M/s. Agarwal Oil
Refinery Corporation, Kanpur Vs. The Commissioner of Trade Tax, U.P. Lucknow
Commissioner of Trade
Tax, U.P. Vs. S/s Agarwal Oil Refinery Corporation, Kanpur
J U D G M E N T
GANGULY, J.
1.
Heard
learned counsel for the parties.
2.
This
appeal is directed against the judgment and order passed by the High Court in Trade
Tax Revisions in exercise of its revisional jurisdiction under Section 11 of
U.P. Trade Tax Act, 1948(hereinafter referred to as the "Act"). The order
of the Tribunal dated 22nd 1 April, 1996 relating to assessment years 1988-89 and
1989-90 was impugned in Revisions before the High Court.
3.
The
case of the appellant, who was the dealer is that it purchased burnt mobil oil
and refined the same mobil oil, but the assessing authority levied tax on the said
burnt mobil oil under Section 3-AAAA of the Act treating the said oil as "old
discarded unserviceable store".
4.
Admittedly,
the first appeal, which was filed by the dealer against such assessment, was allowed
and then again a further appeal was filed by the Commissioner of Trade Tax against
the order of the first appellate authority. The said appeal by the Commissioner
was also dismissed. Thereupon, the Commissioner, Trade Tax filed the revision before
the High Court and the revisional Court overturned the concurrent finding of the
statutory authorities. In doing so, the High Court came to a finding that the present
controversy is covered by a decision of the High Court in the case of Commissioner
of Sales Tax vs. S/S. Industrial Lubricants reported in 1984 U.P.T.C. 1101.
5.
Following
the said decision, the High Court held that burnt mobil oil purchased by the
dealer, the appellant herein, is covered under the entry of "old, discarded
and unserviceable store" being purchased from unregistered dealer and sold
in the same condition. According to the High Court they are liable to be taxed as
such under Section 3-AAAA of the Act during the years under consideration.
6.
Learned
counsel for the appellant while assailing the said finding of the High Court,
submitted that the case is not covered by the decision rendered by the High Court
in the case of S/S. Industrial Lubricants (supra). The only reasoning on the
basis of which the High Court in S/S Industrial Lubricants (supra) allowed the revision
is that mobil oil after having been used does not retain the character of mobil
oil but it becomes "old, discarded and unserviceable store" and that
is why the High Court agreed with the revenue that the burnt mobil oil, being old,
discarded or unserviceable store, is liable to be taxed under the notifications
dated 1.12.1973 and 4.11.1974 @ 3.5% and 4% respectively.
7.
Reference
in this connection may be made to the provision of Section 11 of the said Act to
appreciate the extent of revisional jurisdiction of High Court in dealing with the
concurrent finding of fact. Section 11 of the said Act is set out below: 11. Revision
by High Court in special cases.-
(1) Any person aggrieved
by an order made under sub-section (4) or sub- section (5) of Section 10, other
than an order under sub-section (2) of that section summarily disposing of the appeal,
or by an order passed under Section 22 by the Tribunal, may, within ninety days
from the date of service of such order, apply to the High Court for revision of
such order on the ground that the case involves any question of law.
(2) Any person aggrieved
by an order made by the Revising Authority or an Additional Revising Authority
refusing to state the case under this section, as it stood immediately before April
27, 1978, hereinafter referred to as the said date, may, where the limitation for
making an application to the High Court under sub- section (4), as it stood immediately
before the said date, has not expired, likewise apply for revision to the High Court
within a period of ninety days from the said date.
(3) Where an application
under sub- section (1) or sub-section (3), as they stood immediately before the
said date, was rejected by the Revising Authority or an Additional Revising Authority
on the sole ground that the period of one hundred and twenty days for making the
reference, as specified in the said sub- section (1), has expired, such applicant
may apply for revision of the order made under sub-section (2)of Section 10, to
the High Court within sixty days from the said date on the ground that the case
involves any question of law.
(4) The application for
revision under sub-section (1) shall precisely state the question of law
involved in the case, and it shall be competent for the High Court to formulate
the question of law or to allow any other question of law to be raised.
