State Of West Bengal And Others v. Lal Chand Agarwalla And Others

B.C Ray, J.— Civil Appeal No. 1387/73: This appeal by special leave is against the judgment and order passed in appeal from Original Order No. 612 of 1971 dated 31-5-1973 by the Division Bench of the High Court of Calcutta affirming the judgment and order of the learned Single Judge made in Civil Revision Case No. 5805 of 1970. The respondents who are licensed dealers under the West Bengal Edible Oil Seed Dealers Licensing Order, 1963 have challenged the imposition of entry tax on groundnuts imported into Calcutta Metropolitan Area for the purpose of manufacture of groundnut oil under the provisions of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970 on the ground that such importation of groundnuts as oil seeds is not subject to any levy under the provisions of the said Entry Tax Act inasmuch as there is no specific provision for levy on groundnuts as oil seeds for manufacturing edible oil. They have therefore prayed for a mandate directing the appellants not to impose any entry tax on the ground that they are edible nuts falling under specific entry or edibles provided in the Schedule to the said Act. There was also a prayer for refund of the taxes already imposed and collected by the respondents.

2. The learned Single Judge who issued the rule after hearing both the parties held that though under Sl. No. 4, Item (t) of the Schedule to the said Act, “nuts” was a specified item for purposes of imposition of entry tax as shown in corresponding column 3 in the said Schedule yet the learned Judge held that since groundnut is oil seed for manufacturing edible oil which is not subject to entry tax, the groundnut imported for the purpose of extracting oil as oil seed by the dealers was not subject to the imposition of entry tax. It was further held that the term groundnut might answer the description of being nuts used as edibles as also oil seeds for edible oils. The legislature intended to impose levy on “nuts” imported as edible and not to cover such nuts imported as oil seeds for edible oils. The rule was made absolute with costs and a writ of mandamus was issued directing the appellants herein not to impose any levy under the provisions of the said Act. There was also a further mandate upon the appellants herein directing them to refund all taxes realised under the said Act on groundnut imported by the petitioners, respondents herein into Calcutta Metropolitan Area.

3. Against this judgment and order the respondent State of West Bengal preferred an appeal. This appeal was dismissed and the judgment and order of the learned Single Judge was affirmed. It was held that the intention of the legislature was that edible oil or oil seeds would not be liable to tax. The court referring to the decision in Avadh Sugar Mills Ltd. v. STO (1974) 3 SCC 271, (1973) 31 STC 469, 1973 Tax LR 2448 held that in commercial circles “groundnut” was treated as “oil seed” for manufacture of oil. It did not refer to “nuts” as such, and as such groundnut did not fall within the ambit of entry tax as provided in the said Entry Tax Act. Against this judgment and order the instant appeal on special leave was filed.

4. The sole question that poses itself for consideration in this appeal is whether groundnuts falling within the description of “nuts” in Schedule in Class I, Item 4(t) is liable to be taxed under the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970 in case the purpose of importer is to extract oil therefrom. It has been urged on behalf of the respondents that oil seeds or edible oils are not specified items for the purpose of imposition of entry tax under Section 6(1) of the said Act. The importation into Calcutta Metropolitan Area of groundnuts by the respondents for the purpose of manufacturing groundnut oil is exempt from the levy of entry tax according to them. It is necessary to quote here the relevant provisions of the Schedule for the purpose of determining this question:

Sl. No. Specified goods Rates of tax 1 2 3 Class I — Articles of food and drink * * * * 4 Edibles — * * * * (t) nuts, excluding betel nuts 6 per cent and valorem (u) oilman stores (except edibel oils) (1/2 percent ad valorem for dry fruits * * * * Class III Articles for industrial use and articles used for fuel, lighting, washing and polishing. A. — Articles for industrial use and articles used for fuel * * * * 16 Mineral oils of all sorts (a) * * * * (xii) Turkey read oil, by- products of mineral oils 2 paise per litre * * * * (b) Crude oil 1 paise per litre (c) grease, petroleum jelly 2 per cent ad valorem * * * * B.—Articles used for lighting * * * * 22 Oil seeds of inedible oils 50 paise per 50 kilograms

