Kerala High Court
State Of Kerala vs Aluva Sugar Agency on 22 September, 2006
Equivalent citations: (2007)8VST726(KER)
Author: C.N. Ramachandran Nair
Bench: C.N. Ramachandran Nair, K.M. Joseph
JUDGMENT C.N. Ramachandran Nair, J.
1. The question raised in the revision 1 case filed by the State is whether the Tribunal is justified in granting concessional rate of tax on BISBRI brand bakery margarine sold by the petitioner at four per cent treating it as edible oil under item 17A of the Second Schedule of Notification SRO No. 1728 of 1993 for the assessment year 1997-98. Margarine is one of the items falling under entry 90 of the First Schedule to the Kerala General Sales Tax Act, 1963 which attracts tax at the point of first sale at eight per cent. Entry 90 of the First Schedule to the KGST Act and entry 17A of the Second Schedule to SRO No. 1728 of 1993 are respectively extracted hereunder for easy reference:
First Schedule to the KGST Act:
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Sl. Description fo goods Point of levy Rate of tax
(percentage)
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90 Oils, edible or inedible At the point of 8
including refined or hydro- first sale in the
genated oil and margarine State by a dealer
not elsewhere mentioned in who is liable to
this Schedule or in the tax under Section 5
Second Schedule.
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Second Schedule to SRO No. 1728 of 1993:
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Sl. Description of Existing rate of tax Reduced rate
No. Goods (percentage) of tax
(percentage)
----------------------------------------------------------------17A Edible oil 8 4
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2. From entry 90 above it is clear that margarine is also included therein. However, when concessional rate is granted under notification above referred, the concession is limited to edible oil. Obviously item 90 of the First Schedule covers inedible oils also and since item 17A of the notification refers to only edible oils, it does not cover all items covered by entry 90. It is to be noted that edible oil under Schedule-entry 90 includes refined or hydrogenated oil such as groundnut oil, gingelly oil, refined oil and vanaspathi. The respondent's case is that bakery margarine sold by it is hydrogenated oil or vanaspathi. Counsel also produced leaflets pertaining to the product sold by the respondent and vanaspathi sold by the Hindustan Lever Ltd., under the brand name "Dalda" to show that both are same. According to him, for earlier years in the assessee's case and in the case of Hindustan Lever Ltd., margarine was also assessed at four per cent based on the above notification. However, we are unable to accept the contention of the respondent because the manufacturer of the product BISBRI brand bakery margarine specifically prohibits use of the item except as raw material for bakery/confectionery industry which is printed conspicuously in the leaflet produced. Therefore, BISBRI brand bakery margarine sold by the petitioner cannot be used for ail the purposes for which edible oil including hydrogenated oil and vanaspathi are used. Probably edible oils or vanaspathi could also be used in bakery industry. However, the same does not mean that a product exclusively used to serve as oil in the bakery industry could be treated as edible oil. The product description of the respondent's product in the leaflet further shows that the item is enriched with vitamin A and vitamin D and also contains permitted emulsifiers and stabilisers. Even though counsel for the respondent 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 hydrogenating 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 confectionery 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 confectionery industry and the manufacturer has specifically prohibited use of the item for any other purpose. The 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 confectionery industry, the reverse is not true. In other words, margarine exclusively made for use in bakeries or confectionery 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 the respondent's claim on the ground that the circular clarifying the notification uses the words "such as" and so much so, the list is not exhaustive. However, we find from the circular that the use of words "such as" after including hydrogenated oil is followed by specific items, namely, ground nut oil, gingelly oil and vanaspathi. This only means that those items also are covered by notification. However, margarine referred above is not similar to those items, is what we found. Therefore, we are of the view that bakery margarine is not edible oil covered by the notification and clarified in the circular and therefore, the decision of the Tribunal holding otherwise is liable to be reversed. We therefore allow the revision by reversing the order of the Tribunal and upholding the assessment of bakery margarine at eight per cent under entry 90 of the First Schedule to the KGST Act, 1957.