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The Sales Tax Commisioner v. Jhunhunwala Oil Pvt. Ltd. - SALES/TRADE TAX REVISION No. 1550 of 1990 [2006] RD-AH 9760 (17 May 2006)


This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).



These three trade tax revisions raise common question of law namely taxability of commodity :

a. De-oiled Coconut Cake.

b. De-oiled Neem Cake (Neem Ki Khali).

c. De-oiled Mahua Cake (Mahua Ki Khali).

On behalf of the department, it is contended that although the aforesaid commodities stand exempted from tax under the U.P. Trade Tax Act in view of the notifications no. 3140 dated 15.7.1956 and no. 2994 dated 3.4.1975.  The aforesaid commodities are still taxable under the Central Sales Tax Act in view of the notification no. 8454 dated 1.10.1975, @ 4 per cent.  It is, therefore, submitted that the Tribunal has failed to appreciate the notification issued under Section 8(5)  of the Central Sales Tax Act while passing the impugned order.  

On behalf of the Assessee, it is contended that the notification dated 1.10.1975 relied upon by the department has no application in the facts of the case inasmuch as under Section 8(2-A) of the Central Sales Tax Act commodities generally exempted under the State law, stand automatically  exempted from tax under the Central Sales Tax Act.  It is, therefore, submitted that the order passed by the Tribunal calls for no interference.  

I have heard counsel for the parties.

De-oiled Coconut cake is a bye product of coconut which is basic raw material for Coconut Oil. It is normally used as Cattle Feed.

In view of the aforesaid and having regard to the judgment of this Court in the case of  Omrao Industrial Corporation Vs. Sales Tax Officer, Kanpur reported in 1974 UPTC Page 26, it is held that De-oiled coconut oil is answered the discretion of cattle feed/cattle fodder.

Neem Ki Khali and Mahua Ki Khali have been held to be Fertilizer vide judgment of this Court reported in 1984 UPTC Page 204, CST Vs. Triloki Nath & Sons and the judgment reported in 1986 UPTC Page 391 (                                 ).

Fertilizer and Cattle Feed are  exempted from tax in view of the notification no. 2994 dated 3.4.1975 and notification no. 3140 dated 15.7.1956 under the State Trade Tax.  

Section 8(2A) of the Central Sales Tax reads as follows :

"8(2A) Notwithstanding anything containd in sub-section (1A) of section 6 or sub-section (1) (or clause (b) of sub-section (2)) of this section, the tax payable under this Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than (four per cent) (whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate.  

Explanation : For the purpose of this sub-section a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods"

The language of Section 8 (2-A) speaks no caption and if a  commodity is generally exempt from tax under the State Act it stands automatically exempted from Tax under the Central Sales Act Act.

In view of the aforesaid statutory provision it necessarily follows that if  De-Oiled Groundnut Cake, Neem Ki Khali and Mahua Ki Khali have been generally exempted from taxability under the U.P. Trade Tax Act as noticed hereinabove the aforesaid commodities shall automatically stand exempted from tax under the Central Sales Act, in view of Section 8(2-A) referred to above.

So far as notification no. 8454 dated 1.10.1975 is concerned it may be recorded that the notification has been issued under Section 8 (5) of the Central Sales Tax Act.  Section 8 (2-A) being port of the same scheme has to be read with Section 8(5) so that both can be harmonized.  The notification being subordinate legislation cannot be read so as to whittle down the main statutory provision i.e. Section 8 (2-A) contrary to the main provision itself. Therefore, the notification dated 1.10.1975 in so far as it provides for taxability of D-Oiled Cake @ 4%, must necessarily be read to cover commodities which are not generally exempted under the main provision of 8 (2-A).  The contention raise on behalf of Assessee has, therefore, to be accepted.

In view of the aforesaid this Court is satisfied that the commodities noticed hereinabove are exempt from taxability under the Central Sales Tax Act, in  view of  provision of Section 8(2-A)  and consequently the order passed by the Tribunal does not call for any interference.




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