarine sold by the appellant cannot be used for all purposes for which edible oils, including hydrogenated oils and vanaspathi, are used. It was his case that margarine was used for a limited purpose i.e. only for preparing certain eatables and not for all purposes and, therefore, it cannot be said to be edible oil. 11. The learned counsel relied upon a judgment delivered in the case of Commissioner of Trade Tax, UP v. Associated Distributors, 2008(7) SCC 409. There the dispute was whether bubble gum was a mithai and could be taxed at 6.25% or whether bubble gum was an unclassified item to be taxed at 10%. This Court held that although bubble gum contained 60% of sucrose, still the same was not a mithai. Relying ....
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....o is liable to tax under Section 5. 8 Second Schedule: Sl. No. Description of goods Existing rate of tax (percentage) Reduced rate of tax (percentage) 17A Edible oil 8 4 17. According to the above Entry 90 in the First Schedule, oils, whether edible or inedible, including refined or hydrogenated oils and margarine, not elsewhere mentioned is to be taxed at 8%. It is pertinent to note that concessional rate of 4% is levied on all edible oils as per Entry 17A of the Second Schedule read with Notification SRO No. 429/95 dated 31.2.1995. Thus, instead of 8%, edible oil is taxed at the rate of 4%. The question is whether the appellant is entitled to the aforestated benefit for the margarine manufactured by it. Margarine is definitely an edible oil as it is used for preparing bakery products but it is not used for normal cooking. As margarine is not used for normal cooking but is still used for preparing bakery products, a doubt prevailed whether margarine can be considered as edible oil. In the circumstances, Circular No. 2439/TD dated 19.2.1996 was issued by the Government, which reads as under: "CIRCUAR Sub:- Reduced rate of tax on Edible Oil - Clarif....