1.These two original applications have been filed under Section 8(1), Rajasthan Taxation Tribunal Act, 1995 for quashing the best judgment assessments (annexure-1 in both cases) and demand notices (annexure-2 in both cases), dated May 31, 1996 and orders dated July 30, 1996 (annexure-8 in both cases), dismissing the petitioner's applications for reopening the best judgment assessments. The first case relates to the assessment year 1994-95 and the second case to the assessment year 1995-96.
2. In both the cases, the facts are similar and the law involved is same. As such they are being disposed of by this common judgment. The facts may be summarised thus. The petitioner has its plant at 4; M.I.Area, Alwar. It manufactures solvent extracted oil, refined oil and vanaspati oil. It purchased oil-seeds as raw material without payment of tax on furnishing forms ST-17 as provided under Notification No.F.4(8) FD/Gr.IV/94-57 dated March 7, 1994 issued under Section 4(2) of the Rajasthan Sales Tax Act, 1954 (in short, "the 1954 Act"). After issuance of the Notification No. F.4(69)/FD/Tax/Division/ 94-95 dated March 15, 1996 issued under Section 15, Rajasthan Sales Tax Act, 1994 (in short, "the 1994 Act"), superseding the Notification dated March 7, 1994, oil-seeds were purchased after paying tax at the rate of 2 per cent for manufacturing edible/non-edible oil on furnishing forms ST-17.
On April 12, 1996, the Commercial Taxes Officer, Anti-Evasion-II, Jaipur (respondent No. 2) surveyed the business premises of the petitioner and collected detailed information regarding purchase of oil-seeds. On the ground that hydrogenated vegetable oil is not edible oil within the meaning of the said notification dated March 7, 1994 the respondent No. 2 issued notices under Sections 7B, 11B, 16(1)(i) and (e) of 1954 Act and under Sections 28, 58 and 65 of 1994 Act for both the years. In compliance thereof, the petitioner's representative Sri J.K. Jain, advocate appeared before the respondent No. 2. The cases were lastly adjourned to May 31, 1996. The petitioner's Managing Director, B.S. Gupta wanted to personally appear before the respondent No. 2. As B.S. Gupta had earlier planned to visit Vaishno Devi's Shrine, he requested his advocate Sri J.K. Jain to get the cases adjourned on May 31, 1996. Sri Jain assured him that the cases would be got adjourned. Accordingly, Managing Director B.S. Gupta proceeded to Vaishno Devi's Shrine. Sri Jain, advocate sent adjournment applications through M/ s. Air State Couriers, Alwar on May 30, 1996 instead of coming to Jaipur and personally appearing before him. The applications were delivered on May 31, 1996.
3. On May 31, 1996, the respondent No. 2 passed best judgment assessment observing that none appeared before him. By these best judgment assessments, following amounts were levied.
After the receipt of the best judgment assessments (annexure-1), applications under Section 10-C of 1954 Act read with Section 38 of 1994 Act were moved for setting aside the best judgment assessments.
They were dismissed by orders dated July 30, 1996. Prior to it, the petitioner moved transfer application before the respondent No. 1, the Additional Commissioner, Jaipur. He observed that the orders would not be passed by the respondent No. 2 before the decision of the transfer application. The respondent No. 2 did not wait for the decision of the transfer application and proceeded to pass orders on July 30, 1996, dismissing the applications moved for setting aside the best judgment assessments. The transfer application was, however, allowed by order dated August 18, 1996 (annexure-9).
4. In reply, the respondents have taken two preliminary objections.
Firstly, there existed alternative remedy by way of filing appeals against the impugned assessments and orders before the Deputy Commissioner (Appeals). Secondly interpretation of notifications involves disputed question of facts. Respondents have admitted almost all the averments made in the original applications except that the best judgment assessments and the orders passed were without jurisdiction and illegal. It has further been averred thus. The petitioner did not sell the edible oil manufactured by it either in Rajasthan or in the course of inter-State sale but utilised it for manufacturing hydrogenated vegetable oil against the terms and conditions of the said notifications dated March 7, 1994 and March 15, 1996 and tax, interest and penalty have rightly been imposed. Detailed notices (annexure-R1) (in both the cases) were issued to the petitioner and several opportunities of hearing had been given. It did not co-operate in the disposal of the cases. Accordingly, best judgment assessments had to be passed. The petitioner was not acting bona fidely. It was continuously violating the provisions of law. It wanted to delay the disposal of the cases. Adjournment applications were received on June 1, 1996 after 2.00 p.m.
