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TMI Blog2024 (10) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... an Oil brought by the petitioners within the State of MP for manufacturing/refining Soyabean Refined Oil - revision filed u/s 62 of the MPCT Act read with the relevant provision of the Entry Tax Act - levy of tax also challenged on the ground that in case, the refining of Soya crude oil is treated as a process of manufacture then even in such case, soya crude oil being Raw material would be exempted under N/N. A-3-10-2000-ST-V(82) dated 06-09-2001. HELD THAT:- In the case of Commercial Trade Tax V/s M/s Kumar Paints and Mills Store [ 2023 (3) TMI 943 - SUPREME COURT] the Apex Court considered the question with respect to the product which underwent mixing of base paint with different colours did not result in the new product after undergoing the process of manufacturing as defined under the U.P. Trade Tax Act. The revenue department contended that the sale of paints which had undergone mixing through a computerized process amounts to manufacture thereby resulting in new products. The case in hand, admittedly the petitioner brought Soyabean crude oil within the State and after the process manufactured the refined oil. According to the petitioner, the entry tax on oil entered into th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the order of the Assessment Authority and the Revisional Authority, therefore, all the Writ Petitions are hereby dismissed. - HON'BLE SHRI JUSTICE VIVEK RUSIA HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI Appearance: For the Petitioner : Shri P.M. Choudhary, learned Senior Advocate alongwith Shri Madhav Khandelwal, learned counsel. For the respondent / State : Shri Sudeep Bhargava, learned Dy. A.G.. ORDER PER: JUSTICE VIVEK RUSIA The present batch of writ petitions has been filed challenging the respective impugned orders passed by the Revisional authority, viz, the Additional Commissioner of Commercial Tax, MP, Indore, confirming the imposition of Entry Tax on the crude Soyabean Oil brought by the petitioners within the State of MP for manufacturing/refining Soyabean Refined Oil. For the sake of convenience, the facts are being taken from Writ Petition No. 57/2009, are as under: - 1. The petitioner in Writ Petition No. 57/2009 Patanjali Foods Limited (Formerly known as Ruchi Soya Industries Limited) has been engaged in manufacturing and selling Soya Oil De-oiled Cake (DOC). The present matter relates to the period from 01-04-2004 to 31-03-2005. During the said period the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitute a process of the manufacturer in view of exclusion of said process from manufacture under Notification No. 18 dated 01-04-1995 issued by state government u/s 2(o) of MPCT Act, 1994. The present petition thus challenges the said revisional order and imposition of an entry tax on the entry of crude soya oil, which after refining was sold out of M.P.. The crude oil entered within the local area of the State of M.P. to the extent of sale of such oil after refining outside state of MP either by way of sale outside state or in the course of interstate trade or commerce in view of proviso (ii) to Section 3 (1) of the Madhya Pradesh ke Sthaniya Kshetra Me Maal ke Pravesh Par Kar Adhiniyam, 1976 (MP Entity Tax Act for Short). Submissions of the petitioner: 5. Shri P.M. Choudhari learned senior counsel appearing for the petitioner submitted that the expression use or consumption which is the basis of the levy of tax under the act has been the subject matter of interpretation by the Hon ble Apex Court in several decisions rendered in connection with entry 52 of the list II of the Seventh Schedule to the Constitution of India and since the present State enactment relating to levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it amounts to use or consumption of the commodity in local area Reference in this respect is made to the following decisions. 9. In the case of S.M. Ramlal Co Vs Secretary to Government of Punjab reported in (1995) 14 TLD 10 the Apex Court has explained the coupling of the three words consumption, use or sale while dealing with the question that when the wool purchased in Delhi was brought for dying at the factory in Faridabad and sent back to Delhi, could it be said that the wool was brought for use and was liable to Octroi, the Apex Court held that the expression used is not defined in the Act, in its ordinary meaning the word 'use' as a noun, is the act of employing a thing, putting into action or service, employing for or applying to a given purpose. But the word 'use' occurring in Entry 52 List-II of VIIth Schedule to the Constitution, sandwiched between consumption and sale, must take colour from the context in which it occurs. It is settled rule of interpretation that when two or more words which are susceptible or analogous meaning, are coupled together they are understood to be used in their cognate sense they take as it were, their colour from each other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of interstate sale or sales outside the State and to that extent, the crude oil cannot be said to be used or consumed in the local area. In the absence of manufacture, there is no emergence of new or different commercial commodities. By process of refining oil, the