(5) Every application
for making a reference to the High Court under sub-section (1) or sub-section (3),
as they stood immediately before the said date, pending before the Revising Authority
or an Additional Revising Authority on the said date, shall stand transferred
to the High Court. Every such application upon being so transferred and every
application under sub-section (4), as it stood immediately before the said date,
pending before the High Court on the said date, shall be deemed to be an
application for revision under this Section and disposed of accordingly.
(6) Where the High Court
has before the said date, required the Revising Authority or an Additional Revising
Authority to state the case and refer it to the High Court under sub-section (4),
as it stood immediately before the said date, such authority shall, as soon as may
be, make reference accordingly.
Every reference so made,
and every reference made by such authority before the said date in compliance with
the requirement of the High Court under sub-section (4), as it stood before the
said date, shall be deemed to be an application for revision under this section
and disposed of accordingly.(6-A)Where the Revising Authority or an Additional
Revising Authority has, before the said date, allowed an application under
sub-section (1) or sub-section (3), as they stood immediately before the said 5date,
and such authority has not made reference before the said date, it shall, as
soon as may be, make reference, to the High Court. Every such reference, and
every reference already made by such authority before the said date and pending
before the High Court on the said date, shall be deemed to be an application for
revision under this section and dispose of accordingly.
(7) Where an application
under this section is pending, the High Court may, on an application in that behalf,
stay recovery of any disputed amount of tax, fee or penalty payable, or refund of
any amount due, under the order sought to be revised: Provided that no order for
the stay of recovery of such disputed amount shall remain in force for more
than thirty days unless the applicant furnishes adequate security to the satisfaction
of the Assessing Authority concerned.
(8) The High Court shall,
after hearing the parties to the revision, decide the question of law involved therein,
and where as a result of such decision, the amount of tax, fee or penalty is
required to be determined afresh, the High Court may send a copy of the decision
to the Tribunal for fresh determination of the amount, and the Tribunal shall thereupon
pass such orders as are necessary to dispose of the case in conformity with the
said decision.(8-A) All applications for revision or orders passed under
Section 10 in appeals arising out of the same cause of action in respect of the
same assessment year shall be heard and decided together:
Provided that where any
one or more of such applications have been heard and decided earlier, if the
High Court, while hearing the remaining applications, considers that the earlier
decision may be a legal impediment in giving relief in such remaining
application, it may recall such earlier decisions and may thereafter proceed to
hear and decide all the applications together. (9) The provisions of Section 5 of
the Limitation Act, 1963, shall, mutatis mutandis, apply to every application,
for revision under this section. Explanation.- For the purpose of this section,
the expression "any person" includes the Commissioner and the State Government."
8.
It
is made clear from the structure of Section 11 that normally the High Court under
revision does not interfere with concurrent findings of fact by the lower authority,
unless the case involves any question of law.
9.
Traditionally
in exercise of revisional jurisdiction, High Court does not interfere with concurrent
finding of fact, unless the findings recorded by the lower authorities are perverse
or based on an apparently erroneous principles which are contrary to law or
where the finding of the lower authority was arrived at by a flagrant abuse of the
judicial process or it brings about a gross failure of justice. In this case
none of these principles are attracted.
10.
In
this connection, we may refer to the relevant provision of the Act to find out the
real controversy in issue. Section 3AAAA of the Act which has come up for
consideration in this case is set out hereinbelow: "Section 3-AAAA- Liability
to tax on purchase of goods in certain circumstances-Subject to the provision
of Section 3, every dealer who purchases any goods liable to tax under this Act
(a) from any registered
dealer in circumstances in which no tax is payable by such registered dealer, shall
be liable to pay tax on the purchase price of such goods at the same rate at
which, but for such circumstances, tax would have been payable on the sale of such
goods;
(b) from any person other
than a registered dealer whether or not tax is payable by such person, shall be
liable to pay tax on the purchase price of such goods at the same rate at which
tax is payable on the sale of such goods; Provided that no tax shall be
leviable on the purchase price of such goods in the circumstances mentioned in clauses
(a) and (b), if - (i) such goods purchased from a registered dealer have already
been subjected to tax or may be subjected to tax under this Act; (ii) tax has
already been paid in respect of such goods purchased from any person other than
a registered dealer; (iii) the purchasing dealer resells such goods within the State
or in the course of inter-State trade or commerce or exports out of the
territory of India, in the same form and condition in which he had purchased
them; (iv) such goods are liable to be exempted under Section 4-A of the
Act".
