# M/s Jubilant Organosys Ltd v. The Commissioner, Commercial Taxes, U.P., Lucknow

- **Citation:** (2019) 3 ILRA 808
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-09-12
- **Case number:** Commercial Tax Revision No. 1068 of 2008
- **Bench:** Saumitra Dayal Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-jubilant-organosys-ltd-v-the-commissioner-commercial-taxes-u-p-lucknow-44811
- **Pages:** 11

## Headnote

A. Tax Law-Sales Tax - U.P. Trade Tax Act,
1948 - In absence of any specific taxing
entry permitting the levy of tax on sulphur
content in Gypsum, the revenue cannot be
permitted
to
ignore
the
exemption
provided to Gypsum (by notification no.
784 dated 31.03.1995), with a view to tax
the
sulphur
content
in
Gypsum
-
Composition of SSP as a commodity cannot be
broken down to permit taxation of the value of
Gypsum, a non-phosphatic element of SSP. It is
also not permissible for the revenue authority to
break the identity of Gypsum to determine the
percentage value of Sulphur in Gypsum with the
object of imposing tax on the value of sulphur.
(Para 33, 34, 35, 37, 38)
The commodity SSP has no use other than the
agricultural use as a fertilizer, reading the
exemption
notification
No.
440
dated
12.02.2001 and the exemption notification No.
784 dated 31.03.1995 together, it is clear that
they were issued to grant exemption to
various fertilizers in agriculture. Thus, all the
contents of SSP remained generally exempt.
(Para 36)
B. Tax Law-Sales Tax - U.P. Trade Tax Act, 1948
- Exemption Notification (No. 440 dated
12.02.2001) - The terms of exemption
notification have to be strictly construed.
Exemption
Notification
stipulates
that
Guidelines issued by the Department of
Agriculture, State of U.P. shall be used to
specify the percentage of phosphatic content
in SSP. In absence of such guidelines issued
by the Department of Agriculture, State of
U.P., no reliance can be placed in the
administrative order issued by the Union of
India. In any case, it does not provide for
determination of Phosphatic components in
SSP, it only specifies the percentage of various
contents of SSP. (Para 30, 31, 32)
Revision allowed (E-4)
Precedent followed: -

## Text

808 INDIAN LAW REPORTS ALLAHABAD SERIES
Balances of Acoounting Units vested in
Purvanchal
Vidyut
Vitran
Nigam
Limited, Varanasi as on 12.08.2003" dh
ewy izfr 1⁄4i`"B la0 1 ls 256 rd1⁄2 ,oa "
Explanatory note on the computation on
unit wise balances finally proposed to be
tranaferred
by
the
U.P.
Power
Corporeation Limited to Discoms as on
11.08.2003" dh ewy izfr 1⁄4i`"B la0 1 ls 192
rd1⁄2 lwpukFkZ ,oa vko';d dk;Zokgh gsrq layXu
izsf"kr gSA

layXud%&;FkksifjA

 1⁄4,0ds0 xqIrk1⁄2

eq[; egkizcU/kd 1⁄4ys[kk1⁄2"

18. Sri Bansal lastly submitted that
in case the court is of different view, then
the matter be remanded to A.O. for
limited purpose, only for verification of
the said record for allowing depreciation
to the assessee as per law.

19. Having heard learned counsel for
the parties and from perusal of the records, it
is not in dispute that the UPPCL was divided
into four new distribution Companies under
the Transfer Scheme, 2003 by Government
notification dated 12.8.2003. The respondentassessee is one of the four distribution
Companies. It is further not in dispute that the
Transfer Scheme, 2003 provided for the
assets, which included the fixed assets, but no
break up of assets values and itemwise was
provided in the Transfer Scheme, 2003, as
such the respondent-assessee had appointed
an auditor to make itemwise opening balance
of the assets and liabilities, which according to
the respondent-assessee themselves was
submitted by the auditors to them on
4.12.2015.

20. The contention of the counsel
for
the
Department
regarding
the
depreciation, which has been disallowed
by the assessing officer on the balance
assets acquired on the date of Transfer
Scheme, 2003, as the assets was was not
identifiable at the relevant point of time,
needs consideration.

21. In the light of the fact that the
auditors themselves had submitted report
to the respondent-assessee on 4.12.2015
and the assets so acquired under the
Transfer Scheme, 2003 came to be
identifiable only in the assessment year
2016-17. The said fact has also not been
denied by the counsel for the respondentassessee.

22. In view of the above, we are of
the considered opinion that the matter
needs to be examined afresh for the claim
of depreciation by the assessing officer, in
the light of the auditor's report providing
itemwise
accounting
of
assets
and
liabilities on 4.12.2015. Thus, the matter
is remitted back to the assessing authority
to reconsider and verify the records and
pass fresh order, as far as claim of
depreciation on the assets claimed by the
respondent-assessee,
pursuant
to
the
Scheme of 2003.

