TaxTMI 
TaxTMI 
2026 (9) TMI 1036
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....rporation) has filed this petition challenging the constitutional validity of Section 61 (4-A) of the Madhya Pradesh Commercial Tax Act, 1994 (hereinafter referred to as 'Act of 1994') and constitutional validity of Section 46(5)(ii), 46(6) and Sub-Section (3) of Section 4-A of M.P. Value Added Tax, 2002 read with Section 13 of the Entry Tax Act, 1976 which provides that no Second Appeal shall be admitted by the "Appellate Board" unless, out of the total balance due from the dealer after the order passed in First Appeal, 20% of such balance is paid and the memorandum of appeal is accompanied by a satisfactory prove of payment of such amount and thereupon the "Appellate Board" shall stay the recovery of the balance amount till the decision of the appeal. 3. The petitioner is also seeking quashing of the order dated 14.06.2006 passed by the respondent No.3 and also order dated 21.06.2010 passed by the respondent No.5 in Appeal No.21/2008. It has also challenged the show cause notice dated Nil issued in Appeal No.50/Bhopal/10-11 (Entry Tax) in respect of deposit of tax as per Section 46(5), failing which the appeal shall stand dismissed, and prays for direction to respondents to he....
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....ct (for short Act, 1976) inasmuch as it being entered for the purpose of resale, no entry tax should be imposition on Furnace Oil like Kerosene and the Bitumen, which fall under the same category under Schedule-III of Act, 1976. It is also contended that order dated 14.06.2006 passed by the respondent No.3 is based on 5 characteristics and the fact that both products are being use as fuel such 5 characteristics are color, density, flash point, distillation range and aromatic content, whereas the petitioner has submitted a chart showing 14 characteristics for distinguishing Furnace Oil and Light Diesel Oil, but the respondent No.3 considered only 5 characteristics to arrive at a conclusion that both the products are same. 9. In so far as the controversy regarding rate of tax, the same started with an order of respondent No.3 dated 06.05.1999 passed under Section 68 of Commercial Tax Act, 1994 in the case of M/S Sharatchand Tiwari, wherein it has been decided that Reliance product marketed as C-9 Furnace Oil, treating it to be Light Diesel Oil. This view held the field for about twenty years, and there has been no material change in the entry of the schedule of the Entry Tax Act, ....
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....o the temperature of obtaining residual after filtration in respect of Furnace Oil, it is at 0.25% maximum, while for Light Diesel Oil, its maximum is 0.1%. 14. In so far as another factor, ash content, is concerned, it is the high temperature at which the petroleum product is heated till it totally evaporates and thereafter, the remains are ash content including Silica, Vanadium, Nickel and other material. In the case of Furnace Oil, ash content is 1%, whereas the same is 0.2% regarding Light Diesel Oil. 15. The next distinguishing feature referred to by the petitioner is water content, which is 1% in respect of Furnace Oil and it is 0.2% in the Light Diesel Oil because of which the Carbon chain in Furnace Oil is very complex and long; water is trapped within the chains, and the same is unable to be drained out. So far as sulphur is concerned, it is an impurity in both the products. It is 4% in Furnace Oil and 1.8% in Light Diesel Oil. 16. This amounts to the furnishing of sulphur dioxide gas, which, when ignited and same becomes hazardous and pollutes the atmosphere. Further, referring to viscosity, which pertains to the measurement of a liquid's resistance to flow. ....
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....as also Maulana Azad Institute of Technology, Bhopal certifying that both the above products are different from each other specifying that C-9 Marketed by Reliance Petroleum is different from Furnace Oil of IOCL inasmuch as C-9 is a single Hydro Carbon product, whereas Furnace Oil is a mixture of Hydro-Carbons. The petitioner has also invited attention of this Court to the notification entry dated 01.04.2007 (Annexure P/7) issued under Section 4-A of the Entry Tax Act to contend that the Commercial Tax Department itself has been treating these two products as different commodities. The rate of Entry Tax on Light Diesel Oil, Furnace Oil and hexane was increased by 10%, when entered from outside Madhya Pradesh by a registered dealer. It is also stated that Bureau of India Standards recognized both the products separately. 21. The common name used for Furnace Oil is Fuel Oil. While fixing standards of fuel oil, the specifications has been issued by the committee and such specifications are numbered as IS:1593-1982, which are properties of fuel oil and the same match with the Furnace Oil sold by the petitioner, as his evidence from Annexure P/10. Likewise, the petitioner filed Annex....
