Madhya Pradesh High Court
Om Agro Oil Pvt. Ltd. Girwai Naka Near ... vs Mp Madhya Kshetra Vidyut Vitran Com. ... on 11 February, 2025
Author: Milind Ramesh Phadke
Bench: Milind Ramesh Phadke
NEUTRAL CITATION NO. 2025:MPHC-GWL:8598
1 WP-11988-2022
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE MILIND RAMESH PHADKE
WRIT PETITION No. 11988 of 2022
OM AGRO OIL PVT. LTD. GIRWAI NAKA NEAR GIRWAI POLICE
CHOWKI A B ROAD LASHKAR GWALIOR THR. ITS MANAGE
Versus
MP MADHYA KSHETRA VIDYUT VITRAN COM. LTD. AND OTHERS
Appearance:
Shri Sanjay Kumar Bahirani - Advocate for the petitioner.
Shri Narottam Sharma, Advocate for the respondent [R-1].
Reserved on : 11.2.2025
Pronounced on : 16/05/2025
ORDER
The present petition under Article 226/227 of the Constitution has been preferred being aggrieved by the order dated 21.4.2022 passed by respondent no.3/4 in Appeal No.50/2015, whereby while dismissing the appeal preferred by the petitioner the order of final assessment dated 30.3.2015 by which a fine to the tune of Rs.2,96,473/- was imposed upon him for unauthorized use of electricity alleging that since the petitioner is running a Packaging/Bottling Plant for which as per tariff schedule LV 2.2 non-domestic would be applicable and not tariff schedule LV 4-LT Industrial.
2. Assailing the said approach to be misconceived, false and fabricated the present petition has been filed alleging that the petitioner is Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29 NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 2 WP-11988-2022 using the electricity connection under the head of the industrial plant from where he is manufacturing vegetable oil by blending oil from his own processing manufacturing unit and is not engaged in packing and bottling of prepared beverage/food article, therefore, the petitioner would be liable to pay the tariff as per tariff Schedule LV 4-LT Industrial and not as per tariff Schedule LV 2 non-domestic.
3. Short facts of the case are that the petitioner is running a manufacturing unit of mustard oil for which he has got a registration certificate issued from the Shops & Establishments Act, 1958. Apart from running the manufacturing unit since many other requirements were to be fulfilled therefore petitioner applied for seeking certificate and license under different enactment from different authorities and one of such certificate of authorization was obtained under the General Grading and Marketing Rules 1988 notified under Agriculture Produce (Grading & Marking) Act, 1937.
4. The petitioner company is manufacturing the blended food vegetable oils under the capacity of 06 MT per day for which he has got registration from the Food and Civil Supplies Department Bhopal and had also acquired a license for manufacturing unit under FSSA Act issued by the Central Licensing Authority and similarly for selling the food article intra-state, he had got the license from the Food Safety and Standards of India.
5. For running the manufacturing unit, electricity being a necessary element, the petitioner initially had applied for electricity connection under the tariff category of LV 4.1 A, whereon initially the 24 HP connection was sanctioned but thereafter looking to electricity consumption, it was enhanced Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29 NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 3 WP-11988-2022 upto 60 HP and with the aforesaid connection, the petitioner was running his manufacturing unit, but on 27.12.2014 an inspection was carried out at the petitioner's manufacturing unit wherein the inspecting authority found that apart from manufacturing vegetable oil, the petitioner is also packing the oils in bottles, therefore, found that the electricity connection of petitioner would come under the tariff schedule of LV-2, whereas petitioner was paying the bill of electricity connection under the tariff schedule of LV 4.1 A, so in this regard panchnama and spot inspection report were prepared on the same day.
6. After the said inspection, the interim assessment order was prepared in FORM no.5, wherein it was observed that the petitioner has obtained the electricity connection under the different schedule of tariff and is not making payment as per the actual tariff, therefore, considering the difference, fine of sum of Rs.2,96,473/- was imposed upon the petitioner company.
7. In the light of provisional assessment order, the petitioner deposited Rs.1 lacs under protest and raised an objection against the said provisional assessment order alleging that the petitioner is manufacturing blended oil which is prepared from by mixing other vegetables oils for which permission was given by different authorities under the different enactments and further it was stated that after mixing the mustard oil and rice bran oil, it is blended, filtered and is packed in bottle in the manufacturing process unit itself and thereafter it is sold in the category of blended edible vegetable oil, thus, it cannot be assumed that the petitioner is running a bottling plant and it was further averred that the bottling plant means a packaging of food article/oil Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29 NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 4 WP-11988-2022 purchased from different market, but in the present matter it is only after blending of two oils a blended edible oil is manufactured and thereafter filled in bottles and sold in the market. Therefore, the assessment made on the basis that the petitioner unit is engaged in bottling of edible oil is perverse.