23. We hope and trust that the
aforesaid exercise will be carried out by
the assessing officer within three months
from the date of production of a certified
copy of this order, with the aforesaid
directions all the appeal stands disposed
off.
----------
(2019)11ILR A808

REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 12.09.2019

BEFORE
3 All. M/s Jubilant Organosys Ltd. Vs. The Commissioner, Commercial Taxes, U.P., Lucknow
809
THE HON'BLE SAUMITRA DAYAL SINGH, J.

Commercial Tax Revision No. 1068 of
2008
And
Sales/Trade Tax Revision Cases No. 188
of 2008, 1051 of 2008, 1052 of 2008,
1067 of 2008, 1064 of 2008, 1059 of
2008, 1070 of 2008, 1056 of 2008, 1069
of 2008, 1066 of 2008, 1060 of 2008,
1057 of 2008, 1062 of 2008, 1065 of
2008, 1058 of 2008, 1071 of 2008, 1061
of 2008, 1063 of 2008, 178 of 2010, 179
of 2010, 180 of 2010, 189 of 2010, 190 of
2010, 191 of 2010, 192 of 2010, 242 of
2010, 243 of 2010, 244 of 2010 & 245 of
2010

M/s Jubilant Organosys Ltd. ...Applicant
Versus
The Commissioner, Commercial Taxes,
U.P., Lucknow ...Opposite Party

Counsel for the Applicant:
Sri Nikhil Agrawal, Sri Bharat Ji Agrawal,
Sri Rahul Agarwal

Counsel for the Opposite Party:
C.S.C.
A. Tax Law-Sales Tax - U.P. Trade Tax Act,
1948 - In absence of any specific taxing
entry permitting the levy of tax on sulphur
content in Gypsum, the revenue cannot be
permitted
to
ignore
the
exemption
provided to Gypsum (by notification no.
784 dated 31.03.1995), with a view to tax
the
sulphur
content
in
Gypsum
-
Composition of SSP as a commodity cannot be
broken down to permit taxation of the value of
Gypsum, a non-phosphatic element of SSP. It is
also not permissible for the revenue authority to
break the identity of Gypsum to determine the
percentage value of Sulphur in Gypsum with the
object of imposing tax on the value of sulphur.
(Para 33, 34, 35, 37, 38)
The commodity SSP has no use other than the
agricultural use as a fertilizer, reading the
exemption
notification
No.
440
dated
12.02.2001 and the exemption notification No.
784 dated 31.03.1995 together, it is clear that
they were issued to grant exemption to
various fertilizers in agriculture. Thus, all the
contents of SSP remained generally exempt.
(Para 36)
B. Tax Law-Sales Tax - U.P. Trade Tax Act, 1948
- Exemption Notification (No. 440 dated
12.02.2001) - The terms of exemption
notification have to be strictly construed.
Exemption
Notification
stipulates
that
Guidelines issued by the Department of
Agriculture, State of U.P. shall be used to
specify the percentage of phosphatic content
in SSP. In absence of such guidelines issued
by the Department of Agriculture, State of
U.P., no reliance can be placed in the
administrative order issued by the Union of
India. In any case, it does not provide for
determination of Phosphatic components in
SSP, it only specifies the percentage of various
contents of SSP. (Para 30, 31, 32)
Revision allowed (E-4)
Precedent followed: -
1.
Govind
Saran
Ganga
Saran
Vs.
Commissioner of Sales Tax & ors., 1985
(Supp) SCC 205 (Para 6, 21)
Precedent cited: -
1. C.I.T. Bangalore Vs B.C. Srinivasa Setty,
(1981) 2 SCC 460 (Para 22)
2. St. of M.P. Vs Marico Industries Ltd., 2016
(338) ELT 335 (SC) (Para 23)
Notifications/Administrative
Orders
referred: -
1. Notification No. 1938 dated 02.05.2002
(Para 3)
2. Notification No. KA.Ni.-2-440/XI-9(113)/99U.P.
Act
15-48-Order-(13)-2001
dated
12.02.2001 (Para 8)
3. Notification No. TT-2-784/XI-9(51)/91-U.P.
Act-15/48-Order-95, dated 31.03.1995 (Para
9)
4. U.O.I. S.O. No. 540(E) dated 12.05.2003
(Para 24)
810 INDIAN LAW REPORTS ALLAHABAD SERIES
Commercial Tax Revision against the
order
dated
02.08.2008
passed
by
Commercial Tax Tribunal, Moradabad
Bench, Moradabad.

(Delivered by Hon'ble Saumitra Dayal
Singh, J.)

