1987 (3) TMI 472 - SC - VAT and Sales Tax

Whether groundnuts falling within the description of nuts in the Schedule in Class-I, item No. 4(t), are liable to be taxed under the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970, in case the purpose of importer is to extract oil therefrom? Held that - Considering all the facts and circumstances as well as considering that nuts excluding betel nuts being one of the specified goods mentioned in the Schedule to the said Act clearly bring within its fold groundnut so groundnut imported into Calcutta metropolitan area is liable to the imposition of entry tax under the said Entry Tax Act. We, therefore, allow this appeal and set aside the judgment and order passed in Appeal from Original Order without any order as to costs. The writ petition giving rise to the appeal will stand dismissed.

Summary

Issues Involved:
1. Imposition of entry tax on groundnuts imported for manufacturing groundnut oil.
2. Legislative intent regarding the taxation of groundnuts as "nuts" versus oil-seeds.
3. Interpretation of relevant provisions of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970, and its subsequent amendments.

Analysis:

1. Imposition of Entry Tax on Groundnuts Imported for Manufacturing Groundnut Oil
The respondents, licensed dealers under the West Bengal Edible Oil Seed Dealers Licensing Order, 1963, challenged the imposition of entry tax on groundnuts imported into the Calcutta metropolitan area for manufacturing groundnut oil. They argued that such importation was not subject to levy under the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970, as there was no specific provision for levy on groundnuts as oil-seeds for manufacturing edible oil. They sought a mandate directing the appellants not to impose the entry tax and a refund of taxes already collected.

The learned single judge held that groundnuts, although listed under "nuts" in the Schedule, were primarily used as oil-seeds for manufacturing edible oil, which was not subject to entry tax. The Division Bench of the High Court of Calcutta affirmed this judgment, stating that the legislative intent was to exclude oil-seeds and edible oils from taxation.

2. Legislative Intent Regarding the Taxation of Groundnuts as "Nuts" Versus Oil-Seeds
The court examined whether groundnuts falling within the description of "nuts" in the Schedule in Class-I, item No. 4(t), were liable to be taxed if imported for oil extraction. The respondents argued that oil-seeds or edible oils were not specified items for entry tax under section 6(1) of the Act, thus exempting groundnuts imported for oil manufacture.

The court noted that the Schedule specified "nuts" excluding betel nuts as taxable items under Class-I, item No. 4(t). It was held that groundnuts, which answer the description of nuts, are subject to entry tax regardless of their use for oil extraction. The court emphasized that the legislative intent to tax "nuts" was clear and unambiguous, making groundnuts liable to entry tax.

3. Interpretation of Relevant Provisions of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970, and Its Subsequent Amendments
The court referred to the relevant provisions of the Schedule and noted that Class-I, item No. 4(t) specified "nuts" excluding betel nuts as taxable. The court rejected the respondents' contention that groundnuts used for oil extraction were exempt, stating that once goods answer the description of taxable items, their intended use does not exempt them from tax.

The court also considered the 1972 Act and its 1974 amendment, which clarified that "nuts" included groundnuts, cashewnuts, and walnuts, but excluded betel nuts. This amendment was retrospective, reinforcing that groundnuts were always subject to entry tax.

Conclusion:
The court concluded that groundnuts imported into the Calcutta metropolitan area are liable to entry tax under the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970, and its subsequent amendments. The appeals were allowed, setting aside the previous judgments and dismissing the writ petitions without any order as to costs. The legislative intent to tax "nuts" was clear, and groundnuts, irrespective of their use for oil extraction, were subject to entry tax.