8. After considering the objections of the petitioner final assessment order was passed on 30.12.2015 by which it was directed to the petitioner to deposit an amount of Rs.1,96,473/- as a penalty.
9. Being aggrieved by the final assessment order dated 30.12.2015, the petitioner filed an appeal under section 127 of the M.P. Electricity Act and by raising various grounds as was raised in the objections it was averred that because the petitioner is not running a bottling plant rather it is running a manufacturing unit on which tariff of schedule LV 4.1 A would be applicable, therefore, the penalty imposed upon the petitioner is perse illegal.
10. The Appellate Authority dismissed the appeal, against which the present petition has been filed by the petitioner.
11. Learned counsel for the petitioner had argued before this Court that the respondents authorities have wrongly construed that the manufacturing unit of the petitioner was engaged in bottling of the edible oil, therefore, the tariff under which the petitioner was paying the electricity tariff was not correct and the petitioner was required to pay the electricity tariff as per LV.2 non-domestic which is perse illegal as the basic structure of the unit of the petitioner was of manufacturing of blended edible Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29 NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 5 WP-11988-2022 vegetable oil and not simply of bottling which was of manufacturing a part of the edible oil and used for converting the said product into some other commodity, and the main purpose of the unit was of manufacturing/processing the blended edible vegetable oil. It was further argued by referring to the definition of "producer" as provided under Reguation 2 (f) of Vegetable Oil Products Production and Availability (Regulation) Order 2011 that a producer means a person engaged in the business of producing any vegetable oil product or any solvent- extracted oil, or de-oiled meal, either in his own factory or in the factory of any other person, acting on his behalf and as the petitioner was engaged in the business of producing vegetable oil product, the registration certificate was issued on 30.4.2014 for manufacture of blended edible vegetable oils installed capacity of 6 metric ton per day. Thus, when the petitioner company was engaged in manufacture of blended edible vegetable oil and thereafter was packing it and selling in the open market it cannot be said that the unit was established only for bottling purpose. Thus, on the basis of the aforesaid arguments it was submitted that the impugned orders of illegal assessment deserves to be quashed.
12. Learned counsel for the petitioner while referring to a three Bench decision of the Apex Court in the matter of Chowgule & Co. Pvt. Ltd. & Anr vs Union Of India & Others, reported in AIR 1981 SC 1014 argued that where any commodity is subjected to a process or treatment with a view to its "development of preparation for the market", it would amount to processing of the commodity, though the nature and extent of Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29 NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 6 WP-11988-2022 processing may vary from case to case; as in one case the processing may be slight and in another it may be extensive; but with each process suffered, the commodity would experience a change and wherever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity and the nature and extent of the change is not material. While referring to the aforesaid judgment it was submitted that in the said case diverse quantities of ore possessing different chemical and physical compositions were blended together to produce ore of the requisite chemical and physical composition demanded by the foreign purchaser and as a result of this blending, the quantities of ore mixed together in the course of loading through the Mechanical Ore Handling Plant experienced change in its respective chemical and physical compositions, because what is produced by such blending was ore of a different chemical and physical composition, thus, it was held that when the chemical and physical composition of each kind of ore which goes into the blending is changed, there can be no doubt that the operation of blending would amount to 'processing' of ore.
13. It was further argued that though the aforesaid finding was in relation to section 8 (3) (b) and Rule 13 of the Central Sales Tax Act and Central Sales Tax Rules, but the fact remains that the term processing has been given an extensive meaning which would apply in the present case and would go to show that even if the process of blending of the edible oil and making edible products is construed as it is, it would amount to processing and as per the Tariff Schedule LV.4 LT Industrial, apart from Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29 NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 7 WP-11988-2022 other units any manufacturing or processing unit (excluding bottling plant), producing/processing food items or processing agricultural produce for preservation/increasing its shelf life and Dairy units, the tariff shall be paid as per LV-4.
14. On the other hand learned counsel for the respondents while supporting the impugned orders submitted that no illegality has been committed by the authorities below in holding that the Unit of the petitioner was engaged in repackaging/bottling of the edible oils, therefore, as per tariff schedule 2 the charges were required to be paid and since the said was not paid in accordance with the required tariff schedule, the penalty of Rs.2,96,473/- was rightly imposed and affirmed in the appeal. Thus, prayed for dismissal of the petition.
15. Heard the counsel for the parties and perused the record.
16. The only controversy which is required to be assessed herein is as to whether the petitioner was engaged in manufacturing/processing of the blended edible vegetable oil or was engaged in bottling of said oil and if was engaged in manufacturing/processing of blended edible vegetable oil then whether the tariff as given in tariff schedule IV LT Industrial would be applicable and if it is found that he was engaged in bottling of the area then whether he would be liable to pay the tariff as per schedule tariff LV- 2?
