1985 (8) TMI 351 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the used or drained oil purchased by the assessee can be considered as a lubricating oil under entry No. 47 for taxation purposes.
2. Whether the purchase turnover of the waste oil used in the manufacture of grease is liable to be charged under section 7-A of the Tamil Nadu General Sales Tax Act, 1959.
3. Whether the chemical properties or the actual use of the oil should be the basis for determining if it falls under entry No. 47 as a lubricating oil.

Analysis:
1. The case involved a tax revision where the assessee contended that the used or drained oil purchased by them, which was used as a base for manufacturing grease, should be considered a lubricating oil falling under entry No. 47 for taxation at a single point. The Tribunal, however, considered the waste oil as not usable further as a lubricating oil and held that the purchase turnover of the waste oil is taxable under section 7-A of the Act as long as it is utilized in the manufacture of grease by the assessee.
2. The Tribunal's view was challenged by the assessee, arguing that the chemical properties of the used oil were similar to lubricating oil, and hence, it should not be taxed under section 7-A. The counsel emphasized that even if the oil required some processing to be used as lubricating oil again, it should still be considered as falling under entry No. 47. However, the Court disagreed, stating that the actual use of the oil for lubricating purposes should determine its classification, not just its chemical properties.
3. The Court referred to a decision by the Allahabad High Court regarding groundnut oil, emphasizing that the commercial usability for lubrication purposes is crucial in determining whether an oil can be classified as a lubricating oil under entry No. 47. Since the purchased oil could not be used for lubrication purposes without further processing, it was not considered a lubricating oil. Thus, the Tribunal's decision to tax the purchase turnover of the waste oil under section 7-A was upheld, dismissing the tax case with no order as to costs.