5. In the rejoinder, the petitioner has reiterated all the averments made in the original applications. It has further been averred that the dispute involves substantial questions of the law, the preliminary objections have no substance, edible oil has neither been defined in the Act nor in any notification, principles of natural justice have been violated, the respondent No. 2 has no jurisdiction to pass the impugned assessments dated May 31, 1996 and orders dated August 30, 1996 and the respondent No. 2 was not authorised specifically by the Commissioner as required under Section 77(1) of the 1994 Act.
6. The learned counsel for the petitioner, Sri J.N. Sharma, advocate contended thus. The term "edible oil" has not been defined in the Rajasthan Sales Tax Act or in the Rules framed thereunder or in any of the said notifications. It has been defined in Rajasthan Trade Articles (Licensing & Control) Order, 1980 and in the Pulses, Edible Oil Seeds and Edible Oils (Storage Control) Order, 1977. The expression "edible oil" has been used in the said Notifications dated March 7, 1994 and March 15, 1996 without any qualification or limitation. Edible oil may be any oil, hydrogenation is not a product. It is simply a process for acquiring the quality of being hardened. Hy-drogenated vegetable oil is essentially an edible oil with the quality of being edible and of being hardened. Oil-seeds against forms ST-17 were purchased, solvent extracted oil, refined edible oil and hydrogenated vegetable oil were manufactured and were sold in Rajasthan and also in the course of inter-State trade and commerce. Respondent No. 2 should have granted adjournment on the applications moved by Sri J.K. Jain, advocate. No litigant should be allowed to suffer on account of the mistake committed by his lawyer. The respondent No. 2 had no justification to pass the best judgment assessments without waiting for the decision on the petitioner's application for transfer of the cases and cases were transferred subsequently. It is not correct that the petitioner had adopted delaying tactics. Interest was not leviable.
The learned counsel for the petitioner relied upon the following notifications in support of his said contention.Tungabhadra Industries Ltd. v. Commercial Taxes Officer(SC), Commissioner of Sales Tax v. Prag Ice and Oil Mills [1991] 80 STC 403 (SC) ; Collector of Central Excise v. Jayant Oil Mills Pvt. Ltd. AIR 1989 SC 1316 ; (1989) 40 ELT 287 (SC), Khurjawala Buckles Manufacturing Co. v. Commissioner of Sales Tax [1965] 16 STC 778 (All.), Hindustan Steel Ltd. v. State of Orissa(SC), Commissioner of Income-tax v. Anwar Ali [1970] 76 ITR 696 (SC), Kathiresan Yarn Stores v. State of Tamil Nadu [1978] 42 STC 121 (Mad.)[FB], Assistant Commercial Taxes Officer v. Kumawat Udhyog [1995] 97 STC 238 (Raj), Dechem Plastics Private Limited v. Commercial Taxes Officer [1997] 107 STC 50 (RTT), J.K. Synthetics Ltd. v. Commercial Taxes Officer and Birla Cement Works(SC) and Frick India Limited v. State of Haryana 7. The learned counsel for the department contended thus. The original applications are not maintainable as final assessment orders have been passed. Original applications involved disputed questions of facts.
Hydrogenated oils do not include vanaspati, placing reliance upon the Notifications dated March 8, 1988 (Sl. No. 703 of J.K. Jain's Book), dated March 4, 1992 (Sl. No. 869), dated March 7, 1994 (Sl. No. 12), and dated March 27, 1995 (Sl. No. 968), issued under Section 5(1) of the 1954 Act and Notifications dated April 28, 1988 (Sl. No. 624), dated March 7, 1994 (Sl. No. 926) and dated March 31, 1994 (Sl. No.934) issued under Section 8(5), Central Sales Tax Act.
