Case: Thungabhadra Industries Ltd Vs. The Government Of Andhra Pradesh

1. The points raised in these three appeals which come before us by virtue of special leave under Art. 136 of the Constitution are somewhat out of the ordinary and raise for consideration whether the common order passed by the High Court of Andhra Pradesh rejecting application to review an earlier order by that court, is correct on the facts which we shall state presently.2. The appellant - M/s. Thungabhadra Industries Ltd. are manufacturers of groundnut oil, part of which they convert for sale into hydrogenated oil while the rest is sold as ordinary oil. Under the Madras General Sales Tax Act, hereinafter referred to as the Act, which has application to the State of Andhra Pradesh, while in regard to groundnuts the tax is levied at the point of purchase groundnut oil is taxed at the point of sale. The result of this feature naturally is that when a person purchases groundnut and converts the same into oil and sells the oil extracted he has to pay tax at both the points. Rules have been framed in order to alleviate what might be considered a hardship by reason of this double levy. Rule 5(k) of the Turnover and Assessment Rules provides(k) in the case of a registered manufacturer of groundnut oil and cake, the amount which he is entitled to deduct from his gross turnover under Rule 18 subject to the conditions specified in thatRule 18 referred to readsAny dealer who manufactures groundnut oil and cake from groundnut and/or kernel purchased by him may, on application to the assessing authority having jurisdiction over the area in which he carries on his business, be registered as a manufacturer of groundnut oil and cake.2. Every such registered manufacturer of groundnut oil will be entitled to a deduction under clause (k) of sub-rule (1) of Rule 5 equal to the value of the groundnut and/or kernel, purchased by him and converted into oil and cake if he has paid the tax to the State on such purchases :Provided that the amount for which the oil is sold is included in his net turnover :Provided further that the amount of the turnover in respect of which deduction is allowed shall not exceed the amount of the turnover attributable to the groundnut and/or kernel used in the manufacture of oil and included in the netappellant is admittedly a manufacturer who is registered for the purposes of that rule.3. In respect of the year 1949-50 the appellant while submitting his return disclosing his turnover of the sale of oil, included therein the value of the hydrogenated oil that he sold and claimed a deduction under the rule in respect of the value of the groundnuts which had been utilised for conversion into hydrogenated oil on which he had paid tax at the point of their purchase. This claim was negatived by the Sales Tax authorities on the ground that "hydrogenated groundnut oil" was not "groundnut oil" within R. 18(2). Having failed before the departmental authorities in getting its claim to deduction allowed, the appellant approached the High Court with a Tax Revision Case numbered 120 of 1953 on its file but the High Court, by its judgment dated February 11, 1955, upheld the view of the department. An application was thereafter made to the High Court to grant a certificate of fitness under Art. 133(1) on the ground that substantial question of law as to the interpretation of the General Sales Tax Act and the Rules made thereunder, as well as of certain other enactments which were relied upon in support of their claim by the appellants, arose for decision in the case. The learned Judges by their order dated February 21, 1956 granted the certificate. In view of the points arising in this appeal we consider it would be convenient to set out the text of this orderpetition raises a question of general importance namely whether hydrogenated groundnut oil popularly known as Vanaspathi is groundnut oil so as to enable the assessee to claim exemption under Rules 18(2) and 5(1)(g) of the Turnover and Assessment Rules framed by the Government in exercise of the powers conferred by S. 3 and sub-rules (4) and (5) of the Madras General Sales Tax Act, 1939. The answer to the question arising in this matter turns upon whether the chief characteristics of the groundnut oil remain the same in spite of the chemical processes it undergoes. It also involves the interpretation of the notifications issued by the Government of India under the Essential Supplies (Temporary Powers) Act and certain provisions of the Vegetable Oil Products Control Order. In these circumstances we think it a fit case for appeal to the Supreme Court. Leave is thereforethe appeal was entertained in this Court and numbered as Civil Appeal 498 of 1958, was finally disposed of on October 18, 1960 and is now reported as M/s. Tungabhadra Industries Ltd. v. Commercial Tax Officer, Kurnool, (1961) 2 SCR 14  : (AIR 1961 SC 412  ).4. Meanwhile in regard to the assessment of the three succeeding years - 1950-51, 1951-52 and 1952-53, the same question as to whether "hydrogenated groundnut oil" was "groundnut oil" entitled to the deduction of the purchase turnover under R. 18(2) of the Turnover and Assessment Rules was raised and was decided against the appellant by the Sales Tax Officer. This order was taken up in appeal to the Deputy Commissioner of Commercial Taxes by the appellant and as apparently the identical question was pending in the High Court in regard to the year 1949-50, the appellant authority awaited the decision of the High Court and when T. R. C. 120 of 1953, was decided against the appellant on February 11, 1955, disposed of the appeal against the appellant by its order dated April 5, 1955. Thereafter the appellant approached the Sales Tax Appellate Tribunal but this was obviously a formality because the Tribunal were bound by the judgment of the High Court and the appeals were dismissed by order dated October 20, 1955. Again the