1. The present batch of revisions
have been filed by the assessee, who is
aggrieved by the orders passed by the
Tribunal arising both from the provisional
assessment proceedings for A.Y. 2007-08
(for the months April to December, 2007)
both under the provisions of U.P. Trade
Tax Act, 1948 and the Central Sales Tax
Act, 1956 and also from final assessment
orders for A.Ys. 2002-03 to 2007-08
(U.P. and Central).

2. Since the points involved in all
revisions are common or inter-related, the
present revisions are being decided by a
common
order
wherein
facts
of
Sales/Trade Tax Revision No. 1068 of
2008 [arising from provisional assessment
proceedings for October, 2007 (U.P.)] and
Sales/Trade Tax Revision No. 188 of
2010 [arising from final assessment
proceedings for A.Y. 2005-06 (U.P.)] are
being taken note of. Also, the revisions
filed
against
provisional
assessment
orders are being considered since the
findings recorded and material relied
overlap in the two proceedings of
provisional and final assessment.

3. Sales/Trade Tax Revision No.
1068 of 2008 has been filed by the
assessee
against
the
order
of
the
Commercial Tax Tribunal, Moradabad
dated 02.08.2008 passed in Second
Appeal No.256 of 2008. By that order, the
Tribunal has dismissed the appeal filed by
the assessee and held that the Department
of Agriculture, Government of U.P. had
not issued any guidelines whether tax
may be imposed on the contents of
Sulphur in Single Super Phosphate (SSP)
under the exemption notification No.
1938 dated 02.05.2002. Also, it has been
held that the Sulphur content in Single
Super
Phosphate
(SSP)
was
11%,
according to an order issued by the
Central
Government. Relying on a
communication issued by the Department
of Agriculture, Government of U.P. dated
17.05.2008, it was further held, Single
Super Phosphate (SSP) is obtained as a
result of following chemical reaction :

Ca3(PO4)2 + 2H2SO4 +
4H2O = CaH4(PO4)2 +
2CaSO4.2H2O

Tri Calcium Phosphate Sulphuric Acid
Water Mono Calcium Phosphate Gypsum

4. Undisputedly, Single Super
Phosphate (SSP) is a compound of Mono
Calcium Phosphate [CaH4(PO4)2] and
Gypsum (CaSO4.2H2O). Though, it is
undisputed that Gypsum (CaSO4.2H2O)
sold for agricultural use had been
separately
made
exempt
from
tax,
however, Sulphur contents in Gypsum
(CaSO4.2H2O) have been held to be
taxable, in absence of any information
being given by the Department of
Agriculture, Government of U.P. In the
appeal proceedings arising from the final
assessment order, the Tribunal has
reasoned, only the Phosphatic component
in Single Super Phosphate (SSP) was
exempt under notification No. 440 dated
12.02.2001. The other components of the
Single Super Phosphate (SSP) were not
exempt and therefore taxable.

5. The contention of the assessee
that Sulphur was present in Single Super
Phosphate (SSP), only in the form of
Gypsum
(CaSO4.2H2O)
(that
was
3 All. M/s Jubilant Organosys Ltd. Vs. The Commissioner, Commercial Taxes, U.P., Lucknow
811
separately
made
exempt
by
the
notification No. 784 dated 31.03.1995),
and not in its elementary form has been
negated by the Tribunal on the reasoning
that the assessee never sold Gypsum
(CaSO4.2H2O)
for
agricultural
use.
Similar orders have been passed by the
Tribunal in all other cases.

6. While the revisions arising from
the provisional assessment orders were
admitted
without
reference
to
any
question of law, however, formal order of
admission never came to be passed in the
revisions
arising
from
the
final
assessment
orders.
Normally,
the
revisions arising from the provisional
assessment orders would be rendered
infructuous upon the final assessment
orders coming into existence. However,
in view of the fact that the revenue seeks
to rely on the reasoning given both in the
provisional assessment order as also final
assessment order; the assessee seeks to
rely on the documents accompanying
revisions arising both from provisional
and also final assessment proceedings
and; the question involved is purely legal
with respect to the taxability and
availability of exemption under the
relevant
notifications,
the
revisions
arising from final assessment proceedings
have been heard on merits on the
followings questions of law:-

"(i) Whether, there being no
prescribed percentage of Sulphur (as S)
as mentioned in the Control Order being
present in SSP and the Phosphatic
component of the Single Super Phosphate
being exempt under notification No.440
dated 12.2.2001 and the other constituent
Gypsum (for agriculture use) being
exempt from payment of tax under
notification No.784 dated 31.3.1995, the
order of the Commercial Tax Tribunal
upholding the taxability on estimated
percentage
of
Sulphur
is
legally
sustainable?

