M/s Marico Ltd v. The Commercial Taxes Tribunal, Bihar, Patna

Mr. Alok Kumar Agrawal, Advocate Mr. P. K. Shahi, AG ====================================================== Appearance : (In Miscellaneous Appeal No. 98 of 2015) For the Appellant/s For the Respondent/s (In Miscellaneous Appeal No. 99 of 2015) For the Appellant/s For the Respondent/s ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE HONOURABLE MR. JUSTICE RAJIV ROY CAV JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Mr. Alok Kumar Agrawal, Advocate Mr. P. K. Shahi, AG : : Date : 06-12-2023 Two appeals from the common order dated Patna High Court MA No.98 of 2015 dt.-06-12-2023

11.03.2005 of the Commercial Taxes Tribunal (for brevity ‘the Tribunal’) in a Miscellaneous Case and Revision Case, agitate the same issue. The appellant, a dealer under the provisions of the Bihar Value Added Tax Act, 2005 (for brevity ‘Act of 2005’) approached the authority under Section 77 for a ruling as to whether coconut oil, sold by it, would be taxed at the rate of

12.5% as a residuary item or at the rate of 4% as a commodity coming within Schedule-III.

#2. The assessment year is 2005-06; the year in which the Value Added Tax regime was enforced in the State of Bihar, as in the other states. Initially, Entry 27 of Schedule-III contained edible oil and oil cakes which, by a notification dated

09.07.2005 was amended to read as “edible oils (other than coconut oil) or oil cakes.” Hence, up to 09.07.2005, the commodity was an edible oil liable to a lesser rate of tax as provided for Schedule-III goods. Even after the amendment of

09.07.2005, coconut oil would be taxable at the rate of 4% being a vegetable oil, which was included under Entry 82, which entry was substituted out by notification dated 01.04.2006, is the contention of the assessee.

#3. We heard Sri S.D. Sanjay, learned Senior Counsel for the appellant and Sri Vikas Kumar for the State.

#4. The appellant had approached the authority Patna High Court MA No.98 of 2015 dt.-06-12-2023 under Section 77(1)(e) of the 'Act of 2005'. The authority by Annexure-2 order produced in M.A. No. 98 of 2015 found that the invoice of the petitioner shows ‘coconut oil’ having been sold along with soap, detergents etc. making it clear that what is sold by the petitioner is used as hair oil and not as an edible oil. The Commissioner found that the lesser liability on edible oils and vegetable oils did not include hair oils which fall under the category of toiletries, which have to be taxed at a higher rate of

12.5%. ‘The Tribunal’ concurred with the said opinion by the common impugned order and also rejected the appeal filed from the order of assessment, confirmed in first appeal; which is challenged in M.A. No.99 of 2015.

#5. The question of law arising is as to “whether coconut oil sold by the assessee can be classified as an edible oil under Entry 27 and in the teeth of the exclusion of coconut oil from Entry 27, will it be possible for inclusion under Entry 82 being vegetable oil; as the entries in Schedule-III existed in the relevant year ?”

#6. Learned Senior Counsel appearing for the appellants argued that the Schedule itself was brought out at the nascent stage of introduction of Value Added Tax and there was bound to be some mistakes, the benefit of which has to be necessarily conceded to the assessee. It is pointed out, coconut Patna High Court MA No.98 of 2015 dt.-06-12-2023 oil is an edible oil and in that circumstance till 01.07.2005, it could be included in Entry 27 and after that under Entry 82, as a vegetable oil. It is also pointed out that coconut oil under the Customs Tariff Act is included under the common nomenclature of vegetable oils as per Section III Chapter 15 of the Customs and Central Excise Tariffs annexed along with M.A. No. 99 of

#2015. The Senior Counsel asserts that even in the relevant assessment year, the coconut oil sold by the assessee was only liable to tax at the rate of 4%.

#7. The learned State Counsel on the other hand points out that the assessee though claimed coconut oil as an edible oil, was selling it as hair oil, which would not come either within the definition of an edible oil or under the nomenclature of vegetable oil; since coconut in the normal parlance is not a vegetable. Thus, the State defended the order of ‘the Tribunal’.

