//
you're reading...
legal issues

the appellant, who was the dealer is that it purchased burnt mobil oil and refined the same mobil oil, but the assessing authority levied tax on the said burnt mobil oil under Section 3-AAAA of the Act treating the said oil as “old discarded unserviceable store”. 4. Admittedly, the first appeal, which was filed by the dealer against such assessment, was allowed and then again a further appeal was filed by the Commissioner of Trade Tax against the order of the first appellate authority. The said appeal by the Commissioner was also dismissed. Thereupon, the Commissioner, Trade Tax filed the revision before the High Court and the revisional Court overturned the concurrent finding of the statutory authorities. In doing so, the High Court came to a finding that the present controversy is covered by a decision of the High Court in the case of Commissioner of Sales Tax vs. S/S. Industrial Lubricants reported in 1984 U.P.T.C. 1101.

Petrol pumps

Image via Wikipedia

                                                               REPORTABLE

                   IN THE  SUPREME COURT OF INDIA
                   CIVIL  APPELLATE  JURISDICTION

                   CIVIL APPEAL NO. 2363  OF 2007

M/s. Agarwal Oil Refinery                             ... Appellant(s)
Corporation, Kanpur 

                                  Versus

The Commissioner of Trade Tax, U.P.                   ... Respondent(s)
Lucknow

                                   WITH

        Special Leave Petition (Civil) No. 2148 of 2008

Commissioner of Trade Tax, U.P.             ... Appellant(s)

                                  Versus

S/s Agarwal Oil Refinery Corporation,
Kanpur                                     ... Respondent(s)

                            J U D G M E N T

      GANGULY, J.

1.    Heard learned counsel for the parties.

2.    This appeal is directed against the judgment and order 

      passed   by   the   High   Court   in   Trade   Tax   Revisions   in 

      exercise   of   its   revisional   jurisdiction   under   Section 

      11 of U.P. Trade Tax Act, 1948(hereinafter referred to 

      as   the   "Act").     The   order   of   the   Tribunal   dated   22nd 

                                     1

      April,   1996   relating   to   assessment   years   1988-89   and 

      1989-90   was   impugned   in   Revisions   before   the   High 

      Court.

3.    The  case of  the appellant,  who was  the dealer  is that 

      it purchased burnt mobil oil and refined the same mobil 

      oil,   but   the   assessing     authority   levied   tax     on   the 

      said   burnt   mobil   oil   under   Section   3-AAAA   of   the   Act 

      treating   the   said   oil   as   "old   discarded   unserviceable 

      store".

4.    Admittedly,   the   first   appeal,   which   was   filed   by   the 

      dealer   against   such   assessment,   was   allowed   and   then 

      again a further appeal was filed by the Commissioner of 

      Trade   Tax   against   the   order   of   the   first   appellate 

      authority.     The   said   appeal   by   the   Commissioner   was 

      also dismissed.  Thereupon, the Commissioner, Trade Tax 

      filed   the   revision   before   the   High   Court   and   the 

      revisional   Court   overturned   the   concurrent   finding   of 

      the statutory authorities. In doing so, the High Court

         came   to   a   finding   that   the   present   controversy   is 

      covered by a decision of the High Court in the case of 

      Commissioner   of   Sales   Tax          vs.     S/S.   Industrial 

      Lubricants reported in 1984 U.P.T.C. 1101.

                                    2

5.    Following   the   said   decision,   the   High   Court   held   that 

      burnt mobil oil purchased by the dealer, the appellant 

      herein,   is   covered   under   the   entry   of   "old,   discarded 

      and   unserviceable   store"   being   purchased   from 

      unregistered   dealer   and   sold   in   the   same   condition. 

      According to the High Court they are liable to be taxed 

      as   such   under   Section   3-AAAA   of   the   Act   during   the 

      years under consideration.