17. In the aforesaid regard the relevant certificate of authorization issued under the provisions of General Grading and Marking Rules 1988 notified under Agriculture Produce (Grading and Marking) Act 1937 and Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29 NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 8 WP-11988-2022 the registration certificate issued under the Vegetable Oil Products Production and Availability (Regulation) Order 2011 are required to be seen. As per the certificate of authorization issued under the Act of 1937 under Rule 3(7) and 3 (8) the commodity on which grade designation marks would apply is mentioned as "blended edible vegetable oil" and in the column of name and address of processing unit it is mentioned own processing unit and in column no.8 the particulars of the trade brand, trade mark and private mark is mentioned. Further as per the registration certificate issued under the Order of 2011 it is mentioned that the same has been issued for manufacturing of blended edible vegetable oil of installed capacity of 6 MT per day. Apart from the aforesaid two certificates the petitioner has also procured licence from Food Safety and Standard Authorities of India for vegetable oil processing unit and in the said certificate it is mentioned that the petitioner would be repacking blended edible vegetable oil which included Soyabean Oil, Pamolive Oil, Refined Rice Bran Oil, mustard oil and refined rice bran oil, pamolive oil and mustard oil and mustard oil and cotton seed oil with total installed capacity of 6 MT per day.
18. Further while analyizing whether the activities carried out by the petitioner would amount to manufacturing or it would amount to processing. This court find its expedient to quote para 5 and 6 of the judgement of Apex Court in the matter of Chowgule & Co. Pvt. Ltd. & Anr vs Union Of India & Others (supra) which is as under:
5. The point which arises for consideration under the first question is as to whether blending of ore in the course of loading it into the Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29 NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 9 WP-11988-2022 ship through the Mechanical Ore Handling Plant constituted manufacture or processing of ore. Now it is well settled as a result of several decisions of this Court, the latest being the decision given on 9th May, 1980 in Civil Appeal No. 2398 of 1978-The Deputy Commissioner of Sales Tax v. M/s Pio Food Packers that the test for determining whether manufacture can be said to have taken place is whether the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity, but is recognised in the trade as a new and distinct commodity. This Court speaking through one of us (Pathak, J.) pointed out: "Commonly manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place." The test that is required to be applied is; does the processing of the original commodity bring into existence a commercially different and distinct commodity? On an application of this test, it is clear that the blending of different qualities of ore processing differing chemical and physical composition so as to produce ore of the contractual specifications cannot be said to involve the process of manufacture, since the ore that is produced cannot be regarded as a commercially new and distinct commodity from the ore of different specifications blended together. What is produced as a result of blending is commercially the same article, namely, ore, though with different specifications than the ore which is blended and hence it cannot be said that any process of manufacture is involved in blending of ore.
6. It still remains to consider whether the ore blended in the course of loading through the Mechanical Ore Handling Plant can be said to undergo processing when it is blended. The answer to this question depends upon what is the true meaning and connotation of the word "processing" in sec.8(3)(b) and Rule 13.
The word has not been defined in the Act and it must therefore be interpreted according to its plain natural meaning. Websters' Dictionary gives the following meaning of the word "process", "to subject to some special process or treatment, to subject (especially raw material) to a process of manufacture, development or preparation for the market etc., to convert into marketable form as live stock by slaughtering, grain by milling, cotton by spinning, milk by pasteurizing fruits and vegetables by sorting and repacking." Where therefore any commodity is subjected to a process or treatment with a view to its "development or preparation for the market", as, for example, by sorting and repacking fruits and vegetables, it would amount to processing of the commodity within the meaning of sec.8(3) (b) and Rule 13.
Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 10 WP-11988-2022 The nature and extent of processing may vary from case to case; in one case the processing may be slight and in another it may be extensive; but with each process suffered, the commodity would experience a change. Wherever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity. The nature and extent of the change is not mate rial. It may be that camphor powder may just be compressed into camphor cubes by application of mechanical force or pressure without addition or admixture of any other material and yet the operation may amount to processing of camphor powder as held by the Calcutta High Court in Om Parkash Gupta v. Commissioner of Commercial Taxes, What is necessary in order to characterise an operation as "processing" is that the commodity must, as a result of the operation, experience some change. Here, in the present case, diverse quantities of ore possessing different chemical and physical compositions are blended together to produce ore of the requisite chemical and physical composition demanded by the foreign purchaser and obviously as a result of this blending, the quantities of ore mixed together in the course of loading through the Mechanical Ore Handling Plant experience change in their respective chemical and physical compositions, because what is produced by such blending is ore of a different chemical and physical composition. When the chemical and physical composition of each kind of ore which goes into the blending is changed, there can be no doubt that the operation of blending would amount to 'processing' of ore within the meaning of sec. 8(3) (b) and Rule 13. It is no doubt true that the blending of ore of diverse physical and chemical compositions is carried out by the simple act of physically mixing different quantities of such ore on the conveyor belt of the Mechanical Ore Handling Plant. But to our mind it is immaterial as to how the blending is done and what process is utilised for the purpose of blending. What is material to consider is whether the different quantities of ore which are blended together in the course of loading through the Mechanical Ore Handling Plant undergo any change in their physical and chemical composition as a result of blending and so far as this aspect of the question is concerned, it is impossible to argue that they do not suffer any change in their respective chemical and physical compositions.
