2001 (1) TMI 289 - SC - VAT and Sales Tax

Whether the furnace oil is liable to payment of duty under entry 11 of the Schedule? Held that - Both these entries (Nos. 11 and 67) mention petroleum products Whereas in Entry No. 11 the first words are All petroleum products , the word All is missing in the new Entry No. 67. This, however, will not make any material difference because petroleum products would clearly mean any type of petroleum product. The use of the words and others would, in our opinion, refer to petroleum products other than those which are specifically mentioned therein. What is, however, important is that the said entries specifically exclude aviation fuel, liquid petroleum gas, kerosene and Naphtha for use in the manufacture of fertilizers. If the contention of the learned counsel for the appellants is correct that the words and others would not enable the inclusion of furnace oil in the said entries, then on the same parity of reasoning aviation fuel, liquid petroleum gas, kerosene and naphtha would also have to be regarded as not being included in the said entries and if this is so there was no need for their specific exclusion. The very fact that there is an exclusion clause, means that but for the said exclusion, aviation fuel, LPG, etc. would be included in the said entries and as they are not specifically mentioned they would be covered by reason of the words and others . The said entries further show that the legislature never intended to exclude furnace oil from the levy of entry tax. Appeal dismissed.

Issues Involved:
1. Validity of item 16-B of the Schedule to the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979.
2. Levy of tax on furnace oil under entry 11 of the Schedule to the Act.
3. Interpretation of the term "that is to say" in the context of entry 11.
4. Legality of the penalties imposed by the assessing authorities.

Detailed Analysis:

1. Validity of Item 16-B:
The petitions challenged the validity of item 16-B of the Schedule to the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979. However, this issue was not pressed during the hearing before the learned single Judge, and hence, the focus shifted to the levy of tax on furnace oil under entry 11.

2. Levy of Tax on Furnace Oil:
The primary issue was whether furnace oil is liable to tax under entry 11 of the Schedule. The learned single Judge held that furnace oil is not liable to tax under entry 11, interpreting the list of products as exhaustive. The appellants contended that the list is illustrative, not exhaustive, and that furnace oil falls within the generic term "petroleum products." The Supreme Court concluded that the Legislature intended the list to be illustrative, supported by the expressions "all petroleum products" and "others," indicating that the list is not exhaustive. Thus, furnace oil is liable to tax under entry 11.

3. Interpretation of "That is to Say":
The term "that is to say" was central to the interpretation of entry 11. The appellants argued that this term makes the list illustrative, while the respondents contended it makes the list exhaustive. The Supreme Court referred to Stroud's Judicial Dictionary and previous judgments, concluding that the term "that is to say" can be illustrative or exhaustive depending on the context. In this case, the context and legislative intent indicated an illustrative list, meaning furnace oil is included in the taxable items.

4. Legality of Penalties:
The learned single Judge quashed the penalties imposed by the assessing authorities, reasoning that the entry 16-B had undergone multiple changes, and the company was not liable to pay tax on furnace oil. The Supreme Court found this reasoning insufficient, stating that penalties were levied as per section 5 of the Act. The respondent-company's challenge to the vires of the entry was given up, and thus, the penalties should not have been disturbed. The Supreme Court reinstated the penalties but allowed the respondent to appeal against them within two weeks, with the assurance that the appeals would be entertained without objections on the grounds of limitation.

Conclusion:
The appeals were allowed, setting aside the judgment of the learned single Judge. The Supreme Court held that furnace oil is liable to tax under entry 11, the list of products is illustrative, and the penalties imposed by the assessing authorities were justified. The respondent-company was directed to pay the costs of the appellants throughout, with an option to appeal against the penalties within a specified period.

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