petitioner merely removes impurities in the Crude oil and the resultant commodity still remains the same i.e. Oil may be in its pure form after removal of impurities. By such a process of refining, no new commercial commodity comes into existence and Oil remains Oil. 12. Learned senior counsel further added in his submissions that in another decision of the Supreme Court in the case of Aqueous victuals Pvt Ltd Vs State of U.P. Others reported in (1998) 5 SCC 474, where their Lordships dealing with the question as to whether the empty bottles filled with soft drinks re-exported after being emptied could be said to be used or consumed in the local area has again laid stress on 'retention or reposition of the commodity in the local area and has finally held that the bottles in question cannot be said to be used in the local area. In the case of Universal viscose Oil Products Vs Commissioner of Trade Tax reported in 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Division Bench of this court in the matter of Tata Tea Limited Vs. CTO reported in (2015) 27 STJ 21. Shri Choudhari submitted that while deciding on a bunch of writ petitions relating to the issue of the process of Tea blending other bunch of Writ Petitions relating to the Refining of soyabean oil were also dismissed by the Division Bench of this High Court. The Hon ble Division bench by its common judgment held that the process of Tea Blending constitutes the process of manufacture and as such, the Tea entered within the state being different from the Tea sent outside the state, the entry of tea for the purpose of blending was liable to Entry Tax. For coming to the said conclusion, the Hon ble Division Bench has followed the Division Bench judgment in the case of Badrinarayan Vs. State of MP reported in (1988) 70 STC 12 , where the earlier Division Bench in the context of an incentive notification had held that the process of tea blending amounted to the process of manufacturing. Further, the Hon ble Division Bench has also referred to and relied upon another Division Bench judgment in the case of Chandrabhan Brijmohan Co. Vs. Addnl. Assistant commissioner of Sales Tax Co report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is no longer a good law and a binding judgment. Submissions of respondents / State: 18. Shri Sudeep Bhargava learned Dy. The Advocate General has argued in support of the order passed by the assessment officer, appellate authority and revisional authority that the petitioner purchased the crude oil, brought within the State of M.P. and used it in manufacturing refined oil which is an altogether new commodity saleable in the market. Crude oil brought by the petitioner was used and consumed in making soyabean oil hence the entry tax was attracted, the issue raised by the petitioner is no more resp ingera as the same had already been decided by the Division Bench of this High Court in the case of Tata Tea Limited Vs. CTO reported in (2015) 27 STJ 21 which is not liable to be reopened by relying on the judgment M/s Mishra Tea Blending (supra) passed in the matter of the processing of tea blending, hence all the Writ Petitions devoid of merit and substance be dismissed. Appreciation and conclusion: 19. The MP Entry Tax Act was enacted by the legislature of MP in the exercise of its legislative powers available to it under Entry No 52 of List II Seventh Schedule to the Constitution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto a local area, purchases goods specified in Schedule - III, other than goods which are local goods in relation to such local area, from another dealer of the same local area for consumption or use. the entry of such goods shall be deemed to have been effected into such local area by the dealer who has purchased such goods for the aforesaid purpose and entry tax shall be paid by such dealer. Provided also that in respect of packing material sale shall mean the sale of packing material as such and shall not include its sale along with the goods packed or contained therein. Section 3 (1) carves out exceptions to the charging section and enumerates the circumstances in which no tax is leviable. Proviso (ii) provides for non-liability for Schedule II goods, which after their entry have been sold outside the state or in the course of interstate trade commerce or the course of export out of the territory of India. The said proviso is to protect the levy from being outside the scope of levy Entry 52 List 2 of the Seventh Schedule to the Constitution of India. 21. According to the petitioner, the revisional authority has not decided the principal issue regarding non-livability to Entry t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) All those expressions, other than expression goods and sale which are used but are not defined in this Act and are defined in the [Vanijyik Kar Adhiniyam] shall have the meanings assigned to them in that Act. Definition of manufacture in section 2(o) of MPCT Act 2(o) Manufacture includes any process or manner of producing, collecting, extracting, preparing or making any goods, but does not include such manufacture or manufacturing process as may be notified. The core issue which requires our anxious consideration is whether the petitioner is engaged in the manufacturing or refining of crude soya oil. 23. As per the definition of manufacturing