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.... 25. The petitioner has referred two orders passed by the respondent No.2 on 18.08.2008 in appeal No.A/2005/CTAB/07(State) to point out that order dated 14.06.2026 will only apply prospectively and, in this regard, as quoted in Para-4 of such order to show that order of the Commissioner relating to assessment made in the year 1989-2000. The petitioner further submitted that by order dated 18.08.2008, the respondent No.2 has affirmed the order passed by the respondent No.3 on 14.06.2006. Therefore, as the impugned order dated 21.06.2010 relates to the assessment year 01.04.2007 to 31.03.2008, the remedy of first appeal is an illusion. 26. Likewise, after the decision of the first appeal, if a second appeal is preferred, then the effect of order dated 18.08.2008 will be binding on the respondent No.2. Hence, the remedies of first and second appeals are inefficacious one. On the basis of aforesaid contentions, it is stated that the order dated 14.06.2006 of the respondent No.3 and the ratio followed by the respondent No.5 in order dated 21.06.2010 ignoring distinguishable classifications and law laid down by the Apex Court are in violation of Articles 14 and 19(1)(g) of the Consti....
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....n illegal order raising additional demand would again have to deposit 10% tax on First Appeal and further 20% tax on Second Appeal. The net tax effect would end up in being 50% of the disputed demand. These complete lack of discretion to waiver the part payment therefore, resulted in unintended and onerous demand making the provision arbitrary. 31. It is further pointed out that in the present case, the issue of Furnace Oil can be treated as Light Diesel Oil is such an issue that arose earlier and therefore, the petitioner would have to pay a huge amount of tax, penalty and interest as part payment. With a view to illustrate, the petitioner indicates the status of demand and pre-deposit in First Appeal and Second Appeal from assessment year 1999- 2000 to 2006-2007 to show that as against total demand of Rs. 98.30 Crores, the petitioner has deposited Rs. 17.59 Crores. By way of chart, which has been brought on record as Annexure P/20. 32. By way of amendment, the petitioner has brought on record, the orders passed by First Appellate Authority as well as Appellate Board in respect of assessment years 1999-2000, 2001-2002, 2002-2003, 2003-2004 and 2004-2005 granting relief to th....
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....ailability of an alternative remedy as no substantial ground has been made out by the petitioner so as to sustain the challenge regarding pre-deposit condition for filing appeal. It is submitted that so far as the ingredients of Light Diesel Oil and Furnace Oil are concerned, they are same and similar. The material produced by the petitioner cannot be examined by this Court. The same is to be examined by the experts and, in the absence of any expert's report or examination by the Appropriate Authority, no conclusion can be drawn to assume that Light Diesel Oil and Furnace Oil are different commodities. Under different statutes, the legislation is free to place the commodity at an appropriate place. The dealer has no right to claim that, if, under one statute, the commodity is described as the same, then, under the other statute, the same cannot be considered different. 37. It is submitted that the order dated 14.06.2006 is passed on proper appreciation of the facts and the ingredients of Light Diesel Oil and Furnace Oil. The learned Commissioner has considered the relevant aspects and, after application of mind, has decided that the Light Diesel Oil and Furnace Oil both are ....
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....n the same category for charging under the same rate of tax. 42. A comparative analysis of the technical specifications, physical characteristics, and legal arguments set out by the petitioner demonstrates that Furnace Oil (FO) and Light Diesel Oil (LDO) are distinct commercial and chemical commodities, which the respondents have not controverted. Technical & Characteristic Comparison Parameter/Feature Scientific / Functional Definition Furnace Oil (FO) Light Diesel Oil (LDO) Pour Point ("Core Point") Lowest temperature at which oil ceases to flow freely. 18°C - 21°C 12°C - 18°C Distillation Range Temperature at which the product begins to boil and evaporate. 360°C - 500°C 300°C - 400°C Carbon Chain ($C_n$) Number of carbon atoms present per molecule. $C_{20} - C_{50}$ (Heavier, complex) $C_{16} - C_{30}$ (Lighter) Sedimentation Maximum residual matter obtained after filtration. Max 0.25% Max 0.10% Ash Content Inorganic residue (silica, vanadium, nickel, etc.) remaining after complete combustion/evaporation. 1.0% 0.2% Water Content Moisture trapped within hydrocarbon ....