1976 (1) TMI 158 - HC - VAT and Sales Tax

Issues Involved:
1. Validity and legality of the general sales tax imposed for the years 1971-72 and 1972-73.
2. Legitimacy of the penalty for non-return in those years.
3. Interpretation of entry 6A in Schedule D of the Bombay Sales Tax Act, 1959.
4. Whether the order imposing the penalty is a non-speaking order.

Issue-wise Detailed Analysis:

1. Validity and Legality of the General Sales Tax:
The petitioner, operating as M/s. Laxmi Oil Mills, contested the sales tax assessment for the years 1971-72 and 1972-73. The petitioner was assessed to pay sales tax under entry 6A of Schedule D, amounting to Rs. 436.98 and Rs. 559.03 respectively. The petitioner argued that oil extracted from linseed and groundnut should not be classified as "vegetable non-essential oil" under entry 6A, contending that "non-essential" should be interpreted as "non-edible." However, the court held that the legislative intent and the language of the statute clearly indicated that "non-essential" does not equate to "non-edible." The court emphasized that "essential" and "edible" have distinct meanings and that the classification of oils should be understood in their commercial connotation rather than scientific or technical terms. The court concluded that the oils extracted by the petitioner fell within the scope of "vegetable non-essential oils" and upheld the validity of the tax assessment.

2. Legitimacy of the Penalty for Non-Return:
The petitioner was penalized under section 36 of the Act for failing to file returns for the years 1971-72 and 1972-73, with penalties amounting to Rs. 110 and Rs. 150 respectively. The petitioner contended that the penalty order was a non-speaking order, lacking disclosed grounds for the penalty. The court found little merit in this argument, noting that due notice was served, and a hearing was afforded to the petitioner. The court observed that the petitioner admitted to not filing returns, and the provisions of section 36(2)(c) were clearly met. Therefore, the court held that the penalty order was justified and not vitiated.

3. Interpretation of Entry 6A in Schedule D:
The court examined the interpretation of entry 6A in Schedule D, which pertains to "vegetable non-essential oils." The petitioner argued that "non-essential" should be interpreted as "non-edible," suggesting that edible oils should be exempt from tax. The court rejected this interpretation, clarifying that "essential" and "edible" are not synonymous. The court referred to various dictionaries and encyclopedias to elucidate that "essential oil" is a well-recognized term with specific commercial and scientific meanings, distinct from edible oils. The court concluded that "vegetable non-essential oils" include oils that are not classified as "essential oils," and the oils extracted by the petitioner fell within this category. Thus, the court upheld the tax assessment under entry 6A.

4. Whether the Order Imposing the Penalty is a Non-Speaking Order:
The petitioner argued that the penalty order was a non-speaking order, lacking the grounds for imposing the penalty. The court found this argument unconvincing, noting that the petitioner was given due notice and a hearing. The court observed that the petitioner admitted to not filing returns, and the provisions of section 36(2)(c) were satisfied. Therefore, the court held that the penalty order was justified and not vitiated.

Conclusion:
The court dismissed the petition, upholding the validity and legality of the general sales tax and the penalty for non-return. The court clarified the interpretation of entry 6A in Schedule D, concluding that "vegetable non-essential oils" include the oils extracted by the petitioner. The penalty order was found to be justified and not a non-speaking order. The petition was dismissed with no order as to costs.

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