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TMI Blog2000 (3) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, therefore, issued notices under section 22 for rectification of the error. The notices were contested by the dealer mainly on the ground that the oils sold by the dealer are covered by entry 31, clause (a) of the Notification No. ST-3366 dated September 28, 1993, on which the rate of tax was 2.5 per cent inclusive of additional tax. It was also the contention of the assessee that rectification under section 22 was not permissible merely on the basis of change of opinion. The assessing authority placing reliance upon the decision of this Court as affirmed by the honourable Supreme Court in B.P. Oil Mills Ltd., Agra v. Sales Tax Tribunal [1998] 111 STC 188; 1998 UPTC 1020 levied the tax at the rate of 10 per cent. 3.. First appeals and second appeals filed by the dealer were dismissed hence, these two revisions: 4.. Sri Bharat Ji Agrawal, learned Senior Counsel, assisted by Sri Piyush Agrawal, learned counsel appearing for the revisionist and Sri S.P. Kesarvani, learned Standing Counsel appearing for the revenue have been heard. 5.. Submission of Sri Agrawal is that this was not a case of mistake apparent on the face of record and the question whether the goods sold by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astor seed oil and palsa oil. (b) Oils of all other kinds, including coconut oil and sandalwood oil and oils which are not covered by any other entry in this list or by any other notification issued under the Act. M or I 8 per cent It would further be relevant to state that entry 31 was further amended by notification dated May 15, 1995 being Notification No. TT-21085/XI-7(42)/86-U.P. which is also reproduced as below: Sl. No. Description of goods Point of tax Rate of tax 1 2 3 4 31 (a) Oils of all kinds including demetholised oil, pepermint oil and unperfumed or unscented oil but excluding coconut oil, refined oil and such other oils as are covered by any other entry in this list or by any other notification issued under the Act. M or I 2 per cent (b) Coconut oil M or I 5 per cent (c) Refined oil M or I 6 per cent Then again the said entry was amended by Notification dated September 14, 1995 being Notification No. TT-2-2297/11-7(42)/86-U.P. which reads as follows: 7. There is no disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f mistake in application of the entry, therefore, the mistake can be corrected under section 22. The first appellate authority as well as the Tribunal affirmed the view taken by the assessing authority. 8.. Submission of Sri Bharat Ji Agrawal is that the decision of honourable Supreme Court in Tungabhadra Industries Ltd., Kurnool v. Commercial Tax Officer, Kurnool [1960] 11 STC 827 and the division Bench decision of this Court in Commissioner of Sales Tax, U.P., Lucknow v. Prag Ice and Oil Mills [1975] 35 STC 520 as affirmed by honourable Supreme Court vide its decision in Commissioner of Sales Tax, U.P. v. Prag Ice and Oil Mills [1991] 80 STC 403 are directly on the controversy in question whereas the decision in the case of B.P. Oil Mills Ltd., Agra v. Sales Tax Tribunal, Lucknow [1998] 111 STC 188 (All.); 1994 UPTC 1111 as affirmed by the Supreme Court in B.P. Oil Mills Ltd. v. Sales Tax Tribunal [1998] 111 STC 188 (SC); 1998 UPTC 1020 are on different question and do not relate to the question whether the refined oil would be covered by clause (a) or clause (b) of the entry 31 and, therefore, the authorities below have wrongly relied upon the decisions in the said cases. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to refined oil, there is no doubt processing but this consists merely in removing from raw groundnut oil that constituent part of the raw oil which is not really oil. The elements removed in the refining process consists of free fatty acids, phosphotides and unsaponifiable matter. It took the view that after removal of this non-oleic matter therefor the oil continues to be groundnut oil and nothing more. In case of hydrogenated oil which is prepared from refined oil by the process of passing hydrogen into heated oil in the presence of a catalyst (usually finely powdered nickel), two atoms of hydrogen are absorbed. A portion of the oleic acid which formed a good part of the content of the groundnut oil in its raw state is converted by the absorption of the hydrogen atoms into stearic acid and it is this which gives the characteristic appearance as well as the semi solid condition which it attains........... Though it continues to be the same edible fat that it was before the hardening, and its nutritional properties continue to be the same, it has acquired new properties in that the tendency to rancidity is greatly removed, is easier to keep and to transport. The High Court, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oil' for the purpose of the rule, must be rejected". It was further held by the honourable Court that, "the benefit of the deduction from the turnover cannot be denied, unless the hydrogenated groundnut oil has ceased to be 'groundnut oil'. To be groundnut oil, two conditions have to be satisfied. The oil in question must be from groundnut and secondly the commodity must be 'oil' ". It was held that, "in its essential nature therefore no change has occurred and it remains an oil-a glyceride of fatty acidsthat it was when it issued out of the press". The honourable Supreme Court also observed that: "But neither mere absorption of other matter, nor inter-molecular