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TMI Blog2009 (10) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessing authority had levied the tax on the purchases of used oil under Section 3AAAA of the Act and levied the sales of mobil oil treating it as manufactured product. 3. Being aggrieved by the impugned order, the dealer filed appeal before the Deputy Commissioner (Appeals), Meerut. The Deputy Commissioner (Appeals), Meerut accepted the contention of the dealer in part. He has accepted that in cleaning no manufacturing process was involved and, accordingly, held that sale of mobil oil was not liable to tax but had confirmed the levy of tax on the purchases of used/burnt oil under Section 3AAAA of the Act. 4. Being aggrieved by the order of the Deputy Commissioner (Appeals), the dealer as well as the Commissioner of Trade Tax filed appeals before the Tribunal. The Tribunal by the impugned order upheld the view of the Deputy Commissioner (Appeals) in this regard. 5. Being aggrieved by the order of the Tribunal, the dealer filed Revision No. 161 of 2002 and the Commissioner of Trade Tax filed Revision No. 429 of 2002. 6. Heard Sri Manish Goyal, learned counsel for the dealer and learned Standing Counsel. 7. Learned counsel for the dealer submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. He submitted that none of the authorities have recorded any finding that the old/used oil outlived its utility. He submitted that the said decision is applicable only in case if the used oil outlived its utility. He submitted that the issue involved is squarely covered by the decision of this Court in the case of The Commissioner, Trade Tax, U.P., Lucknow v. S/S Agrawal Oil Refinery Corporation, Kanpur (Supra) in which the earlier decision of this Court in the case of Commissioner of Sales Tax v. S/S Industrial Lubricants (supra) has been considered in detail. 11. Having heard learned counsel for the parties, I have perused the impugned order and the order of the authorities below. 12. It is useful to refer Section 3AAAA of the Act as it existed at the relevant time and relevant Notification No. ST-II-5785/X-10(1)-80-U.P. Act XV-48-Order-81 dated 7-9-1981 : Section 3-AAAA. Liability to tax on purchase of goods in certain circumstances- Subject to the provisions of Section -3, every dealer who purchases any goods liable to tax at the point of sale to consumer - (a) from any registered dealer in circumstances in which no tax is payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from unregistered dealer and by the process of cleaning, impurities had been removed and thereafter sold the cleaned mobil oil as mobil oil. In the process of cleaning old used mobil oil were heated in which sulphuric acid and furfil had been mixed by which the impurities settled down at the bottom which were removed. The question for consideration is whether the used mobil oil was not mobil oil and after cleaning there was any change in its character and some new commodity has been obtained or as a result of cleaning. 14. Similar question came up for consideration before this Court in the case of The Commissioner, Trade Tax, U.P., Lucknow v. S/S Agrawal Oil Refinery Corporation, Kanpur (supra). This Court held as follows : "It is useful to refer the Notification No. ST-II-5785/X-10(1)-80-U.P. Act XV-48-Order-81 dated 7-9-1981. "Old, discarded, unserviceable or obsolete machinery, stores or vehicles including waste products except cinder, coal ash and such items as are included in any other notification issued under the Act @ 8% sale to consumer." The aforesaid notification came up for consideration before Hon'ble Supreme Court in the case of M/s. Rainbow Steel Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for consideration was that mobil oil which has already been used and which has outlived its utility as mobil oil. In that case, it has been held that such mobil oil which has outlived its utility as mobil oil does not retain the character of mobil oil, but it becomes old discarded or unserviceable. Thus, the case is distinguishable on the facts and is not applicable in the present case." 15. In Punjab Aromatics v. State of Kerala (supra), the question for consideration was the levy of purchase tax on the red oil. The fact was that, there was a conversion of red oil to sandalwood oil. The question was whether the raw material was subsumed into final product. Whether there was consumption of used red oil (purchased oil) in the process of conversion to sandalwood oil. The Apex Court held as follows : "We find merit in this civil appeal filed by the assessee. At the outset, it may be stated that process of purification is not in dispute. The entire process of purification has been discussed by the Tribunal in its judgment. The said process eliminates impurities. In the present case we are required to consider the words "consumes such goods (red oil) in the manufacture of other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein below para 18 of the said judgment in Shyam Oil Cake Ltd. which reads as follows : (SCC p. 269) "18. Thus, this Court has held that prior to refining, it was raw groundnut oil and after refining even though the characteristic colour, taste and odour may have changed it remained groundnut oil. In other words, this Court held that there was no manufacture of a new and distinct commodity." Section 5-A(1)(a) of the 1963 Act is similar to Section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959. That Section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act , 1959 came for interpretation before the Madras High Court in State of T.N. v. Subbaraj and Co. in which it was held that the very use of the word "consume" contemplates that the goods purchased should have been devoured or exhausted in the process of manufacture with the result, its identity must have been completely lost. The "test of irreversibility" is an important criterion to ascertain as to when a given process amounts to manufacture. In the present case that test is not satisfied. In the present case, the Tribunal has examined the process and has come to the conclusion that by adding impurities to the sandalw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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