2010 (9) TMI 978 - HC - VAT and Sales Tax

Legality and validity of the order dated June 29, 2001 (annexure P/1) passed by the Additional Commissioner, Commercial Tax, upholding the orders passed by the authorities below wherein they have held that the maize oil and maize cake are produced during preparation of starch from maize, and thus, are not entitled to exemption under notification dated March 30, 1994 (annexure P/5) challenged Held that - In respectful agreement with the decision in Rajaram and Brothers 2009 (12) TMI 863 - MADHYA PRADESH HIGH COURT , that the maize oil and maize cake are by-products of maize and are exempted from tax under the notification dated April 30, 1994 (annexure P/5). The impugned orders dated June 29, 2001 (annexure P/l in both the writ petitions) are quashed, accordingly. Writ petition allowed.

Summary

Issues:
Interpretation of exemption notification dated March 30, 1994 for maize oil and maize cake production.

Analysis:
The judgment involves a challenge to the order upholding that maize oil and maize cake are not entitled to exemption under the notification dated March 30, 1994. The petitioner argues that maize oil and cake are by-products of maize, exempted under the notification. The State argues that these products are not by-products of maize but of the starch production process. The High Court of Madhya Pradesh in a related case granted exemption for similar products, considering them as by-products of cereals.

The notification exempts by-products of foodgrains and cereals from taxes, with maize being classified as a cereal. The petitioner asserts that maize oil and cake are by-products of foodgrains and cereals, hence eligible for exemption. The State contends that these products are not maize by-products but are produced during starch manufacturing. The Supreme Court emphasizes interpreting exemption notifications liberally.

The High Court of Madhya Pradesh in a previous case concluded that maize oil and cake, being by-products of maize, fall within the exemption notification. The petitioner's sister concern benefited from this interpretation. The judgment concurs with this view, stating that maize oil and cake are exempted under the notification. Consequently, the impugned orders denying exemption are quashed.

In conclusion, the High Court rules in favor of the petitioner, allowing both writ petitions and quashing the orders denying exemption for maize oil and cake production. The judgment aligns with the liberal interpretation of exemption notifications and the precedent set by the High Court of Madhya Pradesh in a similar case.