8. There is no force in the contention of the learned counsel for the department that the question whether a particular article falls under certain classification is a question of fact. In Tungabhadra Industries Limited v. Commercial Tax Officer [1960] 11 STC 827, the question before the honourable Supreme Court was whether hydro-genated groundnut oil commonly called vanaspati was groundnut oil within the meaning of Rule 18(2) of Madras General Sales Tax (Turnover and Assessment) Rules, 1939. It was an appeal on a certificate under Article 133 of the Constitution of India. It provides that an appeal shall He to the honourable Supreme Court on a substantial question of law of general importance. The question was decided by the honourable Supreme Court on merits. In Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan [1980] 46 STC 256 at page 263, it has been observed by the honourable Supreme Court as follows : "Finally, it is urged by Shri Sinha that the question whether the rayon tyre cord fabric falls within the expression 'rayon fabrics' is a question of fact and the assessing authority, the appellate authority and the Revenue Board are all agreed that it cannot be classified as a rayon fabric and, therefore, this Court should not interfere in these appeals. It is also pointed out that under Section 15 of the Rajasthan Sales Tax Act a proceeding by way of reference is available to the appellant and this Court, even if it were to consider these appeals on the merits, should exercise no wider jurisdiction than that available to it if it had entertained a reference. We are unable to agree that the question is one of fact.
It is a question which concerns the construction of item 22 of the Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957. If the rayon tyre cord fabric manufactured by the appellant is covered by that item it is exempt from sales tax and there is no jurisdiction in the sales tax authorities to assess the appellant on its turnover. The question is one of substantial importance, and having regard to the circumstances there is good reason for entertaining the appeals and deciding them on the merits." It cannot be disputed that the present question is of general importance and the original application cannot be thrown away on the said objection of the learned counsel for the department.
9. There is no force in the contention of the learned counsel for the petitioner that one more opportunity of hearing should have been given to the petitioner before passing the best judgment assessments dated May 31, 1996 (annexure-1). Admittedly survey of the business premises of the petitioner was done on April 12, 1996. It is specially mentioned in the assessment orders dated May 31, 1996 (annexure-1) that several notices were given to the petitioner and the last notice was for May 31, 1996. In the application dated June 24, 1996 moved under Section 10C of the 1954 Act (annexure-3) by the petitioner, it is stated that Shri J.K. Jain, advocate, Alwar was engaged to represent in these cases, he appeared before the respondent No. 2 on some occasions and the case was lastly adjourned to May 31, 1996. In the notice dated May 21, 1996 it is stated : ^^vkidks mDr losZ{k.k fnukad 12-4-96 ,oa cus vfHk;ksx ds laca/k esa vusd uksfVl fn, x, ,oa vafre uksfVl vkt fnukad 21-5-96 dk fn;k x;k Fkk ftldh vuqikyuk esa u rks vkids }kjk ys[kk iqLrda gh is'k dh xbZ gS vkSj u gh vkids }kjk okafNr lwpuk vkt is'k dh xbZ gSA cfYd vkids }kjk QSDl eSlst Hkstk tkdj vkSj nks ekg dk le; pkgk x;k gSA nks ekg le; pkgus ds ihNs vkids }kjk tks dkj.k mDr QSDl eslst esa of.kZr fd;s x;s gS] mUgsa ns[krs gq, mDr izdj.k esa vkSj nks ekg le; fn, tkus dk dksbZ vkSfpR; izrhr ugha gksrk gSA pwfd vkidks iwoZ esa Hkh ;qfDr;qDr volj fn;k tk pqdk gS] fQj Hkh uSlfxZd U;k; ds fl)kUr dks ns[krs gq, vkids }kjk Hksts x;s QSDl eSlst dks en~nsutj j[krs gq, mDr fjdkMZ e; okafNr lwpuk is'k djus gsrq fnukad 31-5-96 dk le; fn;k tkrk gSA fu;r frfFk dks vkids }kjk fjdkMZ ,oa lwpuk is'k ugha fd;s tkus dh fLFkfr esa ;g lek tk,xk fd uksfVl esa of.kZr rF; vkidks Lohdkj gS ,oa rnuqlkj dk;Zokgh dh tk;sxhA** In reply to this notice, the petitioner's advocate Shri J.K. Jain sent an application (annexure-2) to the respondent No. 2 through M/s. Air State Couriers on May 30, 1996. It was delivered to the respondent No.2 on May 31, 1996. In reply, it is stated that this application was received by respondent No. 2 at 2.10 P.M. on June 1, 1996. Such endorsement also appears in the application annexure R/2. It may be mentioned here that no document has been filed by the petitioner in support of his contention that the application was in fact delivered on May 31, 1996. The petitioner's case is that its Managing Director B.S.Gupta wanted to appear personally before the respondent No. 2 because of seriousness of the case, he had earlier planned to visit Vaishno Devi's on May 31, 1996, he enquired from Shri J.K. Jain, Advocate whether the case could be adjourned, he assured that the case would be adjourned and as such B.S. Gupta left for Vaishno Devi's. Shri J.K.Jain, advocate instead of personally appearing before the respondent No. 2 and seeking adjournment, sent the said application annexure R/2 through the said courier. The method adopted by Shri J.K. Jain, advocate for seeking an adjournment cannot at all be appreciated.
