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TMI Blog2021 (1) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts, which are similar to tar would be covered by the words and others . Similar view was taken in the Circular dated 02.05.2006 and it was provided that benzene, toluene and xylene are not covered under the Entry tar and others or under any other sub entry, therefore, they are not petroleum products specified in the Notification. Thereafter, by Circular dated 09.04.2013, the Circular dated 12.04.2006 was withdrawn. However, the Circular dated 02.05.2006 issued by the I9nance Department of Government of Karnataka is in force. It is well established rule of interpretation of taxing statutes in words of Lord Simonds that subject is not to be taxed without clear words for that purpose and that every Act of Parliament must be read according to natural construction of its words - From perusal of the Entry 67 as well as Sl.No.1 of the Notification, it is evident that Entries seem to cover only petroleum based lubricating oil which entry tax is being paid by the appellant. The synthetic based lubricating oil is not a petroleum product and is therefore, not covered under the entry. Similarly, the grease and base oil have also not been specifically enumerated in the Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter 34 of the Customs Tariff Act, 1975 (hereinafter referred to as the 1975 Act for short) whereas, petroleum based lubricants are imported under Chapter 37 of the 1975 Act. The appellant is also engaged in the business of manufacturing such products in the State of Karnataka and is producing raw materials such as base oils, additives, chemicals and packing materials either locally or through imports. Thus, the appellant undertakes two different business activities in relation to imported lubricants. One of the activities involves pure trading of lubricating oils and grease and the other one involves usage of imported base oil as raw materials for manufacture of lubricating oil and grease. 3. The appellant has been making payment of entry tax in respect of petroleum based lubricating oil in terms of Entry 67 of 3rd Schedule of Karnataka Tax on Entry of Goods Act, 1979 (hereinafter referred to as the 1979 Act for short) read with Entry 1(viii)(a) Notification bearing No. FD/11/CET/2002 dated 30.03.2002 (hereinafter referred to as the Notification for short) in case of entry of synthetic based lubricating oil and grease and base oil into the local area, no tax was being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide order dated 28.10.2011. 4. The appellants thereupon filed appeals before the Joint Commissioner of Income Tax (Appeals) who by an order dated 12.09.2012 by placing reliance on subsequent clarifications issued by the government regarding entry petroleum products and decision of the Supreme Court held entry tax was not leviable on goods brought into the local area for purpose of re-export outside the local area. It was further held that the demand of tax was unsustainable on purchase of synthetic based lubricating oil, which was a non notified commodity. The appellate authority also granted exemption on the purchase of lubricating oil into the State of Karnataka, which was subsequently re-exported outside the State by way of inter state sales or export sales by relying on the decision of the Supreme Court in ENTRY TAX OFFICER, BANGALORE ORS. VS. CHANDANMAL CHAMPALAL AND CO. AND ORS. , (1994) 4 SCC 463. 5. The Additional Commissioner of Commercial Taxes issued a notice dated 07.08.2013 and initiated suo motu revision proceeding under Section 15 of 1979 Act proposing to set aside the order of Joint Commissioner of Income Tax (Appeals) on the ground that the order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be specified in the Notification issued by the State Government. Our attention has also been invited to Entry 67 as well as Entry 103 and the Notification dated 30.03.2002 issued under Section 3 of the 1979 Act providing for rate of tax for each of the goods specified in Entry 67. While inviting our attention to Entry 67 as well as Sl.No.1 of the Notification, it is pointed out that products mentioned therein are petroleum products and the products identified in Entry 67 and Sl.No.1 of the Notification are commonly such products which are classified under Chapter 27 of the 1975 Act. It is also urged that synthetic based lubricating oil classifiable under Section 34 of the 1975 Act is a distinct product from petroleum based lubricating oil classifiable under Chapter 27 of the 1975 Act and synthetic based lubricating oil not being a petroleum product is not covered under the impugned entry. It is also pointed out that the revisional authority while framing the issue has clearly noted that synthetic based lubricating oils are distinguishable from petroleum based lubricating oils yet, has filed to give effect to the aforesaid distinction. It is also urged that grease and base oil are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axability of base oil and grease under the Notification is squarely covered by judgment of the Supreme Court in Indian Aluminum Company supra, which has been followed by division bench of this court in Hyva India supra. It is also urged that in Hyva India, a division bench of this court while relying on Indian Aluminum Company supra has held that the use of words tar and others after the terms specifically mentioned in Sl.No.1(viii) of Notification would refer to petroleum products other than those specifically mentioned in the entry and S.No.1 of the Notification. It is contended that non mentioning of specific product in the entry and Notification does not mean that the petroleum products is not taxable as the words used are tar and others . 