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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
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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.
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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.
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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
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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
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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,
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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.
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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
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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-
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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
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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
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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
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