2005 (1) TMI 648 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of used transformer oil as a petroleum product.
2. Liability to pay tax on the sale of used transformer oil despite exemption on its purchase.
3. Exigibility of tax on used transformer oil sold by the petitioner even if tax was paid at the first stage during purchase.

Issue-wise Detailed Analysis:

1. Taxability of used transformer oil as a petroleum product:
The petitioner argued that used transformer oil, sold as waste at Rs. 5 per litre, should not be taxed as a petroleum product under section 18 of the Haryana General Sales Tax Act, 1973, read with Notification No. S. O. 156/H. A. 20/73/S. 18/87 dated December 30, 1987. The Tribunal and lower authorities maintained that despite reduced lubrication potential, used transformer oil retains its character as a petroleum product. The court emphasized that terms in taxing statutes should be understood in common parlance, not scientific terms. It concluded that used transformer oil, sold only to registered dealers, retains its character as a lubricant and falls within the scope of "petroleum product."

2. Liability to pay tax on the sale of used transformer oil despite exemption on its purchase:
The petitioner contended that since they were exempt from tax on the purchase of transformer oil, they should not be liable for tax on its sale. However, the court clarified that the exemption on purchase does not extend to the sale of used oil. The sale of used transformer oil, retaining its character as a petroleum product, is taxable under the relevant notification and section 18 of the 1973 Act.

3. Exigibility of tax on used transformer oil sold by the petitioner even if tax was paid at the first stage during purchase:
The petitioner argued that having paid tax at the first stage while purchasing transformer oil, they should not be liable for further tax on its sale. The court held that the tax is levied on the sale of petroleum products at the first stage of sale, as per section 18 and the notification. The used transformer oil, sold as a petroleum product, is subject to tax irrespective of the tax paid during its purchase.

Conclusion:
The court upheld the Tribunal's decision, affirming that used transformer oil is taxable as a petroleum product. The petitioner's arguments were rejected based on the interpretation of terms in common parlance and the specific provisions of the Haryana General Sales Tax Act, 1973. The judgments cited by the petitioner were deemed irrelevant to the specific issues of this case. The questions referred by the Tribunal were answered in favor of the department and against the petitioner.