1997 (8) TMI 480 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the activity of converting used waste lubricating oil into usable lubricating oil is a refining process.
2. Whether such activity is covered by Explanation II to section 2(17) of the Bombay Sales Tax Act, 1959.
3. Whether the assessee is entitled to the benefit of resale claim u/s 8(ii) in respect of such refined oil.

Summary:

Issue 1: Refining Process
The Tribunal held that the activity of converting used waste lubricating oil into usable lubricating oil is not a refining process. The process described by the assessee involved removing impurities from the used lubricating oil to make it fit for reuse. Despite this process, the lubricating oil remained lubricating oil, and thus, it was not considered a refining process.

Issue 2: Explanation II to Section 2(17)
The Tribunal concluded that the process undertaken by the assessee did not amount to "manufacture" even under the amended definition of "manufacture" in section 2(17) of the Act, which includes refining of oil. The Tribunal reasoned that the lubricating oil retained its identity as lubricating oil before and after the process, and no new commercial commodity emerged.

Issue 3: Benefit of Resale Claim u/s 8(ii)
The Tribunal allowed the assessee the benefit of resale claim u/s 8(ii) of the Act. The Court supported this conclusion, stating that the process did not result in the manufacture of a new product. The lubricating oil remained the same commodity, merely made fit for reuse by removing impurities. The Court referenced several Supreme Court decisions, including Tungabhadra Industries Ltd. v. Commercial Tax Officer, to support the view that the process did not alter the fundamental nature of the commodity.

Conclusion:
The Court answered the reference in the affirmative, in favor of the assessee and against the revenue. The activity of converting used waste lubricating oil into usable lubricating oil is not a refining process covered by Explanation II to section 2(17) of the Bombay Sales Tax Act, 1959, and the assessee is entitled to the benefit of resale claim u/s 8(ii).