#8. The appellant, even in the memorandum of appeal does not have a clear case as to whether coconut oil manufactured and sold in the brand name of ‘Parachute’ is an edible oil or a hair oil. The contention is that coconut oil manufactured and sold in the brand name of ‘Parachute’ by the appellant is 100% pure coconut oil containing no amount of perfumes. It is also averred that the appellant also manufactures hair oils in the brand name of Parachute Advanced, Parachute Patna High Court MA No.98 of 2015 dt.-06-12-2023 Light, Parachute Jasmine etc. which can be distinguished from the one sold as 100% pure coconut oil. The clear finding of the first Appellate Authority on facts is that the appellant sells the product it manufactures, from coconut, as a hair oil, as evident from the invoice. No question of law arises from this aspect and hence, the appellants product sold in the brand name of Parachute cannot be brought under the Entry of edible oils. In any event, from 01.07.2005 onwards, coconut oil is excluded from Entry 27. This does not really have any significance with respect to the appellant’s product, which is a toiletry and not an edible oil.

#9. Now the question is as to whether coconut oil can be considered to be a ‘vegetable oil’ under Entry 84, which entry was available so in the first year, in which the VAT regime was introduced. The appellant’s counsel harped upon the Customs and Excise Tariff based on HSN Codes. There is no link to HSN Codes in the Entries under the ‘ Act of 2005’ and examination of the same is not permissible especially when the levy has to go by the separate enactments. Even under the Customs and Tariff Act, though ‘Animal or vegetable fats and oils and their cleavage products’ come under Section III, coconut oil, as is palm oil, sunflower oil, mustard oil and so on are treated differently from the common nomenclature applied Patna High Court MA No.98 of 2015 dt.-06-12-2023 to other fixed vegetable fats and oils and their fractions.

#10. The further contention of the appellant is based on Tata Oil Mills Company Ltd. v. Director, Marketing, Bihar State Agriculture Board, Patna, reported in 1986 PLJR 172. Therein a Division Bench was concerned with the term ‘agricultural produce’ which as per the Bihar Agriculture Produce Markets Act, 1960 included all produce, whether processed or non-processed, of agriculture, horticulture, animal husbandry and forests. The learned Judges referred to two decisions of the Madras High Court in Deputy Commissioner of Commercial Taxes, Tiruchirappalli v. Hameed Trading Company, 32 (1973) STC 228, which held that coconut was not a perishable article and cannot be treated as a fresh fruit. It was also held that it was not a vegetable within the meaning of the words of the notification granting exception. A Full Bench of Madras High Court in S.M. Narayana Ayyangar vs S.P.R.M. Subramanian Chettiar in the context of Estates Land Tax was relied on, which held that coconuts are fruits and coconut trees are fruit trees and coconut plantation is a fruit garden. The Dictionary meaning was also looked at to find that coconut is generally referred to as fruit. In any event, the question was answered in the context of the specific definition of the term ‘agricultural produce’ and there was no circumstance of Patna High Court MA No.98 of 2015 dt.-06-12-2023 examining whether coconut was a vegetable or a fruit or a nut. The definition of ‘agricultural produce’ in the enactment which was under consideration in Tata Oil Mills Company Ltd. was an inclusive definition which brought within it’s ambit all produce, whether processed or non-processed of agriculture. Coconut oil admittedly is a processed, product of coconut, which is also admittedly an ‘agricultural produce’. The said decision does not in any manner aid the interpretation sought to be placed on the term ‘vegetable oil’.

#11. As has been held in Deputy Chief Controller of Imports and Exports v. K.T. Kosalram reported in AIR 1971 SC 1283, the Dictionary meaning or the meaning imployed in the Customs Tariff is not of much aid, if the meaning given in the statute is clear. In the present case, the use of vegetable oil definitely indicates process by which oil is extracted from a vegetable. The term ‘vegetable’ in ordinary usage and common parlance cannot be found taking within it’s meaning, coconut.

#12. In 1992 Supp (1) SCC 298, Shri Bharuch Coconut Trading Co. v. Ahmedabad Municipal Corporation, it was held so:-