(ii) Whether, in view of the
letter of the Directorate of Agriculture,
having specified that Sulphur is present in
the form of Gypsum in Single Super
Phosphate
manufactured
by
the
applicant, and Gypsum for agricultural
use being exempt under the notification
No.784
dated
31.03.1995,
the
Commercial Tax Tribunal was legally
justified in upholding the levy of tax on
assumed
percentage
of
Sulphur
components?

(iii) Whether, there being no
guidelines issued by the Department of
Agriculture, Uttar Pradesh as required
under the notification No.440 dated
12.02.2001
regarding
percentage
of
taxable component in respect of Single
Super Phosphate and thus the Sulphur
component present in Single Super
Phosphate
being
indeterminate,
the
Commercial Tax Tribunal was legally
justified in upholding the taxability of
Sulphur component in Single Super
Phosphate contrary to law laid down by
Hon'ble Supreme Court of India in the
case of Govind Saran Ganga Saran
(supra)?"

7. Heard Sri Nikhil Agarwal,
learned counsel for the applicant-assessee
and Sri B.K. Pandey, learned Standing
Counsel for the revenue.

8. Giving the genesis of the present
revisions, learned counsel for the assessee
has first referred to the exemption
notification
No.
KA.Ni.-2-440/XI9(113)/99-U.P.
Act
15-48-Order-(13)-
2001 dated 12.2.2001. It reads as below:
812 INDIAN LAW REPORTS ALLAHABAD SERIES

"Whereas,
the
State
Government
is
satisfied
that
it
is
necessary so to do in the public interest;

Now, therefore, in exercise of
the powers under Clause (a) of Section 4
read with Section 25 of the Uttar Pradesh
Trade Tax Act, 1948 (U.P. Act No. XV of
1948), the Governor is pleased to direct
that no tax under the said Act shall be
payable on the sale of Zinc Sulphate
Fertilizer and micro nutrient mixtures
and on the sale of Potash and Phosphatic
component of the following Chemical
fertilizers from 1st January, 2001 :

(1) D.A.P.

18 : 46
: 0

(2) M.O.P.

(3) S.S.P.

(4) N.P.K.

12 : 32
: 16

(5) N.P.K.

20 : 20
: 0

(6) N.P.K.

15 : 15
: 15

(7) N.P.K.

23 : 23
: 0

(8) N.P.K.

14 : 35
: 14

(9) N.P.K.

20 : 20
: 10

(10) N.P.K.

15 : 15
: 7.5

(11) N.P.K.

10 : 10
: 10

(12) N.P.K.

12 : 6 :
0

(13) N.P.K.

16 : 9 :
0

The percentage of different
components of the chemical fertilizers
shall be determined according to the
guidelines issued by the Department of
Agriculture, Uttar Pradesh from time to
time."

9. Then reference has been made to
the other exemption notification No. TT2-784/XI-9(51)/91-U.P. Act-15/48-Order95, dated 31.3.1995. It reads as below:-

"In exercise of the powers under
clause (a) of Section 4 of Uttar Pradesh
Trade Tax Act, 1948 (U.P. Act No. XV of
1948), read with Section 21 of the Uttar
Pradesh General Clauses Act, 1904 (U.P.
Act No. 1 of 1904) and in supersession of
Government
notification
No.
ST-21419/XI-9(51)/91-U.P. Act-XV/48-Order91, dated August 30, 1991, the Governor
is pleased to direct that, with effect from
April 1, 1995, no tax under the said Act
No. XV of 1948 shall be payable on sale
of Gypsum (IS Code 6046) and Pyrite for
agricultural use."

10. Next reference has been made to
a letter dated 17.05.2008 issued by the
Director of Agriculture, Uttar Pradesh to
the assessee stating that the presence of
Sulphur in Single Super Phosphate (SSP)
occurs as a result of following chemical
reaction :

Ca3(PO4)2 + 2H2SO4 +
4H2O = CaH4(PO4)2 +
2CaSO4.2H2O

Tri Calcium Phosphate Sulphuric Acid
Water Mono Calcium Phosphate Gypsum

11. It has been further specified in
that letter that the chemical formula for
Gypsum is CaSO4.2H2O.

12. Reference has also been made to
a letter dated 15.02.2008 written by the
Assessing Authority of the assessee to the
District
Agriculture
Officer
making
enquiries whether in the computation of
the control price of Single Super
Phosphate
(SSP)
there
was
any
component of any commodity other than
3 All. M/s Jubilant Organosys Ltd. Vs. The Commissioner, Commercial Taxes, U.P., Lucknow
813
Single Super Phosphate (SSP). It appears
the Department of Agriculture, Uttar
Pradesh vide letter dated 22.12.2008
stated (with reference to the letter dated
25.11.2008 issued by the Director of
Agriculture) that Sulphur was present in
the form of Gypsum (CaSO4.2H2O) in
Single
Super Phosphate
(SSP)
and
therefore it should not be taxed.