11. It is also urged that in the instant case also oil and grease which are admittedly petroleum products do not find specific mention neither in entry 67 nor in Sl.No.1 of the Notification. It is also submitted that the contention that the words and others in Sl.No1(viii) of Notification must be read only with preceding word tar has been rejected by this court in HYVA INDIA supra in view of decision of INDIAN ALUMINUM COMPANY supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ALNOORI TOBACCO PRODUCTS , 2004 (170) E.L.T. 135 (SC). 14. We have considered the submissions made by learned counsel for the parties and have pursued the record. Section 3 of the 1979 Act is the charging Section, which mandates that there shall be levy and collection of tax on entry of any goods specified in First schedule into a local area for consumption, use or sale therein at such rates not exceeding 5% of the value of goods as may be specified retrospectively or prospectively by the State Government by a Notification. The aforesaid Section further provides that different dates on different rates may be specified in respect of different goods or different classes of goods or different local areas. First Schedule to the Act specifies the items or goods, on which tax is levied. Entry 11 of the Schedule applicable upto 30.04.1992 reads as under: Entry 11: All petroleum products, that is to say, Petrol, diesel, crude oil, lubricating oil, transformer oil, brake or clutch fluid, bitumen (asphalt), tar and others, but excluding LPG, kerosene and naphtha for use in the manufacture of fertilizers. 15. Thereafter, First Schedule was inserted in the Act by Act No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular dated 09.04.2013, the Circular dated 12.04.2006 was withdrawn. However, the Circular dated 02.05.2006 issued by the I9nance Department of Government of Karnataka is in force. 18. In the backdrop of aforesaid relevant statutory provisions referred to supra, we may advert to well settled principles of construction of taxing statutes. It is well established rule of interpretation of taxing statutes in words of Lord Simonds that subject is not to be taxed without clear words for that purpose and that every Act of Parliament must be read according to natural construction of its words. The aforesaid principle was referred to with approval by Supreme Court in MEMBER SECRETARY, ANDHRA PRADESH STATE BOA RD FOR PREVENTION AN!) CONTROL OF WATER POLLUTION VS. ANDHRA P.RADESH RAYONS LTD., AIR 1989 SC 611, SARASWATI SUGAR MILLS VS. HARYAFVA STATE BOARD, AIR 1992 SC 224, INDIA CINE AGENIES VS. COMMISSIONER OF INCOME TAX, MADRAS, (2008) 17 SCC 385, MAMTA SURGICAL COTTON INDUSTRIES, RAJASTHAN VS. ASSISTANT COMMISSIONER ( NTI EVASION), BHILWARA, RAJASTHAN. (2014) 4 SCC 87. It is equally well settled legal position that in a taxing Act, one has to look at merely what is clearly said. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. It is well settled in law that a decision of the court is only an authority for what it decides and not what can logically be deduced therefrom. It cannot be quoted for a proposition that may seem to follow logically from it and such a mode of reasoning assumes that law is necessarily a logical code, whereas it must be acknowledged that law is not always logical. It is equally well settled legal position, that court should not place reliance on a decision without discussing as to how the factual situation fits in with the fact situation of the decision, on which reliance is placed. [See: DELHI ADMINISTRATION (NCT OF DELHI) VS. MANOHAR LAL, AIR 2002 SC 3088 and HARYANA FINANCIAL CORPORATION VS. JAGADAMBA OIL MILLS , (2002) 3 SCC 496]. It is well settled in law that observations of the courts are neither to be read Euclid s theorems nor as provisions of a statute and should not be taken out of their context. The observations must be read in the context, in which they appear to have been stated. The Judges interpret statutes and they do n3t interpret judgments. [See: BHARAT PETROLEUM CORPORATION LTDD VS1 NRRIV IRAMANI, (2004) 8SCC 479). 22. The aforesaid words were re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oleum based lubricating oil, which s classifiable under Chapter 27 of the 1975 Act. It is also noteworthy that revisional authority while framing the issues have clearly noted that synthetic based lubricating oil are distinguishable from petroleum based lubricating oils. In CARL BECHEM LUBRICANTS (INDIA) PVT. LTD. supra, a division bench of this court held that if a product does not fall within the entry, the same cannot be subjected to entry tax. Similarly, the grease and base oil are not specifically enumerated in the Notification and therefore, cannot be subjected to entry tax. The decisions rendered by Supreme Court in Indian Aluminum Company supra and Hyva India by a bench of this court are not applicable to the fact situation of the case. In view of well settled rules of interpretation of taxing statutes, since, in Entry No.67 of First Schedule of 1979 Act, there s no mention of synthetic based lubricating oil, base oil and grease, therefore, the same cannot be subjected to entry tax as it would contravene Article 265 of the Constitution of India 25. Therefore, it is not necessary for us to refer the issue with regard to the correctness of the view taken by division benc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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