6.    Learned   counsel   for   the   appellant   while   assailing   the 

      said finding of the High Court, submitted that the case 

      is   not   covered   by   the   decision   rendered   by   the   High 

      Court   in   the   case   of  S/S.   Industrial   Lubricants 

      (supra).   The only reasoning on the basis of which the 

      High Court in S/S Industrial Lubricants (supra) allowed 

      the   revision   is   that   mobil   oil   after   having   been   used 

      does   not   retain   the   character   of   mobil   oil   but   it 

      becomes   "old,   discarded   and   unserviceable   store"   and 

      that is why the High Court agreed with the revenue that 

      the   burnt   mobil   oil,   being   old,   discarded   or 

      unserviceable   store,   is   liable   to   be   taxed   under   the 

      notifications dated 1.12.1973 and 4.11.1974 @ 3.5% and 

      4% respectively.

                                     3

7.    Reference   in   this   connection   may   be   made   to   the 

      provision   of   Section   11   of   the   said   Act   to   appreciate 

      the extent of revisional jurisdiction of High Court in 

      dealing   with   the   concurrent   finding   of   fact.     Section 

      11 of the said Act is set out below:

            11.    Revision   by   High   Court   in   special
            cases.-(1)   Any   person   aggrieved   by   an
            order   made   under   sub-section   (4)   or   sub-
            section  (5)  of  Section  10,  other  than  an
            order   under   sub-section   (2)   of   that
            section   summarily   disposing   of   the
            appeal,   or   by   an   order   passed   under
            Section   22   by   the   Tribunal,   may,   within
            ninety   days   from   the   date   of   service   of
            such   order,   apply   to   the   High   Court   for
            revision of such order on the ground that
            the case involves any question of law.

            (2)    Any   person   aggrieved   by   an   order
            made   by   the   Revising   Authority   or   an
            Additional Revising Authority refusing to
            state  the  case  under  this  section,  as  it
            stood   immediately   before   April   27,   1978,
            hereinafter referred to as the said date,
            may,   where   the   limitation   for   making   an
            application   to   the   High   Court   under   sub-
            section   (4),   as   it   stood   immediately
            before   the   said   date,   has   not   expired,
            likewise   apply   for   revision   to   the   High
            Court within a period of ninety days from
            the said date.

            (3)    Where   an   application   under   sub-
            section   (1)   or   sub-section   (3),   as   they
            stood   immediately   before   the   said   date,
            was rejected by the Revising Authority or
            an   Additional   Revising   Authority   on   the
            sole   ground   that   the   period   of   one
            hundred   and   twenty   days   for   making   the
            reference,   as   specified   in   the   said   sub-
            section   (1),   has   expired,   such   applicant
            may  apply  for  revision  of  the  order  made
            under   sub-section   (2)of   Section   10,   to
            the High Court within sixty days from the
                                     4

said   date   on   the   ground   that   the   case
involves any question of law.

(4)      The   application   for   revision   under
sub-section (1) shall precisely state the
question of law involved in the case, and
it  shall  be  competent  for  the  High  Court
to   formulate   the   question   of   law   or   to
allow   any   other   question   of   law   to   be
raised.

(5)      Every   application   for   making   a
reference   to   the   High   Court   under   sub-
section   (1)   or   sub-section   (3),   as   they
stood   immediately   before   the   said   date,
pending   before   the   Revising   Authority   or
an   Additional   Revising   Authority   on   the
said date, shall stand transferred to the
High   Court.     Every   such   application   upon
being          so         transferred         and         every
application   under   sub-section   (4),   as   it
stood   immediately   before   the   said   date,
pending before the High Court on the said
date,   shall   be   deemed   to   be   an
application   for   revision   under   this
Section and disposed of accordingly.

(6)      Where   the   High   Court   has   before   the
said   date,   required   the   Revising
Authority   or   an   Additional   Revising
Authority  to  state  the  case  and  refer  it
to   the   High   Court   under   sub-section   (4),
as   it   stood   immediately     before     the
said   date,   such   authority   shall,   as   soon
as   may   be,   make   reference   accordingly.
Every   reference   so   made,   and   every
reference   made   by   such   authority   before
the   said   date   in   compliance   with   the
requirement   of   the   High   Court   under   sub-
section  (4),  as  it  stood  before  the  said
date,   shall   be   deemed   to   be   an
application   for   revision   under   this
section and disposed of accordingly.