Moreover, the application for adjournment was not received by the respondent before the best judgment assessments were passed.
10. There is a great force in the contention of the learned counsel for the petitioner that the respondent No. 2 should not have passed the best judgment assessments annexure-1 on May 31, 1996 when admittedly transfer application has been filed against him by the petitioner and he was well aware of this fact. Justice should not only be done but it should be shown that it is being done. This transfer application was allowed by the Additional Commissioner by his order dated August 12, 1996 annexure-9. The stay order dated July 4, 1996 shows that transfer application was again moved on June 28, 1996 and comments of the respondent No. 2 were duly invited. The application annexure-6 dated June 29, 1996 moved under Section 10-C of 1954 Act was dismissed by the respondent No. 2 by his order dated July 30, 1996 annexure-8. The order dated August 12, 1996 annexure-9 allowing the transfer application shows that the arguments of both the parties were heard on July 10, 1996. Under these facts and circumstances of the cases, the respondent No. 2 should not have dismissed the applications moved under Section 10-C of 1954 Act by his order dated July 30, 1996 annexure-8. He could have waited for a couple of days particularly when he had already granted several adjournments to the petitioner. On this ground, the orders dated July 30, 1996 annexure-8 cannot be sustained.
11. Admittedly, the petitioner purchased oil seeds as raw material for manufacturing edible/non-edible oil. In both the cases, the respondents have filed a photostat copy of the notice dated May 21, 1996 (annexure R-1 in each case) issued to the petitioner by the respondent No. 2. Its relevant portions run as under : ^^bl izdkj mi;qZDr of.kZr rF;ksa ds vk/kkj ij ;g Li"V gS fd vkids }kjk vf/klwpuk fnukad 7-3-94 ds rgr dj eqfDr dk ykHk ysrs gq, tks eqDr frygu dPps eky ds :i esa fd;k x;k gS mlls tks [kk| v[kk| rsy fufeZr fd;k x;k gS mldk fo vkids }kjk ugha fd;k x;k gS cfYd mi;qZDr fofufeZr rsy dk mi;ksx vkids }kjk ouLifr ?kh ds fofuekZ.k esa dPpk eky ds :i esa fd;k x;k gSA bl rjg ;g Li"V gS fd ftl frygu ls fofufeZr rsy dk fo ugha fd;k tkdj ouLifr ds fofuekZ.k esa dke esa fy;k x;k gSA mDr frygu ij fu;ekuqlkj dj dk nkf;Ro curk gSA vr% vki dkj.k Li"V djsa fd D;ksa ugha mDr frygu dh [kjhn ij fu;ekuqlkj djkjksfir fd;k tkos ,oe~ cus gq, dj nkf;Ro] tks dj cukrk gS mls le; ij jktdks"k esa tek ugha djkus ds dkj.k varxZr /kkjk 58 vkWQ vkj ,l Vh ,Dr] 1994 D;ksa ugha C;kt vkjksfir fd;k tkos\** 12. Oil-seeds were purchased by the petitioner without payment of tax in pursuance of the notification dated March 7, 1994 issued under Section 4(2) of the 1954 Act and on payment of tax at the rate of 2 per cent under notification dated March 15, 1996 issued under Section 15 of the 1994 Act. It would be best to quote here these notifications in extenso. They run as under : "Notification dated 7.3.2994 (S.N. 923) S.O. 187--In exercise of the powers conferred by Section 4(2), R.S.T. Act, 1954, the State Government hereby exempts from tax under the said Act, the sale or purchase of oil-seeds for being used as raw material in the manufacture of edible or non-edible oil in the State, on the following conditions, namely : 1. that such manufactured edible oil is sold by the manufacturer thereof within the State or in the course of inter-State trade or commerce ; and 2. that such purchasing manufacturer furnishes a declaration in form S.T. 17 to the selling dealer.
S.O. 280.--In exercise of the powers conferred by Section 15 of the Rajasthan Sales Tax Act, 1994 (Rajasthan Act No. 22 of 1995) and in supersession of this Department Notification No. F. 4(8)FD/ Gr.
