TaxTMI 
TaxTMI 
TaxTMI 
2011 (7) TMI 1062
X X X X Extracts X X X X
X X X X Extracts X X X X
....eau'). Further says that the coconut oil manufactured by the petitioner company has passed the test conducted by the National Test House, Kolkata The petitioner agrees that, its product under the Trade name "Shalimar Coconut Oil" falls within the taxing schedule prescribed under Entry No.24(i) of 2nd Schedule to the Assam Value Added Taxes Act, 2003 (hereinafter referred to as 'VAT Act' in short) without any ambiguity but the respondents No.2 and 3 have suo moto transponded the entry of coconut oil into 5th Schedule by an order issued vide No.CST - 48/2006/112 dated 11.10.2007 by the Commissioner of Taxes, Assam and notice No.12733 dated 16.11.2007 issued by the Respondent No.3, the Superintendent of Taxes, Guwahati, Unit-D. The aforesaid order dated 11.10.2007 (Annexure-VII) and notice dated 16.11.2007 (Annexure-VI) are under challenge in this writ petition. The petitioner company as stated in the petition was registered as a dealer within the meaning of Assam General Sales Tax Act, 1993 that stood repealed by enactment and subsequent Notification of the VAT Act and the petitioner is a duly registered company under the provisions of VAT Act and it has been assessed by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore, the issue involved in this case is whether coconut oil which is mainly and popularly used as hair oil and not as edible oil in Assam would be taxable at the rate of 12.5% under 5th Schedule to the VAT Act. In other words, whether the coconut edible oil manufactured by the petitioner-company in Assam would come under Entry 24(i) in part-A of the 2nd Schedule to the VAT Act to be charged tax at the rate of 12.5%. Dr. Saraf, learned senior counsel for the petitioner would submit that the impugned decision of the respondent-authorities in coming to a conclusion that the coconut oil in the State of Assam is not used for cooking but it is mainly used for hair oil and it cannot be treated as edible oil, is as much presumptive as unreasonable and baseless inasmuch as there was no survey undertaken before coming to such conclusion which was required to be done before any decision is taken. Such unilateral decision was taken without affording any opportunity of hearing to the petitioner, which is liable to be interfered with in judicial review. The burden lies heavily on the State to prove that the coconut oil is used mainly as hair oil and not as edible oil in Assam. There is no findi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....il is based on market survey and as per the commercial parlance or market test. For application of common parlance and commercial parlance test in respect of a particular item, he would refer us to Commissioner of Trade Tax UP-vs-Associated Distributors Ltd. reported (2008) 7 SCC 409, wherein it is held that the Hindi word Mithai' as understood in the State of U.P. would not cover bubblegum inasmuch as bubblegum is an unclassified item taxable @ 10%. The reason was that the word 'Mithai' has a definite connotation and it can be said with reasonable amount of certainty that people in this country do not consider toffee as Mithai. Similarly in the case of coconut oil produced and sold in Assam, when a person asks a salesman in a shop for coconut oil, he would instantly bring and show coconut oil used as hair oil and not coconut oil used for cooking. Therefore, according to Mr. Choudhury, learned Addl. Advocate General, the coconut oil both in common and commercial parlance would mean only coconut hair oil as the people in the State of Assam mostly and popularly use the coconut oil as hair oil. He would then refer to another case in SSE Pvt. Ltd.-vs- the State of Assam and....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... oil is not popularly used by the people in Assam as edible oil. It is rather popularly used as hair oil only. We are aware that edible oil means oil for being used as medium of cooking. Coconut is undoubtedly a main medium of cooking, mainly in the southern States of India. In the rest of the country, including Assam, it is not usually/popularly used as edible oil or medium of cooking. It means that in common parlance, the coconut oil is not accepted as edible oil in Assam. The respondent-authorities may be right in excluding the coconut edible oil from Entry 24(i) of Schedule-2 and making it chargeable under 5th Schedule as residuary item levying tax at @ 12.5 %. Now coming to the meaning of a particular item under the commercial parlance there is a need for further examination in the context of use of a particular item and treatment given under a statute for charging tax on it. The meaning of 'Mithai' as explained in the "Associated Distributors" case (supra) relates to edible items namely Mithai i.e. sweet and bubblegum i.e.Toffee. Toffee is considered as sweetmeat but bubblegum is not a sweetmeat like the toffee. It is an unclassified goods taxable under the law in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lished that in common parlance edible oil is produced from coconut and sold in the country including the State of Assam. Thus, it appears that there are various tests applied for determining the meaning or connotation of words and expressions describing an article in taxing statutes. The mostly used tests are - common sense or popular test, trader or commercial parlance test, scientific and technical meaning test and user test. Some time dictionary meaning is also pressed into service for interpreting the items. For the purpose of deciding the present case it is not necessary to deal with application of the said tests. However, we feel it apt to bear in mind that the Supreme Court in other cases held that user test is logical but inconclusive. Similarly, use of dictionary meaning in interpreting an item in taxing statute is not considered relevant in all cases. A Division Bench of this court had an occasion to deal with the application of the aforesaid tests in details by referring to various decisions of the Supreme Court. In this context, we are referring ourselves to Chitta Ranjan Saha (supra). The settled position of law has been narrated in paragraph 15 of the judgment which ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be applicable to other cases. Therefore the test as applied to interpretation of 'Mithai' in Associated Distributors case (supra) has no application to the present case. The meaning of Mithai' as explained in the said case relates to edible items only that is 'Mithai' not the sweetmeat or bubblegum i.e. toffee. In the modern days people like to have different food items prepared by different media of cooking. Food items prepared in coconut oil is no exception. People from different parts of India, including southern region, out of employment, business, trade and other avocations, come to Assam. Many people from southern region have come and settled in Assam for whom there is a popular demand for coconut edible oil. It will be just a denial of reality if one makes a superficial observation that only coconut hair oil is used and edible coconut oil is not at all used or sold in Assam. Entry in 24(i) under 2nd Schedule to the VAT Act refers to edible oil. There is no specifications of edible oil made of mustered oil, rape-seed, sunflower or coconut. The item in the said Entry requires fulfillment of test and standard set by the authorities for edible oils. The au....
X X X X Extracts X X X X
X X X X Extracts X X X X
....been pronounced in other decisions of the Supreme Court which have been followed by this court in Chitta Ranjan Saha's case (supra), wherein, following the said principles of law it has been observed that if a tax payer seeks advantage, which was not intended to by the legislature but to which he was entitled on consideration of statute, he must be given that advantage. We see a similar situation in the present case also. The statute namely the VAT Act never intended that coconut edible oil should not be included or would not come under the fold of edible oils in Entry No. 24(i) of the 2nd schedule and thereby the manufacturers/traders who are tax payers would not be given the benefit of rate of tax i.e. @ 4% as prescribed in the 2nd schedule. In the State of Rajasthan, a similar question arose before the Jaipur Bench of Rajasthan High Court in Assistant Commissioner, Circle-E, Commercial Taxation Department-vs- Merico Industries Ltd. shopping center reported in 2006 VOL 15 Tax Update 160 (Rajasthan High Court). The question of law involved in that case was whether "Parachute 110 coconut" sold by the assessee during the relevant period would be taxable at the rate of 4% under ....