(6-A)Where   the   Revising   Authority   or   an
Additional Revising Authority has, before
the   said   date,   allowed   an   application
under sub-section (1) or sub-section (3),
as they stood immediately before the said
                              5

date,   and   such   authority   has   not   made
reference before the said date, it shall,
as soon as may be, make reference, to the
High   Court.   Every   such   reference,   and
every   reference   already   made   by   such
authority   before   the   said   date   and
pending     before   the   High   Court   on   the
said   date,   shall   be   deemed   to   be   an
application   for   revision   under   this
section and dispose of accordingly.

(7)    Where   an   application   under   this
section   is   pending,   the   High   Court   may,
on   an   application   in   that   behalf,   stay
recovery   of   any   disputed   amount   of   tax,
fee  or  penalty  payable,  or  refund  of  any
amount  due,  under  the  order  sought  to  be
revised:

       Provided   that   no   order   for   the   stay
of recovery of such disputed amount shall
remain in force for more than thirty days
unless   the   applicant   furnishes   adequate
security   to   the   satisfaction   of   the
Assessing Authority concerned.

(8)    The   High   Court   shall,   after   hearing
the   parties   to   the   revision,   decide   the
question   of   law   involved   therein,   and
where   as   a   result   of   such   decision,   the
amount of tax, fee or penalty is required
to   be   determined   afresh,   the   High   Court
may   send   a   copy   of   the   decision   to   the
Tribunal   for   fresh   determination   of   the
amount,   and   the   Tribunal   shall   thereupon
pass   such   orders   as   are   necessary   to
dispose   of   the   case   in   conformity   with
the said decision.

(8-A)   All   applications   for   revision   or
orders passed under Section 10 in appeals
arising   out   of   the   same   cause   of   action
in   respect   of   the   same   assessment   year
shall be heard and decided together:

       Provided   that   where   any   one   or   more
of   such   applications   have   been   heard   and
decided earlier, if the High Court, while
hearing   the   remaining   applications,
                         6

               considers   that   the   earlier   decision   may
               be a legal impediment in giving relief in
               such remaining application, it may recall
               such earlier decisions and may thereafter
               proceed   to   hear   and   decide   all   the
               applications together. 

               (9)    The   provisions   of   Section   5   of   the
               Limitation   Act,   1963,   shall,         mutatis
               mutandis,  apply to every application, for
               revision under this section. 

                      Explanation.-   For   the   purpose   of
               this section, the expression "any person"
               includes   the   Commissioner   and   the   State
               Government."

8.    It is made clear from the structure of Section 11 that 

      normally   the   High   Court   under   revision   does   not 

      interfere with concurrent findings of fact by the lower 

      authority,   unless   the   case   involves   any   question   of 

      law. 

9.    Traditionally   in   exercise   of   revisional   jurisdiction, 

      High   Court   does   not   interfere   with   concurrent   finding 

      of   fact,   unless   the   findings   recorded   by   the   lower 

      authorities   are   perverse   or   based   on   an   apparently 

      erroneous principles which are contrary to law or where 

      the finding of the lower authority was arrived at by a 

      flagrant   abuse   of   the   judicial   process   or   it   brings 

      about a gross failure of justice. In this case none of 

      these principles are attracted. 