13. All these materials were placed
before the assessing authority at the stage
of
final
assessment
proceedings.
However, at the stage of provisional
assessment proceedings, the assessing
authority reasoned that according to an
order issued by the Central Government
11% Sulphur was present in Single Super
Phosphate (SSP) and therefore, the same
was not exempt but liable to tax.
According to the assessing officer,
Sulphur was more valuable component of
the Single Super Phosphate (SSP) and
therefore further assuming its value @
20% of the total value of Single Super
Phosphate (SSP), he taxed the same at the
highest
rate
treating
it
to
be
an
unclassified item.

14. Challenge raised by the
assessee, was partially accepted by the
first appellate authority to the extent it
was held, there was no basis to estimate
the 20% value of the Single Super
Phosphate
(SSP)
as
non
exempt.
However, that was left to be determined
at
the
stage
of
final
assessment
proceedings. As to the primary question,
in view of the control order specifying
contents of Sulphur in the Single Super
Phosphate (SSP) at 11% it was reasoned
that the same was taxable.

15. Learned counsel for the assessee
would
submit,
in
the
first
place,
exemption notification No. 440 dated
12.02.2001 grants full exemption on sale
of Potash and Phosphatic component of
Single Super Phosphate (SSP). Though no
guidelines had been issued by the
Department of Agriculture, Uttar Pradesh
to
specify
the
percentage
of
the
Phosphatic component in the Single
Super Phosphate (SSP), however, there is
no material to doubt the correctness of the
chemical reaction and the certification
made by the Agriculture Department, vide
its communications dated 17.05.2008 and
22.12.2008 read with communication
dated 25.11.2008.

16. Thus, it is his submission that
the Single Super Phosphate (SSP) being a
chemical compound of Mono Calcium
Phosphate [CaH4(PO4)2] and Gypsum
(CaSO4.2H2O) is exempt. Insofar as
exemption notification No. 440 dated
12.02.2001 is concerned, the value of
entire
quantity
of
Mono
Calcium
Phosphate [CaH4(PO4)2] would remain
exempt and there is no quarrel with
respect
to
the
same
inasmuch
as
undisputedly, there is no Sulphur content
in the same. Then, referring to Gypsum
(CaSO4.2H2O), it has been submitted that
in any case, Gypsum (CaSO4.2H2O) for
agriculture use was clearly exempt under
the pre-existing exemption notification
No. 784 dated 31.03.1995. Therefore, the
fact that the Sulphur was contained in
Gypsum (CaSO4.2H2O) would be wholly
irrelevant and extraneous to the issue.

17. In any case, it has been
submitted, in absence of any percentage
being specified by the Department of
Agriculture, Uttar Pradesh, as to the
component of the Single Super Phosphate
(SSP), that may be treated to be exempt, it
was not open to the revenue authorities to
814 INDIAN LAW REPORTS ALLAHABAD SERIES
carry out an independent exercise to
discover what part of Single Super
Phosphate (SSP) contained Sulphur. In
absence of guidelines being issued by the
Department of Agriculture, Uttar Pradesh,
which
was
only
an
expert
body
recognized under the notification No. 440
dated 12.2.2001, the entire quantity of
Single Super Phosphate (SSP) would
remain exempt and no artificial process or
reasoning could be adopted to declare any
part of value of that commodity to be not
exempt or taxable.

18. In that context, it has also been
submitted, in any case, it was never open
to the revenue authorities to look out for
the percentage of Sulphur and to bring the
same to tax only because certain amount
of Sulphur had been specified to be
necessary part of Single Super Phosphate
(SSP) under the control order issued by
the Central Government. In fact, if that
control order were to be treated as
relevant, it had to be inferred that Sulphur
was a necessary component of Single
Super Phosphate (SSP) and therefore it
could not be read to defeat the exemption
granted. However, in view of the other
undisputed material existing on record
that such Sulphur was part of Gypsum
(CaSO4.2H2O), which was otherwise
exempt, the entire reasoning adopted by
the revenue authorities would remain
revenue neutral and would not give rise to
any taxability.

19. Reliance has also been placed on
the dictionary meaning of the term
Calcium Sulphate as given in the Penguin
Dictionary of Chemistry, Third Edition,
2003 wherein Calcium Sulphate (4) has
been defined thus:- "occurs naturally as
anhydrite,
and
as
CaSO4.2H2O
as
Gypsum, selenite, satin-spar, alabaster.
Natural anhydrite and CaSO4 prepared
by dehydrating the dihydrate above 650oC
is only slowly soluble in water and is used
as a filter for paper and other materials
(see also Satin White)". Again, Sulphur
has been defined as:- "Non-metal, atomic
No. 16, atomic mass 32.066, m.p.
119.6oC, b.p. 444.6oC, density p 2070,
crustal abundance 260 p.p.m., electronic
configuration [Ne] 3s23p2. Yellow nonmetallic element of Group 16".