IV/94-57 dated March 7, 1994, the State Government being of the opinion, that it is expedient in the public interest so to do, hereby exempts from tax under the said Act, the sale or purchase of oil-seeds for being used as raw material in the manufacture of edible or non-edible oil in the State to the extent to which the rate of tax in respect thereof exceeds two per cent on the following conditions, namely : (1) that such manufactured edible oil is sold by the manufacturer thereof within the State or in the course of inter-State trade or commerce ; and (2) that such purchasing manufacturer furnishes a declaration in form S.T. 17 to the selling dealer.
13. The question for consideration is whether the "vegetable ghee" manufactured by the petitioner was edible oil within the meaning of the said notifications. In para 2, page 3, of the reply, it is stated. "The question of dispute is whether edible oil and hydrogenated vegetable oil, both fall within the same category". If the vegetable ghee manufactured by the petitioner is edible oil then both the original applications deserve to be allowed. This controversy had already been decided by the honourable Supreme Court in Champaklal H. Thakkar v.State of Gujarat AIR 1980 SC 1889. It would be best to quote the observations made in para 8. They run as under : "The only argument advanced on behalf of the appellants in this connection is, as it was before the two courts below, that vanaspati is a form of ghee which is not an oil ; and this contention we find to be without force. Vanaspati, in our opinion, is essentially an oil although it is a different kind of oil than that oil (be it rapeseed oil, cotton-seed oil, groundnut oil, soyabean oil or any other oil) which forms its basic ingredient. Oil will remain oil if it retains its essential properties and merely because it has been subjected to certain processes would not convert it into a different substance. In other words, although certain additions have been made to and operations carried out on oil, it will still be classified as oil unless its essential characteristics have undergone a change so that it would be a misnomer to call it oil as understood in ordinary parlance. The word 'oil' is not defined in the Act and, therefore, its dictionary meaning may well be pressed into service for interpreting the term 'oil mill'. According to Webster's Third New International Dictionary (1966 Edition) the word 'oil' has different connotations in different situations but in the context of item 5 aforesaid the meaning to be given to it would be : 'any of various substances that typically are unctuous, viscous, combustible liquids or solids easily liquefiable on warming and are not miscible with water but are soluble in ether, naphtha, and often alcohol and other organic solvents, that leave a greasy not necessarily permanent stain (as on paper or cloth), that may be of animal, vegetable, mineral or synthetic origin, and that are used according to their types chiefly as lubricants, fuels and illuminants as food, in soap and candles, and in perfumes and flavouring materials.' All the ingredients of this meaning are fully satisfied in the case of hydrogenated vegetable oil. We may specially point that even solids easily liquefiable on warming fall within the meaning given by Webster. Now the various processes, namely, neutralisation, bleaching, deodorisation, hardening and hydrogenation to which oil is subjected for being converted into vanaspati leave its basic characteristics untouched, i.e., it remains a cooking medium with vegetable fat as its main ingredient. Neutralisation, bleaching and deodorisation are merely refining processes so that the colour, the odour and foreign substances are removed from it before it is hydrogenated and hardened and even the two processes last mentioned allow the oil to retain these characteristics. Even ghee, for that matter, is nothing but a form of oil although it is obtained from animal fat, being a derivative from milk. It may be of use to mention that in Persian language ghee is known as 'raughan zard', i.e., yellow oil, and it does not need an expert to point out that the viscosity of ghee depends upon the weather because with the rising temperature during summer months it turns into a liquid while the cold of December and January solidifies it. Nonetheless it remains an oil and it makes no difference that it is called ghee in ordinary parlance. The word is merely a different name for an oil which is not derived from vegetables. From that point of view the term 'vegetable ghee' is a contradiction in terms, ghee being essentially an animal fat. The reason why it has come to be called vegetable ghee appears to be that in its finished form it resembles ghee in appearance and viscosity and is also considered a more respectable form of cooking medium when so-called, thus catering to the psychological satisfaction of the consumer.
