1997 (8) TMI 500 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the Assistant Excise and Taxation Commissioner's order under Section 21(1) of the Punjab General Sales Tax Act, 1948.
2. Whether "washed cotton seed oil" is considered edible oil for the purpose of sales tax.
3. The appropriateness of invoking Article 226 of the Constitution of India without exhausting alternative remedies.
4. Imposition of interest on tax liability.

Issue-wise Detailed Analysis:

1. Legality of the Assistant Excise and Taxation Commissioner's Order:
The primary contention was the suo motu action taken by the Assistant Excise and Taxation Commissioner under Section 21(1) of the Punjab General Sales Tax Act, 1948. The Commissioner revised the assessment of sales tax from 1% to 4% on the inter-State sale of cotton seed oil, deeming it non-edible. The petitioner argued that the assessment had already been finalized and that the Commissioner's action was beyond his jurisdiction. However, the court held that the Commissioner's powers under Section 21(1) include examining the legality and propriety of any order passed by a subordinate authority, and the Commissioner acted within his jurisdiction.

2. Nature of "Washed Cotton Seed Oil":
The core issue was whether "washed cotton seed oil" qualifies as edible oil, which would attract a lower tax rate of 1%. The Assistant Excise and Taxation Commissioner, after an exhaustive examination, concluded that the oil sold by the petitioner did not meet the criteria for being considered edible. This conclusion was supported by the Tribunal. The court referred to various standards and reports, including those from the Prevention of Food Adulteration Act, the Agricultural Produce (Grading and Marking) Act, and the National Chemical Laboratory, which indicated that cotton seed oil requires significant processing to be deemed edible. The court thus upheld the finding that "washed cotton seed oil" is not edible oil.

3. Invocation of Article 226 Without Exhausting Alternative Remedies:
The respondents bypassed the alternative remedy provided under Section 22 of the Act and directly approached the High Court under Article 226 of the Constitution. The court emphasized that Article 226 is an extraordinary remedy and should not be used to bypass statutory remedies unless there is a case of grave injustice or blatant illegality. The court cited precedents, including Thansingh Nathmal v. Superintendent of Taxes, which underscored the principle that the High Court should not entertain writ petitions where an alternative remedy exists. The court found that the respondents should have exhausted the remedies provided under the Act before approaching the High Court.

4. Imposition of Interest on Tax Liability:
The Assistant Excise and Taxation Commissioner imposed interest on the revised tax liability, which the petitioner contested. The court upheld the imposition of interest, referring to the decision in Associated Cement Co. Ltd. v. Commercial Tax Officer, Kota, which clarified that interest is payable on the amount of tax due, irrespective of whether the return filed was true and proper. The court found no reason to interfere with the order imposing interest.

Conclusion:
The appeals were allowed, and the writ petitions were dismissed. The court upheld the Assistant Excise and Taxation Commissioner's order, affirmed the Tribunal's decision, and emphasized the need to exhaust alternative remedies before invoking Article 226. The imposition of interest on the revised tax liability was also upheld. The judgment reinforced the principles of jurisdiction, the necessity of exhausting statutory remedies, and the proper classification of goods for tax purposes.