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2007 (9) TMI 547 - HC - VAT and Sales TaxWhether the Sales Tax Tribunal was legally justified to hold that filtered coconut oil is taxable under the category of oil of all kinds at the rate of four per cent despite the fact that the aforesaid commodity falls under the category hair oil and is consequently taxable under the entry (all kinds of cosmetics) at the rate of 12 per cent with effect from September 7, 1981 vide Notification No. ST-II-5784/x-(1)/80 U.P. Act 15/ 48-Order-81 dated September 7, 1981? Whether the Sales Tax Tribunal was legally justified to hold that the product in question manufactured and sold by the assessee is cattle feed and balance poultry feed which is exempt from payment of sales tax despite the fact that cattle feed is taxable as an unclassified commodity? Whether the Sales Tax Tribunal was legally justified to hold that the assessee was not liable for tax on sale of blue detergent cakes as it was sold after purchasing from Carona Cosmetics and Chemicals Ltd., Kanpur a unit holding eligibility certificate granted under section 4A of the Act despite the fact that this dealer himself is a manufacturer in the real sense of the aforesaid commodity? Held that - So far as question No. (i) is concerned,A similar question came up for consideration before this court in the case of dealer itself for the assessment year 1983-84 in revision No. 49 of 1990 and for other assessment years in revisions Nos. 60, 61, 62 and 63 of 1990. This court vide order dated September 5, 1997 upheld the order of the Tribunal and held that filtered coconut oil is liable to tax under the entry of oil of all kinds. , thus the order of the Tribunal is upheld and the question is answered in favour of the assessee. So far as question No. (ii) is concerned, both the parties are agreed that so far as taxability of cattle feed is concerned, issue is covered by the decision of this court in the case of Cattle Feed Plant, Pradeshik Co-operative Dairy Federation Ltd., Meerut v. Commissioner of Trade Tax reported in 2007 (9) TMI 546 - ALLAHABAD HIGH COURT in which the cattle feed sold in the name of Parag Pashu Aahar has been held covered under the entry of cattle fodder. Thus the order of the Tribunal is upheld and the question is answered in favour of the dealer. Coming to the question No. (iii) no error in the order of the Tribunal. Merely because under the terms of the agreement, Karona Cosmetics and Chemicals Ltd., Kanpur had purchased the raw materials, chemicals, etc., as per specification and the quality prescribed by the dealer it cannot be said that the manufacturing was carried on on behalf of the dealer. The terms of the agreement reveals that agreement was for the sales on principal-to-principal basis. Therefore the sales of blue detergent bars and cakes purchased from Karona Cosmetics and Chemicals Ltd., Kanpur by the dealer to different parties were the second sales and thus, not liable to tax. The order of the Tribunal is upheld and the question is decided in favour of the dealer. Revision dismissed.
Issues:
1. Tax rate on filtered coconut oil 2. Taxability of cattle feed and poultry feed 3. Tax liability on sale of blue detergent cakes Issue 1: Tax rate on filtered coconut oil The Tribunal held that filtered coconut oil falls under the entry "oil of all kinds" and is taxable at four per cent, rejecting the claim of the assessing authority that it should be taxed as hair oil at 12 per cent under the "cosmetics" entry. The Tribunal cited a circular by the Commissioner of Trade Tax directing authorities to treat filtered coconut oil as "oil of all kinds." This decision was consistent with a previous judgment by the High Court upholding the same classification for filtered coconut oil. The legal principle that circulars are binding on the taxing authority was emphasized, as established in various court decisions. The Tribunal's decision was upheld, and the question was answered in favor of the assessee. Issue 2: Taxability of cattle feed and poultry feed Regarding the taxability of cattle feed, the issue was settled by a previous judgment where cattle feed sold under a specific name was held to be exempt from tax. Similarly, the division bench of the High Court had ruled that balanced poultry feeds fall under poultry feed supplements and are exempt from tax. Relying on these precedents, the Tribunal's decision was upheld, and the question was answered in favor of the dealer. Issue 3: Tax liability on sale of blue detergent cakes The dealer purchased blue detergent bars and cakes from a manufacturer holding an eligibility certificate under the Act. The assessing authority considered the dealer liable for tax as a manufacturer, but the dealer argued that the purchases were on a principal-to-principal basis and the sales were the second sales, not subject to tax. The Tribunal accepted the dealer's plea, ruling that the sales were not liable for tax. The High Court found no error in the Tribunal's decision, emphasizing that the agreement between the dealer and the manufacturer was on a principal-to-principal basis. Citing a relevant court decision, the High Court upheld the Tribunal's decision, ruling in favor of the dealer. In conclusion, the High Court dismissed the revision, upholding the Tribunal's decisions on all three issues presented in the case.
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