1990 (2) TMI 281 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether crude oil sold by the assessee is liable to tax at 7% or 8% under item 47-A of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959.
2. Interpretation of the term "crude oil" in the context of the taxing statute.
3. Reliance on subsequent amendments to interpret the meaning of "crude oil".

Issue-wise Detailed Analysis:

1. Tax Liability on Crude Oil:
The primary issue revolves around whether crude oil sold by the assessee should be taxed at 7% or 8% under item 47-A of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The assessing officer, the Appellate Assistant Commissioner, and the Sales Tax Appellate Tribunal all concluded that crude oil falls under item 47-A and is thus subject to tax at the rate prevailing during the relevant period. The assessee challenged this view, leading to the filing of these tax revision cases.

2. Interpretation of "Crude Oil":
The learned counsel for the petitioners argued that the term "crude oil" should be understood in its common parlance and commercial community sense, rather than a technical meaning. The Tribunal's conclusion that crude oil is a kind of mineral oil and falls under item 47-A was contested. The counsel cited the decision in Madras Aluminium Co. Ltd. v. State of Tamil Nadu and presented affidavits from business people to support this view. Additionally, the counsel argued against the Tribunal's reliance on a subsequent amendment to understand the meaning of "crude oil," referencing the Supreme Court's decision in Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co.

3. Reliance on Subsequent Amendments:
The learned Additional Government Pleader contended that it is acceptable to interpret a word in a taxing statute by considering a subsequent amendment. He cited the Supreme Court's judgment in Manickam and Co. v. State of Tamil Nadu. The Pleader emphasized that item 47-A starts with "all kinds of mineral oils," which includes crude oil. The amendment to item 47-A in 1976, which introduced item 3-A in the Second Schedule, was argued to clarify that crude oil falls within the ambit of "all kinds of mineral oils."

Analysis of Relevant Items and Amendments:
Item 47-A before and after the amendment was analyzed. The original item 47-A included "all kinds of mineral oils (other than those falling under item 47 and not otherwise provided for in this Act) including furnace oil." The amendment added "and under item 3-A of the Second Schedule." The court noted that the legislature's intention was clear from the amendment, indicating that crude oil was included in the original entry of item 47-A.

Judicial Precedents and Principles:
The court referred to several judicial precedents, including:
- Madras Aluminium Co. Ltd. v. State of Tamil Nadu: Emphasizing the common parlance interpretation of terms in a taxing statute.
- Polestar Electronic (Pvt.) Ltd. v. Additional Commissioner, Sales Tax: Highlighting that the intention of the legislature should be gathered from the language used in the statute.
- Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co.: Stating that words in a taxing statute should be understood in their popular sense unless a contrary intention is expressed.

Conclusion:
The court concluded that the principle of common parlance meaning cannot be applied to the term "all kinds of mineral oils" in item 47-A. The subsequent amendment to item 47-A provided clarity that crude oil was intended to be included. The court upheld the Tribunal's decision that item 47-A, as it stood during the relevant period, included crude oil. Consequently, the tax cases were dismissed, and there was no order as to costs.

Final Judgment:
The tax cases were dismissed, affirming that crude oil falls under item 47-A and is subject to the applicable tax rate. The court held that the Tribunal's interpretation was correct, and the petitioners' contentions were not accepted.