REPORTABLE IN THE  SUPREME COURT OF INDIA CIVIL  APPELLATE  JURISDICTION

CIVIL APPEAL NO. 2363  OF 2007

M/s. Agarwal Oil Refinery  Corporation, Kanpur  

... Appellant(s)

                 Versus

The Commissioner of Trade Tax, U.P.  Lucknow

... Respondent(s)  

WITH

Special Leave Petition (Civil) No. 2148 of 2008

Commissioner of Trade Tax, U.P.             ... Appellant(s)

Versus

S/s Agarwal Oil Refinery Corporation, Kanpur                                     ... Respondent(s)

J U D G M E N T

GANGULY, J.

1. Heard learned counsel for the parties.

2. This appeal is directed against the judgment and order  

passed  by  the  High  Court  in  Trade  Tax  Revisions  in  

exercise of its revisional jurisdiction under Section  

11 of U.P. Trade Tax Act, 1948(hereinafter referred to  

as the “Act”).  The order of the Tribunal dated 22nd  

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April, 1996 relating to assessment years 1988-89 and  

1989-90  was  impugned  in  Revisions  before  the  High  

Court.

3. The case of the appellant, who was the dealer is that  

it purchased burnt mobil oil and refined the same mobil  

oil, but the assessing  authority levied tax  on the  

said burnt mobil oil under Section 3-AAAA of the Act  

treating the said oil as “old discarded unserviceable  

store”.

4. Admittedly, the first appeal, which was filed by the  

dealer against such assessment, was allowed and then  

again a further appeal was filed by the Commissioner of  

Trade  Tax  against  the  order  of  the  first  appellate  

authority.  The said appeal by the Commissioner was  

also dismissed.  Thereupon, the Commissioner, Trade Tax  

filed  the  revision  before  the  High  Court  and  the  

revisional Court overturned the concurrent finding of  

the statutory authorities. In doing so, the High Court

came to a finding that the present controversy is  

covered by a decision of the High Court in the case of  

Commissioner  of  Sales  Tax vs.  S/S.  Industrial  

Lubricants reported in 1984 U.P.T.C. 1101.

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5. Following the said decision, the High Court held that  

burnt mobil oil purchased by the dealer, the appellant  

herein, is covered under the entry of “old, discarded  

and  unserviceable  store”  being  purchased  from  

unregistered  dealer  and  sold  in  the  same  condition.  

According to the High Court they are liable to be taxed  

as  such  under  Section  3-AAAA  of  the  Act  during  the  

years under consideration.

6. Learned counsel for the appellant while assailing the  

said finding of the High Court, submitted that the case  

is not covered by the decision rendered by the High  

Court  in  the  case  of  S/S.  Industrial  Lubricants  

(supra).   The only reasoning on the basis of which the  

High Court in S/S Industrial Lubricants (supra) allowed  

the revision is that mobil oil after having been used  

does  not  retain  the  character  of  mobil  oil  but  it  

becomes  “old, discarded  and unserviceable  store” and  

that is why the High Court agreed with the revenue that  

the  burnt  mobil  oil,  being  old,  discarded  or  

unserviceable store, is liable to be taxed under the  

notifications dated 1.12.1973 and 4.11.1974 @ 3.5% and  

4% respectively.

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7. Reference  in  this  connection  may  be  made  to  the  

provision of Section 11 of the said Act to appreciate  

the extent of revisional jurisdiction of High Court in  

dealing with the concurrent finding of fact.  Section  

11 of the said Act is set out below:

11. Revision  by  High  Court  in  special  cases.-(1)  Any  person  aggrieved  by  an  order made under sub-section (4) or sub- section (5) of Section 10, other than an  order  under  sub-section  (2)  of  that  section  summarily  disposing  of  the  appeal,  or  by  an  order  passed  under  Section 22 by the Tribunal, may, within  ninety days from the date of service of  such order, apply to the High Court for  revision of such order on the ground that  the case involves any question of law.