20. Relying on those meanings
given to the two terms of science of
Chemistry, it has been submitted, plainly,
Sulphur and Calcium Sulphate have two
different chemical identities. Sulphur is
an element in its elementary form while
the Calcium Sulphate is a compound
being a Sulphate of Calcium. Therefore,
even if the reasoning pursued by the
revenue authorities were to be accepted to
any extent, it may never lead to the
conclusion reached by the revenue
authorities that Single Super Phosphate
(SSP) comprised of Sulphur, inasmuch as
the Sulphur in its elementary form was
not found present to any extent in the
Single
Super
Phosphate
(SSP),
manufactured by the assessee.

21. Reliance has also been placed on
the decision of the Supreme Court in the
case of Govind Saran Ganga Saran Vs.
Commissioner
of
Sales
Tax
and
Others., 1985 (Supp) SCC 205, to
submit that the four components of tax
imposed must be found existing before a
valid levy may arise. Any uncertainty or
vagueness, either as to the character of the
imposition, or to the person on whom the
levy has been imposed or as to the rate on
which the tax has been imposed or as to
the measure or the value on which the rate
is to be applied, would be fatal to the
3 All. M/s Jubilant Organosys Ltd. Vs. The Commissioner, Commercial Taxes, U.P., Lucknow
815
levy. In the instant case, besides other,
there is no measure or value specified
under the statutory scheme that may
permit the revenue authorities to carry out
any independent exercise to determine the
value of content of Sulphur in the Single
Super Phosphate (SSP), manufactured
and sold by the assessee. Therefore, the
exercise carried out by the revenue
authorities in that regard, is without
jurisdiction, presumptuous and in any
case, wholly impermissible for
the
context of the taxing statute.

22. Reliance has also been placed on
the decision of the Supreme Court in the
case of C.I.T. Bangalore Vs. B.C.
Srinivasa Setty, 1981 2 SCC 460,
wherein it has been held that the charging
section
and
computation
provisions
together constitute an integrated code and
thus in absence of charging section
providing
or
allowing
the
revenue
authorities to search out the contents and
value of Sulphur in Single Super
Phosphate (SSP) sold by the assessee,
there was no room for such an exercise to
be carried out at an inferential process.

23. Last, reliance has been placed on
another decision of the Supreme Court in
the State of Madhya Pradesh Vs.
Marico Industries Ltd, 2016 (338) ELT
335 (SC) to submit that the burden to
establish that the assessee had sold
Sulphur was solely on the revenue. No
evidence having been led by the revenue
to establish such fact, it was never
permissible for those authorities to
impose tax on the sale of Sulphur by the
assessee.

24. Responding to the above,
learned Standing Counsel has relied on
the administrative order issued by the
Central Government vide S.O. No. 540(E)
dated 12.5.2003 wherein the composition
of Single Super Phosphate has been given
as below:

1(b).
STRAIGHT
Phosphatic FERTILIZERS

1. Single Super Phosphate
(16% P2O5 Powdered)

(i) Moisture, per cent by weight,
maximum 12.0

(ii) Free phosphoric acid (as
P2O5), per cent by weight, minimum

(iii) Water soluble Phosphates
(as P2O5), per cent by weight, minimum
16.0

(iv) Sulphur (as S), per cent by
weight, minimum 11.0

2. Single Super Phosphate
(14% P2O5 Powdered)

(i) Moisture, per cent by weight,
maximum 12.0

(ii) Free phosphoric acid (as
P2O5), per cent by weight, minimum

(iii) Water soluble Phosphates
(as P2O5), per cent by weight, minimum
14.0

(iv) Sulphur (as S), per cent by
weight, minimum 11.0

25.

Since
the
assessee
had
manufactured and sold Single Super
Phosphate
(SSP)
in
terms
of
the
prescriptions
made
by
the
Central
Government, it has been submitted,
undisputedly, the commodity sold by the
assessee contained minimum Sulphur
(11%) by weight. Thus, it has been
submitted, there is no dispute as to the
Sulphur contents in the commodity sold
by the assessee. Then, referring to the
exemption notification, learned Standing
Counsel
would
submit,
only
such
percentage of Phosphatic component and
Potash in Single Super Phosphate (SSP)
816 INDIAN LAW REPORTS ALLAHABAD SERIES
would
remain
exempt
as
may be
determined
in
accordance
with
the
guidelines issued by the Department of
Agriculture. Inasmuch as the aforesaid
order issued by the Central Government
itself stated that Single Super Phosphate
(SSP) contained 11% Sulphur, the same
was clearly non-exempt and, therefore,
taxable.