We pointedly asked learned counsel for the appellants if he could indicate any difference between vegetable oil and vanaspati which would essentially distinguish the former from the latter, either in physical or chemical properties or in food value. No such difference was indicated and all that he said was that vanaspati would normally be available in solid state and had the appearance of ghee rather than that of any oil. This, in our view, is a superficial difference which does not at all go to the root of the matter."In Tungabhadra Industries Ltd. v. Commercial Tax Officer [I960]' 11 STC 827 (SC)), relied upon by the learned counsel for the petitioner, it has been observed as follows : "...........................................We are unable to accept this argument. No doubt, several oils are normally viscous fluids, but they do harden and assume semi-solid condition on the lowering of the temperature. Though groundnut oil is, at normal temperature, a viscous liquid, it assumes a semi-solid condition if kept for a long enough time in a refrigerator. It is therefore not correct to say that a liquid state is an essential characteristic of a vegetable oil and that if the oil is not liquid, it ceases to be oil. Mowrah oil and Dhup oil are instances where vegetable oil assume a semi-solid state even at normal temperatures. Neither these, nor coconut oil which hardens naturally on even a slight fall in temperature, could be denied the name of oils because of their not being liquid. Other fats like ghee are instances where the physical state does not determine the identity of the commodity.
.................................. That the hydrogenated oil sold by the appellants was out of groundnut not being in dispute, the only point is whether it continues to be oil evenafter hydrogenation. Oil is a chemical compound of glycerine with fatty acids, or rather a glyceride of a mixture of fatty acids--principally oleic, linoleic, stearic and palmitic--the proportion of the particular fat varying in the case of the oil from different oil-seeds and it remains a glyceride of fatty acids even after the hardening process, though the relative proportion of the different types of fatty acids undergoes a slight change. In its essential nature therefore no change had occurred and it remains an oil--a glyceride of fatty acids--that it was when it issued out of the press................................... The change here is both additive and inter-molecular, but yet it could hardly be said that rancid groundnut oil is not groundnut oil. It would undoubtedly be very bad groundnut oil but still it would be groundnut oil and if so it does not seem to accord with logic that when the quality of the oil is improved in that its resistance to the natural processes of deterioration through oxidation is increased, it should be held not to be oil.
Both the Tribunal as well as the High Court have pointed out that except for its keeping quality without rancidity and ease of packing and transport without leakage, hydrogenated oil serves the same purpose as a cooking medium and has identical food value as refined groundnut oil. There is no use to which the groundnut oil can be put for which the hydrogenated oil could not be used, nor is there any use to which the hydrogenated oil could be put for which the raw oil could not be used. Similarly we consider that hydrogenated oil still continues to be "groundnut oil" notwithstanding the processing which is merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desire to consume groundnut oil." 15. First Schedule of Vegetable Oil Products (Standards of Quality) Order, 1975, defines vanaspati as under : "Vanaspati means hydrogenated vegetable oil meant for human consumption." Para 2(g) of the Pulses, Edible Oil Seeds and Edible Oil (Storage Control) Order, 1977, as amended, defines edible oil as under : "(g) "Edible oil" means any oil used, directly or after processing, for human consumption and includes hydrogenated vegetable oil." It has been held in "Chandausi Oil Mills v. Sales Tax Commissioner [1961] 12 STC 310 (All.) that words used in Control Orders may be given the same meaning.
16. Vanaspati has been included in hydrogenated vegetable oil to make the position crystal clear in the following notifications : Entry No. 63 of Notification No. F.4(8)FD/Gr.IV/94-46 dated 7.3.1994, Sr. No. 912 of J.K. Jain's Book, II Volume.
Entry No. 53 of Notification No. F.4(ll)FD/Gr. IV/95-49 dated 27.3.1996, Sr. No. 968.
Entry No. 62 of Notification No. F.4(7)FD/Gr. IV/92-70 dated 4.3.1992, Sr. No. 869.
Entry No. 64 of Notification No. F.4(5)FD/Gr. IV/88-13 dated 8.3.1988, Sr. No. 703.
17. Under 1954 Act and 1994 Act, the taxable event is sale or purchase and not production or manufacture, attracting excise duty under Central Excises and Salt Act, 1944. Production of hydrogenated vegetable oil from oil-seeds involves only one manufacturing process.
18. From the aforesaid facts, circumstances and authoritative observations, it can well be said that the petitioner sold the vegetable hydrogenated oil (vanaspati ghee), an edible oil, manufactured from the oil-seeds purchased under the said notifications, it did not commit any breach of the said condition of the notifications and no tax was thus leviable. When there was no liability for payment of tax, there arose no question of payment of interest and imposition of penalty.
19. Accordingly, both the Original Applications are allowed. In both the cases, assessment orders dated 31.5.1996 (annexure 1), demand notices (annexure-2) and orders dated July 30, 1996 (annexure 6) are set aside. No order as to cost.