(2) Any  person  aggrieved  by  an  order  made  by  the  Revising  Authority  or  an  Additional Revising Authority refusing to  state the case under this section, as it  stood immediately before April 27, 1978,  hereinafter referred to as the said date,  may, where the limitation for making an  application to the High Court under sub- section  (4),  as  it  stood  immediately  before  the  said  date,  has  not  expired,  likewise apply for revision to the High  Court within a period of ninety days from  the said date.

(3) Where  an  application  under  sub- section (1) or sub-section (3), as they  stood immediately before the said date,  was rejected by the Revising Authority or  an Additional Revising Authority on the  sole  ground  that  the  period  of  one  hundred  and  twenty  days  for  making  the  reference, as specified in the said sub- section (1), has expired, such applicant  may apply for revision of the order made  under  sub-section  (2)of  Section  10,  to  the High Court within sixty days from the  

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said  date  on  the  ground  that  the  case  involves any question of law.

(4) The  application  for  revision  under  sub-section (1) shall precisely state the  question of law involved in the case, and  it shall be competent for the High Court  to formulate the question of law or to  allow  any  other  question  of  law  to  be  raised.

(5) Every  application  for  making  a  reference  to  the  High  Court  under  sub- section (1) or sub-section (3), as they  stood immediately before the said date,  pending before the Revising Authority or  an Additional Revising Authority on the  said date, shall stand transferred to the  High Court.  Every such application upon  being  so  transferred  and  every  application under sub-section (4), as it  stood immediately before the said date,  pending before the High Court on the said  date,  shall  be  deemed  to  be  an  application  for  revision  under  this  Section and disposed of accordingly.

(6) Where the High Court has before the  said  date,  required  the  Revising  Authority  or  an  Additional  Revising  Authority to state the case and refer it  to the High Court under sub-section (4),  as  it  stood  immediately   before   the  said date, such authority shall, as soon  as  may  be,  make  reference  accordingly.  Every  reference  so  made,  and  every  reference made by such authority before  the  said  date  in  compliance  with  the  requirement of the High Court under sub- section (4), as it stood before the said  date,  shall  be  deemed  to  be  an  application  for  revision  under  this  section and disposed of accordingly.

(6-A)Where the Revising Authority or an  Additional Revising Authority has, before  the  said  date,  allowed  an  application  under sub-section (1) or sub-section (3),  as they stood immediately before the said  

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date,  and  such  authority  has  not  made  reference before the said date, it shall,  as soon as may be, make reference, to the  High  Court.  Every  such  reference,  and  every  reference  already  made  by  such  authority  before  the  said  date  and  pending   before  the  High  Court  on  the  said  date,  shall  be  deemed  to  be  an  application  for  revision  under  this  section and dispose of accordingly.

(7) Where  an  application  under  this  section is pending, the High Court may,  on  an  application  in  that  behalf,  stay  recovery of any disputed amount of tax,  fee or penalty payable, or refund of any  amount due, under the order sought to be  revised:

Provided that no order for the stay  of recovery of such disputed amount shall  remain in force for more than thirty days  unless  the  applicant  furnishes  adequate  security  to  the  satisfaction  of  the  Assessing Authority concerned.

(8) The High Court shall, after hearing  the parties to the revision, decide the  question  of  law  involved  therein,  and  where as a result of such decision, the  amount of tax, fee or penalty is required  to be determined afresh, the High Court  may send a copy of the decision to the  Tribunal for fresh determination of the  amount, and the Tribunal shall thereupon  pass  such  orders  as  are  necessary  to  dispose  of  the  case  in  conformity  with  the said decision.

(8-A)  All  applications  for  revision  or  orders passed under Section 10 in appeals  arising out of the same cause of action  in  respect  of  the  same  assessment  year  shall be heard and decided together:

Provided that where any one or more  of such applications have been heard and  decided earlier, if the High Court, while  hearing  the  remaining  applications,  

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considers that the earlier decision may  be a legal impediment in giving relief in  such remaining application, it may recall  such earlier decisions and may thereafter  proceed  to  hear  and  decide  all  the  applications together.  