26. Reference has also been made to
the
communication
issued
by
the
Department of Agriculture, (as has also
been referred to by learned counsel for
the applicant-assessee), to submit that the
prescription
made
by
the
Central
Government is wholly corroborated by
the
communication
issued
by
the
Department of Agriculture, Uttar Pradesh,
inasmuch as the Sulphur is clearly
mentioned as an ingredient of Single
Super Phosphate (SSP) manufactured by
the assessee.

27. Further, learned Standing
Counsel would submit, there is no case
set up by the assessee that it sold Gypsum
(CaSO4.2H2O)
and,
therefore,
the
Tribunal has not erred in rejecting the
claim set up by the assessee.

28. Having heard learned counsel
for the parties and having perused the
record, in the first place, it is to be seen
whether the commodity Single Super
Phosphate (SSP) was granted exemption.
Second, it would have to be examined if
such exemption existed whether any
exception was created by law so as to
exclude from exemption and thus subject
to tax any part of the value of such Single
Super Phosphate (SSP). If such exception
is found to be existing in law, it would
have to be further seen whether any tax
liability
existed
on
such
excepted
component of Single Super Phosphate
(SSP). It is in that last context that the
presence of Sulphur in Single Super
Phosphate
(SSP)
would
require
consideration.

29. On fact, there is no dispute that
Calcium Sulphate is present in Single
Super Phosphate (SSP). At the same time,
it has not been resisted by the revenue
that the presence of Sulphur in Single
Super Phosphate (SSP) is only in the
shape of Gypsum (CaSO4.2H2O) and not
in it's elementary form.

30. Coming to the exemption
notification No. 440 dated 12.2.2001, it is
clear that amongst others, Phosphatic
component of Single Super Phosphate
(SSP) and not Single Super Phosphate
(SSP) as a commodity was exempt. As to
the percentage of Phosphatic component
in Single Super Phosphate (SSP), the
legislature clearly provided that the
guidelines issued by the Department of
Agriculture, Uttar Pradesh, would be
binding. Admittedly, no guidelines were
ever issued by the Department of
Agriculture, Uttar Pradesh to specify the
percentage of Phosphatic contents in
Single Super Phosphate (SSP).

31. Reliance placed by learned
Standing Counsel on the administrative
order issued by the Central Government
does not satisfy the condition contained in
exemption notification No. 440 dated
12.2.2001. First, the Central Government
was clearly not the authority specified in
the
exemption
notification
for
that
purpose.
Only
the
Department
of
Agriculture,
Uttar
Pradesh
was
recognized to prescribe the percentage of
Phosphatic component in Single Super
Phosphate (SSP). Therefore, it is wholly
3 All. M/s Jubilant Organosys Ltd. Vs. The Commissioner, Commercial Taxes, U.P., Lucknow
817
erroneous on part of the Tribunal and the
revenue authorities to have relied on that
administrative order issued by the Central
Government
for
the
purpose
of
determining the percentage of exemption
granted to Single Super Phosphate (SSP).

32. Second, that order does not seek
to specify the percentage of Phosphatic
component in Single Super Phosphate
(SSP). There is no evidence to that effect.
The fact that that order specifies the
percentage of various contents of Single
Super Phosphate (SSP) does not and it
cannot in any way lead to the conclusion
either by necessary or other implication
that it provides for determination of
Phosphatic components in Single Super
Phosphate (SSP). In fact, a plain reading
of that order only brings out that it
specifies the contents of (maximum)
Moisture, (minimum) free phosphoric
acid,
(minimum)
water
soluble
phosphates and (minimum) Sulphur that
may be present in Single Super Phosphate
(SSP). It does not satisfy the requirement
of the exemption notification No. 440
dated 12.2.2001 and it does not bring out
the
total
percentage
of
Phosphatic
component in Single Super Phosphate. It
does not even attempt to identify the
Phosphatic component in Single Super
Phosphate as an ingredient.