under Section 2(k), Factories Act, 1948 it means the process of (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal or (ii) pumping oil, water, sewage or any other substance, or; (iii) generating, transforming or transmitting power or (iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book bin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is no manufacturing at all and, the resultant product cannot be said to have emerged because of manufacture. Commercially new and distinct articles ought to emerge out of the process applied. To ascertain whether the manufacturing process has taken place or not, a test is to be applied, whether change or series of changes take the commodity to a point where commercially it can no longer be regarded as the original commodity, but, instead is recognized as a new and distinct article that has emerged as a result of processes then manufacture can be said to have taken place. This is the test to be applied to conclude whether the process applied to the product amounts to manufacturing or not. 26. In the case of Mamta Surgical Cotton Industries, Rajasthan vs Assistant Commissioner (Anti-Evasion), Bhilwara, Rajasthan reported in 2014 0 Supreme (SC) 50 the Apex court has held as under:- 34. The surgical cotton is made sterile and fit for surgical use and it is not put to the same use to which the unmanufactured cotton is put and vice versa. Therefore, when unmanufactured cotton undergoes a manufacturing process, a new product saleable into the market which is having a distinct iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Physically refined soyabean oil and also disclosed it contains (i) permitted anti-oxidants (INS 319), (ii)Antifoaming agents (900a) and (iii) Vitamin A (25 IU per gram) Vitamin D (4.5 IU per gram). The addition of the above ingredients by way of a mechanical process in crude soyabean oil amounts to the manufacturing process. The process to get the finished product called refined soyabean oil is described in the form of a chart as under:- 28. The Apex court has considered a similar process applied in the manufacturing of surgical cotton from raw cotton in the case of Mamta Surgical Cotton Industries (supra). Para 29 is as under 29. Having noticed the relevant Entries, the definition of 'manufacture' and judicial precedents, we would now notice, (a) the process adopted by the assessee for the purpose of converting raw cotton into surgical cotton and (b) the utility and commercial use of surgical cotton in contrast to cotton. Process of conversion of cotton into surgical cotton 30. The Project report on Surgical Absorbent Cotton, December 2010 (pg. 3 and 4) prepared by MSME - Development Institute, Ministry of Micro, Small Medium Enterprises, Government of India provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the commercial market by a different name and use. Surgical cotton possesses higher utility than cotton in its un-manufactured state. We are of the considered view that in the case of making soyabean oil same analogy applies hence the learned revenue authorities have rightly held that it is the case of manufacturing soyabean oil. 31. In the case of Commercial Trade Tax V/s M/s Kumar Paints and Mills Store in Civil Appeal No.5937 of 2011, the Apex Court considered the question with respect to the product which underwent mixing of base paint with different colours did not result in the new product after undergoing the process of manufacturing as defined under the U.P. Trade Tax Act. The revenue department contended that the sale of paints which had undergone mixing through a computerized process amounts to manufacture thereby resulting in new products. After considering all the judgments dated 02.03.2023 up to the date, the word manufacturer must be understood in common parlance. This means the product of the article from the use of raw and real material, however, if the change made in the article is related to a new and different article, it would amount to manufacturing the drip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the tax on entry of the goods into the local area has rightly been imposed for consumption/use or sale therein. 33. The petitioner is trying to avoid the payment of the entry tax solely on the ground that the petitioner is engaged in refining the crude Soya oil to Soyabean oil, no entry tax is leviable in view of Proviso 2 of Section 3 (1) of the Entry Tax Act, only in case of consumption or use of oil by the Assessee. It is correct that the Revisional Authority while rejecting the aforesaid contention has held that the process of refining crude oil does not constitute a process of manufacture in view of the said exclusion of the process of refining under notification No. 18 dated 01.04.1995 issued by the State under Section 2(o) of the MPCT Act, 1994. 34. As per Entry No.52 of List 2, VIIth Schedule of the Constitution of India, the tax on the entry of goods into the local area is leviable for consumption, use or sale therein even if it is called by whatever name manufacturing or refining. In the case of the petitioner, a new product Refined Soyabean oil emerges after applying various processes to the crude Soyabean oil. The cued soya oil is used in making finished consumabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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