Allahabad High Court
M/S Agarwal Food Industries vs The Commissioner Of Commercial Tax on 16 January, 2014
Author: Sudhir Agarwal
Bench: Sudhir Agarwal
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No. - 34 Case :- SALES/TRADE TAX REVISION No. - 85 of 2014 Applicant :- M/S Agarwal Food Industries Opposite Party :- The Commissioner Of Commercial Tax Counsel for Applicant :- Ashok Kumar Counsel for Opposite Party :- C.S.C. Hon'ble Sudhir Agarwal,J.
1. As agreed by learned counsel for the parties, I proceed to decide the matter finally at this stage under the rules of the Court.
2. Heard Sri Ashok Kumar, learned counsel for the petitioner and learned Standing Counsel for the respondents.
3. The only question up for consideration is, whether item manufactured by revisionist-assessee (hereinafter referred to as "assessee") would be covered by entry "Edible oils & oilcake" at serial no.687 or "Vegetable oil" at serial no.2331 in the Schedule of Rates under Value Added Tax Act, 2008.
4. The first appellate authority, though has held that commodity produced by assessee is covered by term "Edible oil and edible vegetable ghee" hence taxable accordingly but it has been reversed by Tribunal on very strange and surprising reasons, which are irrelevant to the question up for consideration before it or otherwise were of no consequence at all. The Tribunal has observed that assessee claims to be manufacturing different exclusive item using different ingredients natural and otherwise. However, it does not mean that assessee was manufacturing something, which was not covered by aforesaid entries.
5. It is not the understanding of the parties or the way they address or term it but in order to understand whether a particular commodity or goods is covered by a particular entry in the fiscal statute, the nature and substance of that commodity has to be considered vis a vis appropriate entry and assessee's conduct and his individual understanding as such would not be material unless and until it can be shown that item is such, which is covered by more than one entries and in that case, some other principles of interpretation relating to taxing entries may be applied like doctrine of common parlance, dictionary meaning etc.
6. Here it is not in dispute that whatever was being manufactured by assessee is in the nature of "oil" since it is used as a cooking medium. It is also evident from the findings recorded by Tribunal that commodity manufactured by assessee is prepared using milk hydrogenated and unhydrogenated fats and various natural and identical flavouring substances. Schedule-II Part-A, Entry 43 is "Edible oils and oilcake". Even if I go with the Tribunal to hold that since hydrogenated and unhydrogenated fats both have been used therefore, commodity in question would not be "Vanaspati", that will make no difference for the reason that Entries 130 and 131, Schedule 2, Part-A "Vanaspati oil (Hydrogenated Vegetable Oil)" and "Vegetable oil including gingili oil and bran oil". The entry "Vegetable oil" is also wide and covers every oil which is vegetable in its nature, meaning thereby is prepared using vegetable ingredients, since rate of tax for both the entries is 5% and 4% respectively. If commodity in question is covered by any of the aforesaid items, it has to be taxed accordingly and not to be taxed by treating as a classified item for which rate of tax is 13.5%.
7. In the present case, whether commodity in question is an "edible oil" or not since the term "oil" is a wide term and in its wider sense, shall include even a "Vegetable oil" but since term "Vegetable oil" has been mentioned in different entries, well established proposition of law that special shall prevail over general. Even if a commodity is a "edible oil" but if it is also a "vegetable oil", it would be covered by entry of "Vegetable oil" and shall be taxed accordingly.
8. First of all, I proceed to consider whether commodity in question could be included within the term "Edible oil" under entry no.43.
9. The word "edible" means fit to be eaten as food. In Chandausi Oil Mills Vs. Sales Tax Commissioner, 1961(12) STC 310, the Court considered whether "linseed oil" is "edible oil" or not, and held that meaning of term "edible" is, "something which is fit to be eaten as food". It shall cover "linseed oil" being an article fit for being eaten as food and hence it is an "edible oil".