11.
The
relevant entries which are covered in this controversy as per notification dated
7th September, 1981 and 31st May, 1985 are as under: S.No. Description of goods
Point of Tax Rate of Tax x x x x 31. Oil of all kinds, other M or I 4 per than those
covered by any cent other entry of this list or by any other notification issued
under the Act 32. Old, discarded, Sale to consumer 8 per unserviceable or obsolete
cent 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.
12.
In
the instant case, the Tribunal as the second appellate forum is the last fact finding
authority. From the admitted facts recorded by the Tribunal it appears that the
appellant-the dealer manufactures refined mobil oil from the raw material, i.e.,
the burnt mobil oil which it purchases and then sells a virtually new item in
the market. In 1988-89 and 1989- 990 the assessments were made under Rule 41(7)
of the U.P. Trade Tax Rules, but the said assessment has been opened and a
fresh assessment has been made.
Aggrieved by the same,
the dealer preferred first appeal before the A.C.(J) who allowed both the appeals
by an order dated 26.5.1995 holding therein that the dealer is not liable to pay
and quashed the imposition of tax upon dealer for the relevant assessment years.
Aggrieved thereby, the revenue preferred a second appeal before the Tribunal. Before
the said appellate authority, the revenue urged that the burnt mobil oil which is
purchased by the assessee who was the manufacturer of refined oil is taxable at
the point of sale to the consumer as it comes under the category of old and
discarded material. The Tribunal did not accept the said contention by
examining the facts and the records of the case.
The Tribunal came to the
following finding: "it is undisputed that the burnt mobil oil on which the
tax has been imposed, has been purchased by the assessee respondent from unregistered
dealer like kabarie and hawkers in retail manner. However, in the like manner the
old PVC shoes and chappals purchased by the dealer who converted into granules and
sold them in the market, they have not been treated under the category of 'old discarded
and unserviceable stores' as held by the case laws cited by the assessee's 1 counsel
Sri S Rais, Advocate. In our opinion, the case of burnt mobil oil is similar to
the case of PVC shoes etc. which are purchased by dealer for manufacture of plastic
granules etc. by purchasing them from kabaris and hawkers etc. in retail
manner."
13.
The
Tribunal also came to a finding that the refined mobil oil is manufactured by the
dealer from burnt mobil oil. The item is taxable at the point of manufacturer
and is not liable to be taxed at the point of sale to the consumer under Section
3-AAAA of the Act.
14.
We
are of the opinion that unless the High Court, as a revisional authority, finds
that those factual conclusions by both the appellate authorities are perverse, it
cannot overturn the same by relying on a judgment which is factually distinguishable.
In the judgment on which the High Court relied, there is no finding by the Tribunal,
the last fact-finding authority, on the nature of the goods, which was the subject
matter of the disputed transaction.
The case on which the
High Court relied, namely, in the case of S/S. Industrial Lubricants (supra),
is not the case of a dealer who after purchasing burnt mobil oil, manufactures
refined mobil oil from that raw material. But the Tribunal in the instant case
has found on facts that the appellant herein manufactured refined mobil oil from
the burnt mobil oil. Therefore, there is substantial factual difference between
the present case and the case on which the High Court relied while dealing with
the revision proceedings before it. We are of the view that the High Court was not
correct in relying on a decision, which is factually distinguishable.
15.
For
the reasons afore-stated, we cannot sustain the order of the High Court. The
order of the High Court is quashed.
16.
We
remand the matter to the High Court and request the High Court to decide the
revisions on the facts of the present case on the principle of revisional jurisdiction
indicated hereinabove. We hope that the High Court will come to a reasoned conclusion
in the facts and circumstances of the case.
17.
We
further make it clear that we have not expressed any opinion on the merits of the
finding recorded by the Tribunal since the High Court is to re-examine the same
afresh. With these observations, the appeal is allowed and the matter is remanded
to the High Court for a fresh decision of the revision proceedings on the lines
indicated above.
18.
In
the facts of the case, there will be no order as to costs. S.L.P.(C) NO. 2148
OF 2008 Delay condoned. We do not find any merit in the special leave petition,
which is accordingly dismissed.
......................J.
[D.K. JAIN]
......................J.
[ASOK KUMAR GANGULY]
NEW
DELHI,
August
10, 2011
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