                                        7

10.    In   this   connection,   we   may   refer   to   the   relevant 

       provision   of   the   Act   to   find   out   the   real   controversy 

       in issue.   Section 3AAAA of the Act which has come up 

       for consideration in this case is set out hereinbelow:

                  "Section   3-AAAA-   Liability   to     tax
            on   purchase   of   goods   in   certain
            circumstances-Subject to the provision of
            Section 3, every dealer who purchases any
            goods liable to tax under this Act- 

                  (a)   from   any   registered   dealer   in
            circumstances in which no tax is payable
            by   such   registered   dealer,   shall   be
            liable   to   pay   tax   on   the   purchase   price
            of such goods at the same rate at which,
            but   for   such   circumstances,   tax   would
            have   been   payable   on   the   sale   of   such
            goods;

                  (b)   from   any   person   other   than   a
            registered   dealer   whether   or   not   tax   is
            payable   by   such   person,   shall   be   liable
            to pay tax on the purchase price of such
            goods   at   the   same   rate   at   which   tax   is
            payable on the sale of such goods;

            Provided that no tax shall be leviable on
            the   purchase   price   of   such   goods   in   the
            circumstances   mentioned   in   clauses   (a)
            and (b), if -

            (i)   such   goods   purchased   from   a
            registered   dealer   have     already   been
            subjected   to   tax   or   may   be   subjected   to
            tax under this Act;

            (ii) tax has already been paid in respect
            of   such   goods   purchased   from   any   person
            other than a registered dealer;

            (iii)   the   purchasing   dealer   resells   such
            goods   within   the   State   or   in   the   course
            of   inter-State   trade   or   commerce   or
            exports out of the territory of India, in 

                                      8

                 the   same   form   and   condition   in   which   he
                 had purchased them;

                 (iv) such goods are liable to be exempted
                 under Section 4-A of the Act".

11.         The   relevant   entries   which   are   covered   in   this 

            controversy   as   per   notification   dated   7th  September, 

            1981 and 31st May, 1985 are as under:

S.No. Description of goods                            Point of Tax         Rate   of
                                                                           Tax

       x                   x                                 x                    x

  31.        Oil   of   all   kinds,   other  M or I                       4   per
             than   those   covered   by   any                             cent
             other entry of this list or
             by   any   other   notification
             issued under the Act

  32.        Old,                      discarded, Sale to consumer         8   per
             unserviceable   or   obsolete                                 cent
             machinery,              stores         or
             vehicles   including   waste
             products   except   cinder,
             coal   ash   and   such   items   as
             are   included   in   any   other
             notification   issued   under
             the Act.

12.         In   the   instant   case,   the   Tribunal   as   the   second 

            appellate   forum   is   the   last   fact   finding   authority. 

            From   the   admitted   facts   recorded   by   the   Tribunal   it 

            appears   that   the   appellant-the   dealer   manufactures 

            refined   mobil   oil   from   the   raw   material,   i.e.,   the 

            burnt   mobil   oil   which   it   purchases   and   then   sells   a 

            virtually new item in the market.  In 1988-89 and 1989-

                                               9

90   the   assessments   were   made   under   Rule   41(7)   of   the 

U.P. Trade Tax Rules, but the said assessment has been 

opened and a fresh assessment has been made. Aggrieved 

by   the   same,   the   dealer   preferred   first   appeal   before 

the   A.C.(J)   who   allowed   both   the   appeals   by   an   order 

dated 26.5.1995 holding therein that the dealer is  not 

liable   to   pay   and   quashed   the   imposition   of   tax   upon 

dealer   for   the   relevant   assessment   years.   Aggrieved 

thereby,   the   revenue   preferred   a   second   appeal   before 

the Tribunal.  Before the said appellate authority, the 

revenue   urged   that   the   burnt   mobil   oil   which   is 

purchased   by   the   assessee   who   was   the   manufacturer   of 

refined   oil   is   taxable   at   the   point   of   sale   to   the 

consumer   as   it   comes   under   the   category   of   old   and 

discarded   material.   The   Tribunal   did   not   accept   the 

said contention by examining the facts and the records 

of   the   case.     The   Tribunal   came   to   the   following 

finding: 