10. In respect of "coconut oil", this Court had an occasion to consider, whether it is a "hair oil" or "edible oil" since it can be used for cooking purpose as also as hair oil. In Commissioner of Sales Tax Vs. Ram Kumar Nand Kumar, Kanpur, 1972 UPTC 736, this Court said that a commodity if falls in two different entries, its taxability would be determined by usability i.e. purpose for which it has been sold. The above decision has been followed in Bombay Oil Industries Pvt. Ltd. Vs. Commissioner of Trade Tax, 2008 UPTC 1173, wherein Hon'ble Prakash Krishna J. has held that "coconut oil" when advertised for sale as a commodity for "dark and long hair" and looking to the purpose for which it has been sold and also the intention of parties, it has to be treated as "hair oil" in the particular case before the Court and not as "edible oil", though it can be used for both the purpose. It thus held that "Parachute coconut oil" sold in small packets is a "hair oil" and taxable accordingly. Therefore, it is only when a commodity qualifies for more that one entries, other considerations would be attracted but if it is attracted by only one entry giving its natural meaning, no further inquiry is necessary.
11. The term "edible" itself came to be considered in Ram Kumar Vs. State of Panjab, 2000 (117) STC 362 and Panjab and Haryana High Court held that edible oil means any oil used, directly or after processing, for human consumption and includes hydrogenated vegetable oil.
12. Looking to the meaning of term "edible" and "edible oil", I have no hesitation in holding that commodity in question, which admittedly was a cooking medium, and consisted of various fats etc., is covered by term "edible oil". The mere fact that assessee claims various qualities of the aforesaid commodity, for the purpose of claiming a better marketability, that would not make any difference so as to take away from the ambit of "edible oil". The mere fact that commodity in question was mentioned on the packet as a blended fat as a healthier cooking medium will be of no relevance to take away from its basic concept of edible oil. The further fact that it is a proprietary food also would not result in any consequence of excluding the commodity in question from the wide term "Edible oil" under entry 43.
13. Now the next question would be whether entry "vegetable oil" can include within its ambit the commodity in question.
14. Whether hydrogenated or unhydrogenated but it is not in dispute that various fats have been used in preparing the commodity and all these items are vegetable in nature. The term "vegetable" as such has not been defined in the statute under consideration but it has been considered by Court time and again. In Ram Bux Chaturbhuj Vs. State of Rajasthan, AIR 1963 SC 351, the Court said that term "vegetable" in taxing statutes must mean "as in common parlance, that class of vegetables which is grown in a kitchen garden or in firm and is used for the table. A "vegetable product" has been defined as a product of or made of or out of vegetable, by Apex Court in Britannia Industries Ltd. Vs. T.N. Pollution Control Board, (2000) 9 SCC 68. The "vegetable" being a word of every day use, it has been said by Court in Motipur Zamindary Co. (P) Ltd. Vs. The State of Bihar, AIR 1962 SC 660 that it must be construed in its popular sense, that is to say, the meaning with which the people are conversant with the subject matter with which the statute is dealing would be attached to. In the context of betel leaves and sugarcane, which came to be considered by Court construing the meaning of word "in popular sense", it was held that the same are not vegetables.
15. In CCE Vs. Krishna Carbon Paper Co. (1988) Suppl. 12 (3) SCR 12 the Court said that consumers understanding of the expressions used in legislation relating to them is also an input in judicial construction. Emphasis was made for construing entries of goods in Excise, Customs, Octroi or Sales Tax Act. The Court said that resort should normally be had not to the scientific or technical meaning but to their popular meaning i.e. the meaning attached to the expressions used by those dealing in them must be preferred.
16. Since, in the present case, findings of Tribunal that commodity manufactured by assessee is prepared by use of milk fats etc., and other natural fats and substance and further that it is a cooking medium, in my view, it would be a "vegetable oil" also so as to be covered by Entry 131, Schedule II, Part-A. In other words, under the Act, 2008, the commodity in question is an "edible oil" under entry 687 of the Schedule and also a "vegetable oil" under Entry 2331. Since the commodity in question is covered by two entries, in my view, specific entry "vegetable oil" will prevail over entry "edible and oilcake" and therefore, question, referred to above, is answered by holding that commodity in question is taxable under Entry 2331 i.e. "Vegetable oil including gingili oil and bran oil". It is answered accordingly.
17. The revision is accordingly allowed. The judgment of Tribunal dated 16.5.2013, impugned in this revision, is hereby set aside.
18. A copy of this order shall be sent to the Tribunal for passing appropriate order in accordance with law.
Order Date :- 16.1.2014 KA