5. Section 6 of the said Act provides for imposition of levy and collection of taxes on the entry of every specified goods into Calcutta Metropolitan Area (for consumption, use or sale therein) from any place outside that area at such rate not exceeding the rates specified in the corresponding entry in column 3 of this Schedule as the State Government may by notification specify. The State Government specified the goods entry of which into Calcutta Metropolitan Area will be liable to tax under this Act at the rate specified in corresponding column 3 of the Schedule. On a reading of the aforesaid Schedule it is clear and evident that Class 1 specifies articles liable to tax grouped under the caption of food and drink. Item 4(t) specified nuts excluding betel nuts as one of the items on which the rate of entry tax has been specifically mentioned therein. Under the said Class I in Item 4(n) oilman stores (except edible oils) has been mentioned and in Class 3 under heading (B) Item 22 refers to oil seeds of inedible oils as one of the specified items for imposition of tax. It has been urged on behalf of the respondents that as edible oils are exempted from imposition of tax under the said Act groundnut which is imported by the respondent dealers from outside the State into Calcutta Metropolitan Area for the purpose of manufacture of groundnut oil is exempted from the imposition of entry tax. It has been further urged in this connection that a very negligible quantity of groundnuts is used for edible purposes. The groundnuts are generally used as oil seeds for the purpose of manufacturing edible oil i.e groundnut oil. It has been submitted that though groundnut is included within nuts in Item 4(t) yet it was rightly held by the courts below that groundnuts used as oil seeds for the purpose of manufacture of groundnut oil is free from imposition of entry tax and as such the appeal should be dismissed. This contention of the learned Counsel on behalf of the respondents cannot be sustained inasmuch as “nuts” has been specified as one of the items liable to be taxed under Item 4(t) for imposition of tax at the rate mentioned in corresponding Column 3. So on a plain reading of the said provisions it is clear and evident that groundnuts which answer the description of nuts is exigible to entry tax under the said Act. It is unnecessary to go into the question as to whether groundnut is also used for the purpose of extracting edible oil. The observations of this Court in the case of Avadh Sugar Mills Ltd. v. ST0 (1974) 3 SCC 271, (1973) 31 STC 469, 1973 Tax LR 2448 wherein groundnut has been taken as oil seed for the purpose of U.P Sales Tax Act have no bearing for the purpose of imposition of entry tax under the said Entry Tax Act, 1970 as it has been mentioned already hereinbefore that under Item 4(t) “nuts” has been specifically mentioned as one of the specified goods for the. imposition of entry tax. Once the goods answer the description of the item exigible to tax, the importer of such goods cannot escape liability depending on the use to which he puts it. No question of speculating about intention of the legislature arises when “nuts” are in terms specified as goods which are exigible to tax and “groundnuts” fall under the description of ‘nuts’. That groundnuts are nuts is not disputed nor disputable that it is not so. An extract from Encyclopaedia Britannica also leaves no room for doubt on this score and even the contention of the respondents is not that groundnuts are not “nuts” but that when the same are imported for extracting oil the same are not exigible to tax. Groundnuts are “nuts” whether the same are consumed as they are or whether they are crushed for extracting oil — they do not cease to be nuts. The relevant extract is appended below as Appendix “A”.

APPENDIX “A”

Book Name: Encyclopaedia Britannica

Volume 16 Napoleon I to Ozonolysis

(Page 797 Nusaybin-NUT) Edn. 1968

NUT, generally any seed or fruit consisting of a kernel, usually oily, surrounded by a hard or brittle shell. Most edible nuts, e.g, walnut, Brazil nut, peanut, etc., are well known as dessert nuts. Not all nuts, however, are edible; some are used as sources of oil or fat and may be regarded as oil seeds (see Oil Plants); others are used for ornaments. The botanical definition of a nut, based on morphological features, is more restrictive: a hard dry, one-celled one seeded fruit that does not split open at maturity. Among the nuts that fit both the botanical and popular conception are the acorn, chestnut and filbert; other so-called nuts may be botanically seeds (Brazil nuts), legumes (peanuts) or drupes (almond, coconut, pecan and walnut). In this article the term nut will be used in its broadest sense unless otherwise indicated.

