1955 (2) TMI 5 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Deduction of freight charges under Rule 5(1)(g) of the Turnover and Assessment Rules.
2. Deduction under Rule 18(2) of the Turnover and Assessment Rules for hydrogenated groundnut oil (Vanaspathi).

Analysis:

1. Deduction of Freight Charges under Rule 5(1)(g):

Relevant Rule:
Rule 5(1)(g) states: "All amounts falling under the following two heads, when specified and charged for by the dealer separately, without including them in the price of the goods sold: (i) freight; (ii) charges for packing and delivery and other such like services."

Contention:
The petitioner argued that freight charges should be deductible as they were shown as separate items in the bills.

Court's Interpretation:
The court noted that the rule requires freight to be excluded from the price of the goods sold. In this case, the petitioners charged a price inclusive of railway freight and then gave a deduction for the railway freight. The court stated, "If the price stipulated for a commodity is inclusive of the freight on the understanding that the goods would be delivered at the place of the buyer free of freight, it will form an integral part of the turnover."

Conclusion:
The court concluded that the taxing authorities rightly disallowed the claim under this head, as the freight charges were not shown separately from the price of the goods sold.

2. Deduction under Rule 18(2) for Hydrogenated Groundnut Oil (Vanaspathi):

Relevant Rule:
Rule 18(2) states: "Every such manufacturer shall be entitled to a deduction under clause (k) of sub-rule (1) of rule 5 equal to the value of the groundnut and/or kernel purchased and converted by him into oil and cake provided that the amount for which the oil is sold is included in his turnover."

Contention:
The petitioner contended that hydrogenated groundnut oil (Vanaspathi) should be considered as groundnut oil for the purposes of Rule 18(2).

Court's Interpretation:
The court examined whether the term "oil" in Rule 18(2) includes hydrogenated oil. It was noted that hydrogenation alters the chemical composition of the oil, converting unsaturated oleic acid into saturated stearic acid. The court remarked, "There is a difference in chemical structure between the two substances although all the chemical contents do not disappear."

Commercial and Popular Sense:
The court also considered the commercial and popular understanding of the term. It was noted that hydrogenated oil is popularly known as Vanaspathi and does not pass off as groundnut oil in the market. The court stated, "It is difficult to regard it as oil within the connotation of rule 18(2)."

Supporting Cases:
The court referred to several cases, including Stanley v. Western Insurance Co., Cotton v. Vogan and Co., and others, to emphasize that terms should be interpreted in their ordinary and popular sense unless specified otherwise.

Government Notifications:
The court examined notifications issued by the Government of India, which required hydrogenated oil to be labeled as such. This supported the view that hydrogenated oil is a distinct product from groundnut oil.

Conclusion:
The court concluded that hydrogenated groundnut oil is a product of groundnut oil but not the same as groundnut oil. Therefore, it does not qualify for the deduction under Rule 18(2). The court stated, "In our opinion, the petitioner is not entitled to invoke rule 18(2) and the decision of the Appellate Tribunal is correct."

Final Decision:
The petition was dismissed with costs fixed at Rs. 250.