1997 (2) TMI 533 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether maize oil manufactured and sold by the assessee is an edible oil.

Detailed Analysis:

Issue 1: Whether maize oil manufactured and sold by the assessee is an edible oil.

Background and Facts:
The assessee, a private limited company registered under the Central Sales Tax Act, 1956, and the Punjab General Sales Tax Act, 1948, engaged in manufacturing corn products, including maize oil, sold maize oil for Rs. 17,87,797. The assessee claimed that maize oil should be taxed at a concessional rate of 1% as an edible oil. However, the assessing authority levied a higher rate of 4%, resulting in an additional demand of Rs. 1,02,521, arguing that maize oil was not an edible oil as it was sold in crude form and required further processing to meet the standards prescribed in the Prevention of Food Adulteration Act, 1954.

Arguments by the Assessee:
The assessee contended that maize oil was marketed both in India and abroad as an edible oil and was increasingly used in the manufacture of vanaspati. The assessee argued that the definition of "edible oil" in other enactments should be considered, particularly the Pulses, Edible Oil Seeds, and Edible Oils (Storage Control) Order, 1977, which defined "edible oil" as any oil used, directly or after processing, for human consumption.

Legal Definitions and Precedents:
The court examined various definitions and precedents, including:
- The Pulses, Edible Oil Seeds, and Edible Oils (Storage Control) Order, 1977, which defined "edible oil" as any oil used, directly or after processing, for human consumption.
- Notification G.S.R. No. 1068(E) dated November 12, 1988, by the Ministry of Food and Civil Supplies, which declared maize (corn) oil as an edible oil for use in the manufacture of vegetable oil.
- Standards laid down in Appendix 'B' of the Prevention of Food Adulteration Rules, 1955, regarding maize (corn) oil.
- Case law from various courts, including Chandausi Oil Mills v. Sales Tax Commissioner, U.P., Milkhi Ram Oil & Dall Mills v. State of Punjab, Commissioner of Sales Tax, Madhya Pradesh v. Jaswant Singh Charan Singh, Bharat General and Textile Industries Ltd. v. State of Maharashtra, and Chhatar Extractions Pvt. Limited v. Excise and Taxation Commissioner, Punjab.

Court's Analysis:
The court concluded that the term "edible oil" should be understood in its common parlance and practical use. The court noted that maize oil was used as a major constituent in the manufacture of vegetable ghee and oil, and the buyers had specified the required standards for maize oil, indicating its suitability for human consumption. The court also referenced various notifications and orders that permitted the use of maize oil in the manufacture of vegetable oil, reinforcing its classification as an edible oil.

Conclusion:
The court held that maize (corn) oil produced by the assessee should be treated as edible oil. The question of law was answered in the affirmative, in favor of the assessee and against the Revenue.

Final Judgment:
Reference answered in the affirmative.