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2002 DIGILAW 993 (PNJ)

Castrol India Ltd. v. State Of Punjab

2002-09-26

N.K.SODHI, VIRENDER SINGH

body2002
Judgment N.K.Sodhi, J. 1. What is the rate of tax in regard to the Mobile oil and lubricants under the Punjab General Sales Tax Act, 1948 (for short the Act) is the short question that arises for consideration in this bunch of four civil writ petitions 1889, 2956, 3652 and 7006 of 2002 which were heard together. The answer to this question depends upon the interpretation to be placed on the provisions of Ordinance 3 of 2000 promulgated by the Governor of Punjab amending amongst others Section 5 (1) of the Act. The Ordinance was replaced by Punjab Act No. 7 of 2000. Since the issue involved is pristinely legal, reference to the facts of each individual case is not necessary. 2. Petitioners herein are public limited companies registered under the provisions of the Companies Act, 1956 and they have a vast network of sale of oils and lubricants all over the country including the State of Punjab. In the State of Punjab, they are registered dealers under the Act as well as under the Central Sales Tax Act, 1956 and amongst others, they sell mobile oil and lubricants. Petitioner in civil writ petition 1889 of 2002 filed its quarterly returns for the period ending 30.6.2001 and 30.9.2001. It deposited sales tax at the rate of 8 per cent for these quarters on the sale of Mobil oil. It received a notice dated 21.11.2001 from the Assessing Authority, Ludhiana pointing out that sales tax was payable at the rate of 20 per cent and that it should deposit a sum of Rs. 3,74,60,956/- as the balance amount due from it as sales tax at the rate of 20 per cent. It was also called upon to show cause why penalty under Section 10(6) of the Act be not imposed and interest under Section 11(d) of the Act be not levied. It is against this notice that Castrol India Limited has filed the present writ petition contending that it is liable to pay tax only at the rate of 8 per cent and that the respondents are not justified in demanding the same at the rate of 20 per cent. Similar notices received by other petitioners have been challenged in the connected writ petitions. 3. Similar notices received by other petitioners have been challenged in the connected writ petitions. 3. Section 5(1) of the Act was amended by the Punjab General Sales Tax (Second Amendment) Ordinance No. 3 of 2000 (hereinafter referred to as the Ordinance) which was promulgated on 25.1.2000 and the same was published in the Punjab Government Gazette on that date. This Ordinance was replaced by the Punjab General Safes Tax (Second Amendment) and Validation Act No. 7 of 2000. The relevant part of Sections (1) and (2) of the Ordinance with which we are concerned in these cases are reproduced hereunder for facility of reference. "1. (1) This Ordinance may be called the Punjab General Sales Tax (Second Amendment) Ordinance, 2000. (2). It shall come into force at once but in respect of the goods specified in items 11 and 26 under Category IV item 5 under Category IX and items 4 and 5 under Category X of Schedule A appended to the Act, it shall come into force from such date as the State Government may, specify by notification and till the notification is issued, the tax in respect of these goods shall be levied at the rates specified in Category XI of Schedule A. (3) XX XX (4) XX XX 4. Schedule A to the Act was also substituted by the Ordinance and it is necessary to refer to the relevant parts of this Schedule which read as under: "SCHEDULE" A Sr. Description of Goods, no. CATEGORY I GOODS TAXABLE AT THE RATE OF ONE PER CENT 1. XX XXCATEGORY II GOODS TAXABLE AT THE RATE OF TWO PER CENT 1. XX XXCATEGORY III GOODS TAXABLE AT THE RATE OF THREE PER CENT 1. XX XX2. XX XXCATEGORY IV GOODS TAXABLE AT; THE RATE OF FOUR PER CENT 1. XX XX2. XX XXXX XX XXCATEGORY VII GOODS TAXABLE AT THE RATE OF EIGHT PER CENT 1. Goods not specified elsewhere. XX XX XXCATEGORY X GOODS TAXABLE AT THE RATE OF TWENTY PER CENT 1. XX XX2. XX XX3. XX XX4. Mobil Oil and lubricants 5. Molasses 6. XX XX7. XX XXCATEGORY XI Sr. no.Description of GoodsRate of tax applicable 1.Diesel oil8% 2.Mobil oil and lubricants8% 3.Molasses8% 4.Yam of all types including knitting wool and raw wool.2% 5.XX 6.XX 7.XX 5. XX XX XXCATEGORY X GOODS TAXABLE AT THE RATE OF TWENTY PER CENT 1. XX XX2. XX XX3. XX XX4. Mobil Oil and lubricants 5. Molasses 6. XX XX7. XX XXCATEGORY XI Sr. no.Description of GoodsRate of tax applicable 1.Diesel oil8% 2.Mobil oil and lubricants8% 3.Molasses8% 4.Yam of all types including knitting wool and raw wool.2% 5.XX 6.XX 7.XX 5. A bare reading of the aforesaid provisions of the Ordinance makes it clear that Mobile Oil and lubricants are mentioned at item No. 4 Category X of Schedule A to the Act and the same are liable to tax at the rate of 20%. It is amazing that these goods are also mentioned at item No. 2 in Category XI where the rate of tax applicable is 8 per cent. However, this incongruity does not stand in our way in view of the provisions of Section 1 of the Ordinance. According to Sub-section (2) of Section 1 of the Ordinance it came into force at once i.e. on the date of its publication in the official gazette on 25.1.2000. However, items No. 4 and 5 of Category X of Schedule A were to come into force w.e.f. such date which was to be notified by the State Government and till such notification is issued, the tax in respect of these goods is leviable at the rates specified in Category XI pf Schedule A. It is common ground between the parties that the State Government has not notified the date of enforcement of items no. 4 and 5 in Category X of the Schedule. Therefore, these items, for all practical purposes, do not exist in Category X in which Category rate of tax is 20 per cent. In the absence of such a notification, the rate of tax applicable to these items would be the one specified in Category XI of Schedule A. The rate of tax applicable against item No. 2 in Category XI is 8 per cent. There is, thus, no doubt that rate of tax applicable to Mobil oil and lubricants was 8 per cent. The matter does not end here. By a notification dated 30.3.2001 the State Government amended Schedule A to the Act and Category XI therefrom has been omitted with effect from 1.4.2001. With the omission of Category XI there is therefore no rate of tax prescribed for Mobil oil and lubricants because item no. The matter does not end here. By a notification dated 30.3.2001 the State Government amended Schedule A to the Act and Category XI therefrom has been omitted with effect from 1.4.2001. With the omission of Category XI there is therefore no rate of tax prescribed for Mobil oil and lubricants because item no. 4 in Category X has not yet been enforced. In other words, Mobil oil and lubricants have not been specified in any of the Categories in Schedule A. In this view of the matter, Category VII which is residuary category and fixes rate of tax in regard to goods not specified elsewhere shall come into play. In Category VII rate of tax applicable in regard to goods not specified elsewhere is 8 per cent. Therefore, Mobil Oil and lubricants nothing been specified elsewhere are liable to tax at the rate of 8 per cent only. Respondents are, therefore, not justified in requiring the petitioners to deposit tax at the rate of 20 per cent under Category X because, as already observed, item No. 4 in Category X (Mobil oil and lubricants) has not been enforced so far. 6. In the result, the writ petition is allowed and the impugned notice dated 21.11.2001 issued to M/s Castrol India Limited, Ludhiana quashed. Similar notices issued to other petitioners are also quashed for the same reasons. There is no order as to costs.