changes necessarily affect the identity of a substance as ordinarily understood. Thus for instance there are absorptions of matter and inter-molecular changes which deteriorate the quality or utility of the oil and it might be interesting to see if such additions and alterations could be taken to render it any the less 'oil'. Groundnut oil when it issues out of the expresser normally contains a large proportion of unsaturated fatty acids-oleic and linoleic-which with other fatty acids which are saturated are in combinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the Revenue and held that: "The High Court following the judgment of this Court in Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 STC 827, came to the conclusion that the residue left, after going through the process of acids and chemicals, continues and remains to be the groundnut oil and is taxable at one per cent. We agree with the reasoning and the conclusions reached by the High Court." Thus, the view taken by the Supreme Court in Tungabhadra Industries case [1960] 11 STC 827, as well as Prag Ice and Oil Mills [1991] 80 STC 403, was that refining or hydrogenation of the groundnut oil does not change the nature of the oil and only impurities are removed by refining or hydrogenation and in that process even if some other matter is absorbed that does not affect the identity of the substance as it is ordinarily understood. The groundnut oil will remain to be the groundnut oil. The case of the present dealer also the refining is done by chemical processes. The ordinary mustard oil and sunflower oil are treated with alkali to remove the acid present therein. The acid free oil so obtained are then bleached with absorbent cotton and/or activated carbon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent that the expression 'manufacture' covers within its sweep not only such activities carried on by a person which bring into existence a new commercial commodity different from the articles on which that activity was carried on but also such activities which do not necessarily result in bringing into existence an article different from the article on which such activity was carried on, for example, where an activity by way of ornamenting of goods is carried on, the ornamented goods may not be goods commercially different from the goods which had been subject to ornamentation. But then a manufacturing activity, as defined by section 2(e-1) having been carried on in respect of goods originally produced the ornamented goods will have to be treated as a goods which have again been manufactured. Likewise where a goods known to the trade has been prepared or produced (i.e., brought into existence) but then certain changes are effected in it to adapt the same for a particular purpose it may despite some changes continue to be the same commercial commodity. But then if it has been so adapted for a particular purpose it has been subjected to a manufacturing process and the goods so adapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration was whether consequent upon its conversion to hydrogenated oil by improving its quality groundnut oil lost its identity. In answering this question in the negative this Court held that refined groundnut oil (hydrogenated oil) continues to be groundnut oil notwithstanding that such oil does not possess the characteristic colour, or taste, odour, etc., of the raw groundnut oil. Indeed, the controversy in that case centred round the interpretation of the expression 'groundnut oil' appearing in the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. Neither the expression 'manufacture' nor the expression 'processing' directly came up for interpretation in that case." 16.. Thus the questions involved in the case of B.P. Oil Mills Ltd. [1998] 111 STC 188 (SC); 1998 UPTC 1020 was quite different and distinct from the question involved in the present case. As already pointed out above, clause (b) of entry No. 31 of the notification provided exclusionary clause by mentioning "the oils which were not covered by any other entry". Once it is found that after refinement any kind of oil including mustard oil, sunflower oil for that matter remains to be the mustard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Concrete Spun Pipe Works v. Sales Tax Officer, Sector V, Kanpur [1969] 24 STC 48 and the other is Kakkar General Stores v. State of Uttar Pradesh 1997 UPTC 56. In the first case of Concrete Spun Pipe Works [1969] 24 STC 48 (All.), the facts were that the Sales Tax Officer making the assessment applied the rate of tax of 2 per cent to the turnover for the purposes of determining the tax liability. Subsequently in his view the spun pipes sold by the petitioner fell under the description of sanitary fittings and were liable to tax at the rate of 7 per cent. He proposed to rectify the assessment. Challenge to the jurisdiction of the Sales Tax Officer under section 22 was made. It was held that "the jurisdiction of the assessing authority under section 22 is confined to the rectification of a mistake apparent on the face of the record of the assessment. It must be a mistake and it must be apparent on the face of the record. Clearly section 22 does not envisage rectification of an error of judgment ............. It must be a mistake which will appear upon a glance at the record and not a mistake which emerges after a prolonged debate on the merits of the question". The High Court q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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