2016 (8) TMI 634 - HC - VAT and Sales Tax

Rate of Tax / VAT - classification of Crude Degummed Soyabean Oil - entry 185 (ii) of Schedule (ii) Part A of GVAT - Held that - oil will remain oil if it retains its essential properties and merely because it has been subjected to certain processes would not convert it into a different substance - any oil, which can be used for human consumption, shall be treated to be edible oil and since the product in question is essentially Oil , in our view, the same will fall under Entry 185 (ii)-Edible Oil. Accordingly, it is held that Crude Degummed Soyabean Oil is covered by Entry 185 (ii) of Schedule (ii) Part A of the Act and the Tribunal has committed an error in holding that it is covered by entry 185 (i) of the said Schedule. Crude Degummed Soyabean Oil is covered by Entry 185 (ii) of Schedule (ii) Part A of the Act and the Tribunal has committed an error in holding that it is covered by entry 185 (i) of the said Schedule. Accordingly, the question posed for our consideration is answered in favour of the assessee and against the department.

Summary

Issues:
Interpretation of entries 185 (i) and 185 (ii) of Schedule II Part A of the Gujarat Sales Tax Act, 1969 regarding the classification of "Crude Degummed Soyabean Oil."

Analysis:
The Tribunal referred a question of law regarding the classification of "Crude Degummed Soyabean Oil" under entry 185 (i) or 185 (ii) of Schedule II Part A of the Gujarat Sales Tax Act, 1969. The Tribunal held that the product does not fall under entry 185 (ii) meant for edible oil, as it was sold for preparing a non-human consumption product. An application under Section 69 of the Act was made for a reference to the High Court, which was allowed, leading to the present case.

The appellant argued that the product falls under entry 185 (ii) as it is essentially oil and cited legal precedents to support this claim. The appellant emphasized that the product should be considered edible oil based on its essential properties, even if processes are required. The appellant also highlighted the Central Excise Tariff and a decision of the Punjab and Haryana High Court to support the classification of the product as edible oil.

On the other hand, the State argued that since processing was required on the product and it was not consumable in its imported form, it should not be classified under entry 185 (ii) for edible oil. The State contested the binding nature of the custom authority's classification of the product as edible oil.

After considering the arguments and relevant legal provisions, the High Court held that "Crude Degummed Soyabean Oil" should be classified as edible oil under entry 185 (ii) of Schedule II Part A of the Act. The Court relied on legal precedents emphasizing that oil retains its essential properties despite processing and can be considered edible oil if usable for human consumption. Therefore, the Tribunal's decision was overturned, and the classification under entry 185 (ii) was upheld in favor of the assessee.

This detailed analysis of the judgment clarifies the interpretation of the relevant entries in the Gujarat Sales Tax Act, 1969 and provides a comprehensive understanding of the reasoning behind the High Court's decision regarding the classification of "Crude Degummed Soyabean Oil."