orders of the Sales Tax Appellate Tribunal the appellant preferred three Tax Revision Cases - T. R. C. 75, 76 and 77 of 1956 in regard to the three assessment years. The learned Judges of the High Court dismissed the three Revision Cases on October 7, 1958 following their earlier decision in T. R. C. 120 of 1953 in regard to the assessment for the year 1949-50. At this date, it would be noticed, the correctness of the decision of the High Court in T. R. C. 120 of 1953 was pending adjudication in this Court by virtue of the Certificate of fitness granted by the High Court under Art. 133(1). Desiring to file an appeal to this Court against the judgment of the High Court in these three Tax Revision Cases as well, the appellant filed, on February 16, 1959, three miscellaneous petitions under Art. 133(1) of the Constitution praying for a certificate of fitness that the case involved substantial questions of law as to the interpretation of the Sales Tax Act and the Rules made thereunder etc. The learned Judges, however, by their order dated September 4, 1959 dismissed the petition statingjudgment sought to be appealed against is one of affirmance. We do not think that it involves any substantial question of law as to the interpretation of the Constitution; nor do we regard this as a fit case for appeal to the Supremethat matter becomes relevant is because the appellant filed three applications for review of this order under O. XLVII R. 1 of the Civil Procedure Code specifying this as the ground for relief. These applications for review were filed on November 23, 1959 and apparently notice was issued to the respondent State Government and the petition for review came on for hearing on January 6, 1961. On that date the learned Judges dismissed the said applications and assigned the following as the reasons for theironly ground argued in support of these review petitions is that leave to appeal to the Supreme Court was granted in similar circumstances in regard to previous year and there was no reason why leave should have been refused in these cases. We do not think that that would furnish a sufficient ground for reviewing the order dismissing the petitions for leave to file an appeal to the Supreme Court. That apart, the Supreme Court was moved under Article 136 of the Constitution for special leave and that was dismissed may be on the ground that it was not filed in time. In the circumstances, we think that our order dated 4-9-1959 dismissing S. C. C. M. Ps. Nos. 4823, 4825 and 4827 of 1959 cannot beappellants thereupon made applications for special leave from this Court to challenge the correctness of this last order and the leave having been granted after notice to the respondent, the appeals are now before us.

Reasoning: 8. Order XLVII R. 1(1) of the Civil Procedure Code permits an application for review being filed "from a decree or order from which an appeal is allowed but from which no appeal has been preferred." In the present case, it would be seen, on the date when the application for review was filed the appellant had not filed an appeal to this Court and therefore the terms of O. XLVII R. 1(1) did not stand in the way of the petition for review being entertained. Learned Counsel for the respondent did not contest this position. Nor could we read the judgment of the High Court as rejecting the petition for review on that ground. The crucial date for determining whether or not the terms of O. XLVII R. 1(1) are satisfied is the date when the application for review is filed. If on that date no appeal has been filed it is competent for the Court hearing the petition for review to dispose of the application on the merits notwithstanding the pendency of the appeal, subject only to this, that if before the application for review is finally decided the appeal itself has been disposed of, the jurisdiction of the court hearing the review petition would come to an end.Before concluding we desire to make an observation arising out of an appeal made to us by learned Counsel for the respondent that even if the appeals were allowed we should make no direction as regards costs against his client. The right of the appellant to the benefit of the exemption which he claimed and which was disallowed to him by the judgment of the High Court in T. R. Cs. 75, 76 and 77 really depended on the correct construction of R. 18(2) of the Turnover and Assessment Rules and in particular on the meaning of the expression "groundnut oil" occurring there - whether it included "hydrogenated oil". This Court in its judgment in (1961) 2 SCR 14   : (AIR 1961 SC 412  ) pronounced on the proper construction of the word "groundnut oil" occurring in R. 18 of the Turnover and Assessment Rules as they then stood. The assessment proceeding for 1950-51, 1951-52 and 1952-53 had not attained finality against the assessee by the termination of all proceedings, because there were still applications for review pending before the High Court. In the circumstances, it would have been reasonable to expect that the Sales Tax authorities should have afforded the appellant the benefit of the decision of this court in regard to these later years also unless there was some insuperable difficulty or other circumstance in the way of their doing so, and learned Counsel for the respondent has brought none to our notice. That is so far as regards the merits of the controversy in the tax revision cases in which certificates were sought. Of course if on any technical or similar points the State is entitled to succeed indisputably they would not be prevented from doing so and they would be entitled to collect the tax as assessed and as decided in its favour by the High Court. But when the respondent fails in the objections raised to prevent the matter coming to this Court, we do not see any justification for the plea that costs should not follow the event but that the appellant should be deprived of its right to costs.