33. Even otherwise if the argument
advanced by learned Standing Counsel
were to be accepted to any extent, it may
have no impact as in face of other
undisputed evidence in the shape of
certification
letters
issued
by
the
Department of Agriculture, Uttar Pradesh,
Sulphur is present in Single Super
Phosphate
(SSP)
only
as
Calcium
Sulphate i.e. Gypsum (CaSO4.2H2O) and
not as Sulphur in its elementary form.
Though no percentage of the Phosphatic
component in Single Super Phosphate
(SSP) had been identified yet, it was
made plain that other than Phosphatic
component,
Single
Super
Phosphate
(SSP) contained Gypsum. Undisputedly,
Gypsum (CaSO4.2H2O) by itself was
made exempt by the State legislature
under a separate notification No. 784
dated 31.3.1995. Gypsum having been
identified as an item by the taxing statute,
reading the exemption notification no.
440 dated 12.2.2001 strictly, it is the
taxability or otherwise of Gypsum that
was required to be examined and not the
ingredient
thereof.
To
allow
the
department to do so would be to allow it
to ignore the taxing/exemption entry that
the goods clearly satisfy in favour of what
lies within it. That rule if applied would
lead to alarming if not plainly disastrous
results. In any case in absence of any
specific/special
taxing
entry
to
tax
Sulphur
contents
in
Gypsum
(CaSO4.2H2O), it is not possible to allow
the revenue to ignore the specific
exemption notification No. 784 dated
31.3.1995 to tax Sulphur allegedly
present in Gypsum (CaSO4.2H2O).

34. Thus, to the Department of
Agriculture, Uttar Pradesh, the Single
Super Phosphate (SSP) is a compound
comprised of two parts, the first being the
Phosphatic component i.e. Mono Calcium
Phosphate [CaH4(PO4)2] and the other is
Gypsum (CaSO4.2H2O). With respect to
the
Mono
Calcium
Phosphate
[CaH4(PO4)2], there is no dispute between
the parties that the same was wholly
exempt under notification No. 440 dated
12.2.2001.

35. Then, in the context of tax
sought to be imposed on Sulphur, it is
818 INDIAN LAW REPORTS ALLAHABAD SERIES
seen that Sulphur is present in Single
Super Phosphate (SSP) as Calcium
Phosphate in Gypsum (CaSO4.2H2O).
The
state
legislature
had
already
identified Gypsum (CaSO4.2H2O) for
agriculture use as a commodity exempt
from tax under notification No. 784 dated
31.3.1995.

36. Insofar as the commodity Single
Super Phosphate (SSP) has no use other
than the agricultural use as a fertilizer,
reading exemption notification No. 440
dated 12.2.2001 and the exemption
notification No. 784 dated 31.3.1995
together, it is clear that they were issued
to grant exemption to various fertilizers
used in agriculture. Thus, all contents of
Single Super Phosphate (SSP) i.e. Mono
Calcium Phosphate [CaH4(PO4)2] and
Gypsum
(CaSO4.2H2O),
remained
generally exempt.

37.

Also,
inasmuch
as
the
exemption notification nos. 784 dated
31.3.1995 does not restrict the exemption
on Gypsum (CaSO4.2H2O) to its content
excluding Sulphur, it is not possible to
allow the revenue authorities to ignore the
composite identity of compound Single
Super Phosphate (SSP) or to allow them
to ignore the identity of Gypsum
(CaSO4.2H2O) as a constituent of that
compound for the purpose of bringing to
tax the value of Sulphur in Gypsum
(CaSO4.2H2O).

38. The clear legal position that
emerges is, de hors notification No. 784
dated 31.3.1995, it may have been
permissible to the revenue authorities to
tax the value of Gypsum (CaSO4.2H2O)
[as
Gypsum
is
a
non-Phosphatic
component of Single Super Phosphate
(SSP)] if such guidelines had been found
existing. However, in absence of such
exclusionary clause in that notification, it
is not permissible for the revenue
authorities to break the identity of
Gypsum
(CaSO4.2H2O)
so
as
to
determine
the
percentage
value
of
Sulphur in Gypsum (CaSO4.2H2O) only
with the object of imposing tax on the
value of Sulphur.

33. In view and in terms of the
above, the questions of law (as framed
above), are answered in the negative i.e.
in favour of the applicant-assessee and
against the revenue, in Sales/Trade Tax
Revision Nos. 178 of 2010, 179 of 2010,
180 of 2010, 188 of 2010, 189 of 2010,
190 of 2010, 191 of 2010, 192 of 2010,
242 of 2010, 243 of 2010, 244 of 2010 &
245 of 2010. Those revisions are
accordingly allowed. The other revisions
being Sales/Trade Tax Revision Nos.
1051 of 2008, 1052 of 2008, 1067 of
2008, 1064 of 2008, 1059 of 2008, 1070
of 2008, 1056 of 2008, 1069 of 2008,
1066 of 2008, 1060 of 2008, 1057 of
2008, 1062 of 2008, 1068 of 2008, 1065
of 2008, 1058 of 2008, 1071 of 2008,
1061 of 2008 & 1063 of 2008 stand
disposed of accordingly.
----------

(2019)11ILR A818

ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 15.10.2019

BEFORE
THE HON'BLE RAM KRISHNA GAUTAM, J.

Crl. Misc. Transfer Application No. 81 of 2019

Rakesh Kumar Mishra @ Laddu Baba
 ...Applicant (In Jail)
Versus
State of U.P. & Anr. ...Opposite Parties