(9) The provisions of Section 5 of the  Limitation  Act,  1963,  shall,  mutatis  mutandis, apply to every application, for  revision under this section.  

Explanation.-  For  the  purpose  of  this section, the expression “any person”  includes the Commissioner and the State  Government.”

8. It is made clear from the structure of Section 11 that  

normally  the  High  Court  under  revision  does  not  

interfere with concurrent findings of fact by the lower  

authority,  unless  the  case  involves  any  question  of  

law.  

9. Traditionally in exercise of revisional jurisdiction,  

High Court does not interfere with concurrent finding  

of  fact,  unless  the  findings  recorded  by  the  lower  

authorities  are  perverse  or  based  on  an  apparently  

erroneous principles which are contrary to law or where  

the finding of the lower authority was arrived at by a  

flagrant abuse of the judicial process or it brings  

about a gross failure of justice. In this case none of  

these principles are attracted.  

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10. In  this  connection,  we  may  refer  to  the  relevant  

provision of the Act to find out the real controversy  

in issue.  Section 3AAAA of the Act which has come up  

for consideration in this case is set out hereinbelow:

“Section 3-AAAA- Liability to  tax  on  purchase  of  goods  in  certain  circumstances-Subject to the provision of  Section 3, every dealer who purchases any  goods liable to tax under this Act-  

(a)  from  any  registered  dealer  in  circumstances in which no tax is payable  by  such  registered  dealer,  shall  be  liable to pay tax on the purchase price  of such goods at the same rate at which,  but  for  such  circumstances,  tax  would  have  been  payable  on  the  sale  of  such  goods;

(b)  from  any  person  other  than  a  registered dealer whether or not tax is  payable by such person, shall be liable  to pay tax on the purchase price of such  goods at the same rate at which tax is  payable on the sale of such goods;

Provided that no tax shall be leviable on  the purchase price of such goods in the  circumstances  mentioned  in  clauses  (a)  and (b), if -

(i)  such  goods  purchased  from  a  registered  dealer  have   already  been  subjected to tax or may be subjected to  tax under this Act;

(ii) tax has already been paid in respect  of such goods purchased from any person  other than a registered dealer;

(iii) the purchasing dealer resells such  goods within the State or in the course  of  inter-State  trade  or  commerce  or  exports out of the territory of India, in  

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the same form and condition in which he  had purchased them;

(iv) such goods are liable to be exempted  under Section 4-A of the Act”.

11. The  relevant  entries  which  are  covered  in  this  

controversy  as  per  notification  dated  7th September,  

1981 and 31st May, 1985 are as under:

S.No. Description of goods Point of Tax Rate of  Tax

x               x x x

31. Oil  of  all  kinds,  other  than  those  covered  by  any  other entry of this list or  by  any  other  notification  issued under the Act

M or I 4  per  cent

32. Old,  discarded,  unserviceable  or  obsolete  machinery,  stores  or  vehicles  including  waste  products  except  cinder,  coal ash and such items as  are  included  in  any  other  notification  issued  under  the Act.

Sale to consumer 8  per  cent

12. In  the  instant  case,  the  Tribunal  as  the  second  

appellate  forum  is  the  last  fact  finding  authority.  

From the admitted facts recorded by the Tribunal it  

appears  that  the  appellant-the  dealer  manufactures  

refined  mobil  oil  from  the  raw  material,  i.e.,  the  

burnt mobil oil which it purchases and then sells a  

virtually new item in the market.  In 1988-89 and 1989-

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90 the assessments were made under Rule 41(7) of the  