      "...it is undisputed that the burnt mobil
      oil   on   which   the   tax   has   been   imposed,
      has   been   purchased   by   the   assessee
      respondent   from   unregistered   dealer
      like   kabarie   and   hawkers   in   retail
      manner.     However,   in   the   like   manner
      the   old   PVC   shoes   and   chappals
      purchased   by   the   dealer   who   converted
      into   granules   and   sold   them   in   the
      market,   they   have   not   been   treated
      under   the   category   of   'old   discarded
      and   unserviceable   stores'       as   held   by
      the   case   laws   cited   by   the   assessee's
                               1

               counsel   Sri   S   Rais,   Advocate.     In   our
               opinion, the case of burnt mobil oil is
               similar   to   the   case   of   PVC   shoes   etc.
               which   are   purchased   by   dealer   for
               manufacture   of   plastic   granules   etc.
               by   purchasing   them   from   kabaris   and
               hawkers etc. in retail manner."

13.    The   Tribunal   also   came   to   a   finding   that   the   refined 

       mobil   oil   is   manufactured   by   the   dealer   from   burnt 

       mobil   oil.     The   item   is   taxable   at   the   point   of 

       manufacturer and is not liable to be             taxed at the point 

       of   sale   to   the   consumer   under   Section   3-AAAA   of   the 

       Act.

14.    We are of the opinion that unless the High Court, as a 

       revisional   authority,   finds   that   those   factual 

       conclusions   by   both   the   appellate   authorities   are 

       perverse,   it   cannot   overturn   the   same   by   relying   on   a 

       judgment   which   is   factually   distinguishable.   In   the 

       judgment   on   which   the   High   Court   relied,   there   is   no 

       finding   by   the   Tribunal,   the   last   fact-finding 

       authority,   on   the   nature   of   the   goods,   which   was   the 

       subject matter of the disputed transaction. The case on 

       which   the   High   Court   relied,   namely,   in   the   case   of 

       S/S. Industrial Lubricants  (supra), is not the case of 

       a   dealer   who   after   purchasing   burnt   mobil   oil, 

       manufactures refined mobil oil from that raw material. 

                                       1

       But the Tribunal in the instant case has found on facts 

       that   the   appellant   herein   manufactured   refined   mobil 

       oil   from   the   burnt   mobil   oil.     Therefore,   there   is 

       substantial factual difference between the present case 

       and   the   case   on   which   the   High   Court   relied   while 

       dealing with the revision proceedings before it. We are 

       of   the   view   that   the   High   Court   was   not   correct   in 

       relying   on   a   decision,   which   is   factually 

       distinguishable.

15.    For   the   reasons   afore-stated,   we   cannot   sustain   the 

       order of the High Court.   The order of the High Court 

       is quashed.

16.    We remand the matter to the High Court and request the 

       High Court to decide the revisions on the facts of the 

       present   case   on   the   principle   of   revisional 

       jurisdiction   indicated   hereinabove.     We   hope   that   the 

       High   Court   will   come   to   a   reasoned   conclusion   in   the 

       facts and circumstances of the case.

17.    We further make it clear that we have not expressed any 

       opinion   on   the   merits   of   the   finding   recorded   by   the 

       Tribunal since the High Court is to re-examine the same 

       afresh. With these observations, the appeal is allowed 

       and   the   matter   is   remanded   to   the   High   Court   for   a
                                     1

       fresh decision of the revision proceedings on the lines 

       indicated above. 

18.    In the facts of the case, there will be no order as to 

       costs.

       S.L.P.(C) NO. 2148 OF 2008

       Delay condoned.

       We do not find any merit in the special leave petition, 

which is accordingly dismissed.

                                           ......................J
                                              [D.K. JAIN] 

                                          .......................J
                                             [ASOK KUMAR GANGULY]
NEW DELHI,
August 10, 2011

                                   1

About advocatemmmohan

ADVOCATE

Discussion

Comments are closed.

Blog Stats

  • 2,884,450 hits

ADVOCATE MMMOHAN

archieves

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 1,905 other followers

Follow advocatemmmohan on WordPress.com
%d bloggers like this: