1974 (8) TMI 92 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "cattle fodder" in a sales tax notification for exemption.
Validity of sales tax assessment on the turnover of oil-cakes sold by the petitioner.

Analysis:
The judgment by the High Court of Allahabad dealt with the interpretation of the term "cattle fodder" in a sales tax notification for exemption and the validity of sales tax assessment on the turnover of oil-cakes sold by the petitioner. The petitioner, engaged in manufacturing and selling oil and oil-cakes, was assessed for sales tax for the year 1968-69. Initially, the turnover of oil-cakes was exempted from sales tax under a specific notification. However, a subsequent circular by the Sales Tax Commissioner led to the reopening of the assessment, claiming that oil-cakes used for further oil extraction were not exempt from tax.

The main contention revolved around whether oil-cakes sold by the petitioner, primarily used for oil extraction and not as cattle fodder, were still eligible for exemption under the sales tax notification. The petitioner argued that the term "cattle fodder" in the notification only included green fodder, while the standing counsel contended that other items listed, including oil-cake, were exempt as they were commonly used as cattle fodder. The court held that all articles commonly known as oil-cakes, including those used for purposes other than cattle fodder, would be exempt under the notification.

Drawing on a similar case precedent, the court emphasized that the general usage of a product as cattle feed determined its classification under the notification, irrespective of specific cases where it might be used differently. Therefore, the oil-cakes sold by the petitioner, even if used for oil extraction, were considered exempt as they were generally recognized as cattle fodder. The court quashed the assessment orders for both 1968-69 and 1969-70, allowing the petitioner's claim for exemption and awarding costs.

In conclusion, the judgment clarified that the common understanding of a product as cattle fodder determined its eligibility for exemption under the sales tax notification, regardless of specific uses in certain cases. The court's decision favored the petitioner, upholding the exemption of oil-cakes from sales tax assessment based on their general recognition as cattle fodder.