Dismissed

M/S.Bhuvana Oil Corporation, v. the Special Commissioner

Madras HC4 Aug 2021WP/29348/2004

Case brief

AI extract

What is this about?

Single Judge disposed of a writ petition under Article 226 challenging the levy of 1% resale tax under Section 3-H of TN Sales Tax Act. The court followed a Division Bench judgment upheld by the Apex Court regarding tax on white kerosene and dismissed the petition.

What did the court decide?

None; the petition was dismissed by staying the collection of 1% resale tax continues as per Division Bench order.

M/S.Bhuvana Oil Corporation, Vs the Special… — Writ and Judicial Review | Madras HC (2021)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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Date : 04.08.2021

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CORAM:

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THE HON'BLE MR. JUSTICE S.M.SUBRAMANIAM

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W.P.No.29348 of 2004 and W.P.M.P.No.35634 of 2004

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M/s.Bhuvana Oil Corporation rep. by its Proprietor, S.Gopalakrishnan, 32, Bhavani Main Road, Erode 638 004. ... Petitioner Vs.

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1.The Special Commissioner, Commissioner of Commercial Taxes, Chepauk, Chennai - 5.

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2.The Commercial Tax Officer, (FAC) Chithode Circle, Erode. ... Respondents

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Prayer : Petition filed under Article 226 of Constitution of India praying for issuance of a Writ of Mandamus forbearing the respondents 1 and 2 from levying and collecting 1% resale tax under Section 3-H of the Tamil Nadu Government Sales Tax Act on the total turnover of the petitioner.

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For Petitioner : Mr.P.Solomon Francis

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For Respondents : Mr.V.Veluchamy Government Advocate ORDER

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The issue raised in this writ petition was adjudicated elaborately by the Hon'ble Division Bench of this Court in the case of SGS Petro Organic Limited Vs. Commercial Tax Officer, Ayanavaram Assessment Circle, Chennai and others reported in 2013 SCC Online Mad 721.

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It is brought to the notice of this Court that the S.L.P. filed against the said judgment of the Hon'ble Division Bench was also dismissed by the Hon'ble Apex Court of India. Thus, the order passed by the Hon'ble Division Bench is to be followed for the purpose of disposing of this writ petition. The relevant paragraphs of the judgment of the Hon'ble Division Bench reads as under:

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https://hcservices.ecourts.gov.in/hcservices/

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"18. The Committee, while making its recommendations, has opined as follows:-

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"3. The Committee find that there is a big difference between the selling price of SKO and HSD (High Speed Diesel) ranging from Rs.3.76 to Rs.7.26 per litre. This wide difference is the basis cause of misuse of SKO. The Committee are of the opinion that this difference should be bridged. Apart from raising customs duty the Committee recommend that the State Governments should impose sales tax to such an extent that the difference between rolling price of SKO and HSD is marginal. . .

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Government through a notification have made it mandatory for the public sector oil companies to colour the kerosene blue meant for Public Distribution System (PDS). Imported kerosene is of white colour and can easily be mixed with diesel and even with petrol. The Committee are of the opinion that the Government should make it mandatory to colour the imported kerosene also with a colour different from blue which is meant for PDS. "

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The report consists of certain annexures. Annexure-1I of the Report gives the details of the cases registered for misuse of PDS kerosene & Superior Kerosene Oil in automobiles as fuel. As per the said Annexure, about 15,065 litres of both PDS kerosene and SKO worth about Rs.2,44,023/- and about 26 tanker lorries were seized in 2002, about 22,437 litres worth about Rs.3,68,866 were seized in 2003 and upto 5.7.2003, 62 cases were registered and about 37,502 litres worth about 6,12,889/- along with 64 vehicles were seized.

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The aforesaid details make it crystal clear that the misuse of PDS kerosene & Superior Kerosene Oil in automobiles as fuel have been increasing from year to year. In 2002 only 24 cases were registered, whereas in 2003 it increased to 62 and in 2003 upto 5.7.2003, it gone to 64. This would only infer that the persons engaged in misuse of SKO and the kerosene meant for PDS are being increased from time to time .

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The aforesaid aspect has been highlighted in the Budget Speech made on the Floor of the year 20032004. Coming to know about the use of white Kerosene as a substitute for Diesel Oil, besides causing more pollution and damage to the engines, in order to curb the said practice, it has been decided by the Government to increase the tax rate for white Kerosene from 4% to 25%. But, the tax rate for PDS Kerosene i.e. Blue Kerosene will however continue to remain at

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https://hcservices.ecourts.gov.in/hcservices/

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4%.

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The object of providing such concessional rate of duty on kerosene used for illuminating burning oil lamps i.e., @ 4% was to provide some relief to those economically backward sections of society who use kerosene for illumination and other domestic purposes, and therefore, the benefit of concessional rate of duty was available only on the kerosene meant for PDS. On such consideration only the kerosene which meant for Public Distribution System was continue to remain taxed at 4%, whereas only the white Kerosene which is meant for industrial purpose is taxed at 25%. It is brought to the notice of this Court that in a study undertaken by the Southern Region of the AntiAdulteration Cell it was observed that "unimaginable quantities of white kerosene are being imported for consumption by industrial consumers and by the general public. It was also found that the State Government suffers a heavy loss of revenue on account of sales tax evasion as the sales tax on diesel is around 28 per cent as against 13.8 per cent on SKO. Considering all these factors along with the laudable recommendations made by the Standing Committee and the follow up steps taken by the State Government to curb the misuse of kerosene meant for Public Distribution System, we do not any see any illegality in imposing tax on white kerosene meant for industrial purpose at 25%.

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With regard to the writ appeals filed challenging the individual order of assessment, we are in full agreement with the learned single Judge in rejecting those matters as they have been tied along with this batch only for considering the legal issue involved and not the factual aspects raised challenging the assessment order.

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For the reasons stated above, the writ appeals fail and the same are dismissed. Consequently, the connected miscellaneous petitions are closed. No costs."

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As far as the writ petition filed against the notice is concerned, the Assessee is at liberty to submit his objections/explanations and participate in the process of proceedings to be completed. Regarding the Assessment Order passed, the Assessee is at liberty to prefer an appeal, if any other grievance exist, except the issues which were concluded in the judgment of the Hon'ble Division Bench of this Court cited supra.

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https://hcservices.ecourts.gov.in/hcservices/

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With these observations, this Writ Petition is disposed of. No costs. Consequently, connected miscellaneous petition is closed.

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Assistant Registrar(CS VIII)

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//True Copy//

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Sub Assistant Registrar

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Sgl To

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1.The Special Commissioner, Commissioner of Commercial Taxes, Chepauk, Chennai - 5.

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2.The Commercial Tax Officer, (FAC) Chithode Circle, Erode.

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+1 cc to Spl Government Pleader Taxes Sr.No. 38599 W.P.No.29348 of 2004

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PMK(CO) A.SK(19.08.2021)

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https://hcservices.ecourts.gov.in/hcservices/

M/S.Bhuvana Oil Corporation, v. the Special Commissioner

Case brief

What is this about?

What did the court decide?

M/S.Bhuvana Oil Corporation, v. the Special Commissioner

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Cases cited

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