2014 (7) TMI 73 - SC - VAT and Sales Tax

Imposition of tax - Reopening of assessment - Taxability of mobil oil - taxability at the point of sale to the consumer - The case of the appellant, who was the dealer, is that it purchased burnt mobil oil and refined the same mobil oil, but the assessing authority levied tax on the said burnt mobil oil under section 3AAAA of the Act treating the said oil as old, discarded and unserviceable store . - The Tribunal came to a finding that the refined mobil oil is manufactured by the dealer from burnt mobil oil, therefore, item is taxable at the point of manufacturer and is not liable to be taxed at the point of sale to the consumer under section 3AAAA of the Act - High court decided the case against assessee - Held that - unless the High Court, as a revisional authority, finds that those factual conclusions by both the appellate authorities are perverse, it cannot overturn the same by relying on a judgment which is factually distinguishable. In the judgment on which the High Court relied, there is no finding by the Tribunal, the last fact-finding authority, on the nature of the goods, which was the subject-matter of the disputed transaction. Therefore, there is substantial factual difference between the present case and the case on which the High Court relied while dealing with the revision proceedings before it. High Court was not correct in relying on a decision, which is factually distinguishable - Matter remanded back to high court - Decided in favour of assessee.

Issues Involved:

1. Taxability of burnt mobil oil under section 3AAAA of the U.P. Trade Tax Act, 1948.
2. Revisional jurisdiction of the High Court under section 11 of the U.P. Trade Tax Act, 1948.
3. Applicability of the decision in Commissioner of Sales Tax v. Industrial Lubricants [1984] UPTC 1101 to the present case.

Issue-wise Detailed Analysis:

1. Taxability of Burnt Mobil Oil:

The primary issue is whether burnt mobil oil, which is refined and sold by the dealer, falls under the category of "old, discarded and unserviceable store" and is thus taxable under section 3AAAA of the U.P. Trade Tax Act, 1948. The assessing authority levied tax on the burnt mobil oil, treating it as such. However, the Tribunal, the second appellate forum, found that the dealer manufactures refined mobil oil from the burnt mobil oil, essentially creating a new product. The Tribunal held that the refined mobil oil is taxable at the point of manufacture, not at the point of sale to the consumer under section 3AAAA.

2. Revisional Jurisdiction of the High Court:

The High Court, in its revisional jurisdiction under section 11 of the Act, overturned the concurrent findings of the lower authorities. Section 11 allows the High Court to revise orders if the case involves any question of law. The Supreme Court emphasized that the High Court traditionally does not interfere with concurrent findings of fact unless they are perverse, based on erroneous principles, or result in a gross failure of justice. In this case, the Supreme Court found that none of these principles were attracted, indicating that the High Court overstepped its revisional jurisdiction.

3. Applicability of the Decision in Commissioner of Sales Tax v. Industrial Lubricants:

The High Court relied on the decision in Commissioner of Sales Tax v. Industrial Lubricants [1984] UPTC 1101, which held that used mobil oil becomes "old, discarded and unserviceable store" and is taxable as such. However, the Supreme Court noted that the facts of the present case are distinguishable. In Industrial Lubricants, there was no finding that the dealer manufactured a new product from the burnt mobil oil. In contrast, the Tribunal in the present case found that the dealer manufactures refined mobil oil from burnt mobil oil. Therefore, the High Court's reliance on the Industrial Lubricants case was misplaced.

Conclusion:

The Supreme Court quashed the High Court's order and remanded the matter back to the High Court for a fresh decision based on the facts of the present case and the principles of revisional jurisdiction. The Supreme Court did not express any opinion on the merits of the Tribunal's findings, leaving it to the High Court to re-examine the case afresh. The appeal was allowed, and the special leave petition was dismissed for lack of merit.

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