U.P. Trade Tax Rules, but the said assessment has been  

opened and a fresh assessment has been made. Aggrieved  

by the same, the dealer preferred first appeal before  

the A.C.(J) who allowed both the appeals by an order  

dated 26.5.1995 holding therein that the dealer is  not  

liable to pay and quashed the imposition of tax upon  

dealer  for  the  relevant  assessment  years.  Aggrieved  

thereby, the revenue preferred a second appeal before  

the Tribunal.  Before the said appellate authority, the  

revenue  urged  that  the  burnt  mobil  oil  which  is  

purchased by the assessee who was the manufacturer of  

refined oil is taxable at the point of sale to the  

consumer  as  it  comes  under  the  category  of  old  and  

discarded  material.  The  Tribunal  did  not  accept  the  

said contention by examining the facts and the records  

of  the  case.   The  Tribunal  came  to  the  following  

finding:  

“…it is undisputed that the burnt mobil  oil on which the tax has been imposed,  has  been  purchased  by  the  assessee  respondent  from  unregistered  dealer  like  kabarie  and  hawkers  in  retail  manner.   However,  in  the  like  manner  the  old  PVC  shoes  and  chappals  purchased  by  the  dealer  who  converted  into  granules  and  sold  them  in  the  market,  they  have  not  been  treated  under  the  category  of  'old  discarded  and unserviceable stores'   as held by  the case laws cited by the assessee's  

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counsel Sri S Rais, Advocate.  In our  opinion, the case of burnt mobil oil is  similar to the case of PVC shoes etc.  which  are  purchased  by  dealer  for  manufacture  of  plastic  granules  etc.  by  purchasing  them  from  kabaris  and  hawkers etc. in retail manner.”

13. The Tribunal also came to a finding that the refined  

mobil  oil  is  manufactured  by  the  dealer  from  burnt  

mobil  oil.   The  item  is  taxable  at  the  point  of  

manufacturer and is not liable to be taxed at the point  

of sale to the consumer under Section 3-AAAA of the  

Act.

14. We are of the opinion that unless the High Court, as a  

revisional  authority,  finds  that  those  factual  

conclusions  by  both  the  appellate  authorities  are  

perverse, it cannot overturn the same by relying on a  

judgment  which  is  factually  distinguishable.  In  the  

judgment on which the High Court relied, there is no  

finding  by  the  Tribunal,  the  last  fact-finding  

authority, on the nature of the goods, which was the  

subject matter of the disputed transaction. The case on  

which the High Court relied, namely, in the case of  

S/S. Industrial Lubricants (supra), is not the case of  

a  dealer  who  after  purchasing  burnt  mobil  oil,  

manufactures refined mobil oil from that raw material.  

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But the Tribunal in the instant case has found on facts  

that  the appellant  herein manufactured  refined mobil  

oil  from  the  burnt  mobil  oil.   Therefore,  there  is  

substantial factual difference between the present case  

and  the  case  on  which  the  High  Court  relied  while  

dealing with the revision proceedings before it. We are  

of the view that the High Court was not correct in  

relying  on  a  decision,  which  is  factually  

distinguishable.

15. For  the  reasons  afore-stated,  we  cannot  sustain  the  

order of the High Court.  The order of the High Court  

is quashed.

16. We remand the matter to the High Court and request the  

High Court to decide the revisions on the facts of the  

present  case  on  the  principle  of  revisional  

jurisdiction indicated hereinabove.  We hope that the  

High Court will come to a reasoned conclusion in the  

facts and circumstances of the case.

17. We further make it clear that we have not expressed any  

opinion on the merits of the finding recorded by the  

Tribunal since the High Court is to re-examine the same  

afresh. With these observations, the appeal is allowed  

and the matter is remanded to the High Court for a  1

fresh decision of the revision proceedings on the lines  

indicated above.  

18. In the facts of the case, there will be no order as to  

costs.

S.L.P.(C) NO. 2148 OF 2008

Delay condoned.

We do not find any merit in the special leave petition,  

which is accordingly dismissed.

                         ......................J           [D.K. JAIN]                                 

                        .......................J              [ASOK KUMAR GANGULY]  

NEW DELHI, August 10, 2011

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