19. So far as ascertaining the unit to be a manufacturing unit the test that is required to be applied is; does the processing of the original commodity bring into existence a commercially different and distinct commodity? Answering the aforesaid the Apex Court has held that the blending of different qualities of material processing differing chemical and Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29 NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 11 WP-11988-2022 physical composition so as to produce material of the contractual specifications cannot be said to involve the process of manufacture, since the products that is produced cannot be regarded as a commercially new and distinct commodity from the products of different specifications blended together and what is produced as a result of blending is commercially the same article, though with different specifications than the product which is blended and hence it cannot be said that any process of manufacture is involved in blending. Herein case the very contention of the petitioner is that it is engaged in blending of two different oils which do not convert into new product rather turns into oil of different specifications. Thus, when the finding product cannot be said to be commercially new and distinct commodity from the oil of different specifications when blended together it cannot be said that any process of manufacture is involved therein.
20. However, it still remains to be considered whether the oil blended in the course can be said to undergo processing when it is blended. In the aforesaid regard it is observed that the answer to this question depends upon what is the true meaning and connotation of the word "processing" while dealing the matter in regard to sec.8(3)(b) and Rule 13 of Central Sales Tax Rules, 1956 and Central Sales Tax Act, 1957 and the Apex Court in Chowgule's case had went on to hold that as per the websters' Dictionary the meaning of the word "process", is subject to some special process or treatment, to subject (especially raw material) to a process of manufacture, development or preparation for the market etc., to convert into marketable Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29 NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 12 WP-11988-2022 form as live stock by slaughtering, grain by milling, cotton by spinning, milk by pasteurizing fruits and vegetables by sorting and repacking. Thus, where any commodity is subjected to a process or treatment with a view to its "development or preparation for the market", it would amount to processing of the commodity. The nature and extent of processing may vary from case to case; but with each process suffered, the commodity would experience a change. Wherever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity. Thus, what is necessary in order to characterise an operation as "processing" is that the commodity must, as a result of the operation, experience some change. Here, in the present case, two different compositions are blended together to produce oil of the requisite chemical and physical composition and as a result of this blending, the quantities of oil mixed together experience change in their respective compositions, because what is produced by such blending is oil of a different composition and when the chemical and physical composition of each kind of oil which goes into the blending is changed, there can be no doubt that the operation of blending would amount to 'processing'. Thus, in the very unit of the petitioner it can be said that after processing of the blended edible vegetable oil, it is packed and the said unit cannot be any way said to engaged only in repacking of the oil.
21. Accordingly, this Court finds that for the unit run by the petitioner the tariff Schedule LV.4 would be applicable. For reference LV-IV Industrial Unit is reproduced hereinbelow:
Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29NEUTRAL CITATION NO. 2025:MPHC-GWL:8598 13 WP-11988-2022 Applicability:
Tariff LV-4 is applicable to light, fan and power for operating equipment used by printing press and any other industrial establishments and workshops (where any processing or manufacturing takes place including tyre re-treading). These tariffs are also applicable to cold storage, gur (jaggery) making machines, flour mills, Masala Chakkies, hullers, khandsari units, ginning and pressing units, sugar cane crushers (including sugar cane juicing machine), power looms, dal mills, besan mills, and ice factories and any other manufacturing or processing units (excluding bottling plant) producing/processing food items or processing agriculture produce for preservation/increasing its shelf life and Dairy units (where milk is processed to produce other end products of milk other than chilling, pasteurization etc.)
22. The assessing officer as well as the Appellate Authority thus had wrongly held that the tariff schedule LV-2 non-domestic would be applicable to the petitioner Unit and as he had not made the payment as per the right tariff schedule he is liable for a penalty of Rs.2,96,473/- is perverse and illegal. Accordingly, the order dated 21.4.2022 as well as final assessment order dated 30.3.2015 are hereby set aside.
23. In view of above, the writ petition stands allowed and disposed of.
(MILIND RAMESH PHADKE) JUDGE (aspr) Signature Not Verified Signed by: ASHISH PAWAR Signing time: 19-05-2025 12:20:29