6. The legislative intent to tax nuts being very clear there is no room for considering whether groundnut is also oil seed used for manufacturing edible oil, “why” it is imported and whether it is exempt from entry tax on that account. Undoubtedly, nuts include groundnut also. The contention of the respondents in our considered opinion is totally devoid of any merit and as such it is overruled. It is very relevant to mention here that the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970 was replaced by the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972 (West Bengal Act 5 of 1972). In the said Act identical provision has been made for the imposition of entry tax on specified goods entering into Calcutta Metropolitan Area at the rates specified in corresponding Column 3 of the items mentioned in the Schedule. Class I, Item 4(u) specifies edible nuts excluding betel nuts as was in the previous Act of 1970. In Entry 22 under Class IV oil seeds of vegetable oils other than mustard, rape, groundnut etc. was mentioned. In Item 24 of the said Class IV vegetable oils, other than mustard oil, groundnut oil etc. has been specifically mentioned. So this Act of 1972 also specifically mentions “nuts” as one of the goods entry of which into Calcutta Metropolitan Area is subject to the levy of entry tax. This Act of 1972 was further amended in 1974 by West Bengal Act 19 of 1974. By the said Act it has been specifically mentioned in the Schedule to the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972 in Sl. No. 4, Item (u) for the words “nuts excluding betel nuts” the words “nuts including groundnuts, cashewnuts and walnuts but excluding betel nuts” shall he, and shall be deemed always to have been, substituted. In other words, the words “nuts including groundnuts, cashewnuts and walnuts but excluding betel nuts” has been substituted retrospectively for the words “nuts excluding betel nuts” in Item 4(u). This amendment is clarificatory in nature and makes explicit what was implicit out of abundant caution, and clearly puts an end to all controversies as to whether groundnuts imported into Calcutta Metropolitan Area from outside is liable to imposition of entry tax. It makes patently clear that groundnut as one of the “nuts” was always subject to the imposition of entry tax under the said Entry Tax Act. The contention that groundnut imported into Calcutta Metropolitan Area for the purpose of manufacture of groundnut oil which is one of the edible oils and which is exempted from the imposition of levy of entry tax cannot be sustained any longer in view of the express provisions of the Act.

7. Considering all these facts and circumstances as well as considering that nuts excluding betel nuts being one of the specified goods mentioned in the Schedule to the said Act clearly bring within its fold groundnut; so groundnut imported into Calcutta Metropolitan Area is liable to the imposition of entry tax under the said Entry Tax Act. We therefore allow this appeal and set aside the judgment and order passed in appeal from Original Order No. 612 of 1971 without any order as to costs. The writ petition giving rise to the appeal will stand dismissed.

8. In Civil Appeal No. 4301 of 1984 the respondent made a similar challenge that groundnut which the petitioner imported from outside the State into Calcutta Metropolitan Area could not be subjected to the levy of entry tax as the same is used as oil seed for manufacturing edible oil i.e groundnut oil which is exempted from the incidence of entry tax under the said Act. This challenge was made in 1974 when the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972 as amended by the Amendment Act (West Bengal Act 19 of 1974) came into operation. We have already mentioned hereinbefore that in the Schedule to the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972 in Sl. No. 4, item (u) for the words “nuts excluding betel nuts” the words “nuts including groundnuts, cashewnuts and walnuts but excluding betel nuts” shall be deemed always to have been substituted. In other words, this amendment has been given retrospective effect and groundnut being specifically mentioned in Sl. No. 4(u) of the Schedule to the said Act, there is no scope for any controversy that “groundnuts” imported into Calcutta Metropolitan Area are liable to entry tax under the provisions of the said Act.

9. In this view of the matter this judgment will also govern Civil Appeal No. 4301 of 1984 wherein identical questions have been raised. This appeal is also allowed without any order as to costs. The writ petition giving rise to the appeal will stand dismissed with no order as to costs.