# M/S. TUNGABHADRA INDUSTRIES LTD v. THE COMMERCIAL TAX OFI<'ICER, KURNOOL

- **Citation:** [1961] 2 S.C.R. 14
- **Court:** Supreme Court of India
- **Decided:** 1961
- **Case number:** CIVIL APPELLATE JUBISDIOTION: Civil Appeal No. 498 of 1958
- **Bench:** S. K. DAs, M. Hidayatullah, K. C. DAs Gul'TA, J.C. Shah, N. Rajagopala Ayyangab
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-tungabhadra-industries-ltd-v-the-commercial-tax-ofi-icer-kurnool-2206
- **Pages:** 13

## Headnote

Sales
Tax__;.Hydrogenated
groundnut oil (Vanasf>ati), if
groundnut oil-Madras General Sales Tax (Turnover and Assessment) Rules, Ig39, rr. 4, 5 and I8.
The appellant purchased groundnuts out of which it manufactured gro1mdnut oil ; it also refined the oil and hydrogenated
it converting it into Vanaspati. It sold the oil in all the three
states. Under the Madras General Sales Tax Act, 1939, and the
Turnover and Assessment Rules, for determining the taxable
turnover the appellant was entitled to deduct the purchase price
of the groundnuts from the proceeds of the sale of all groundnut
oil. The High Court held that the appellant was entitled to the
deduction in respect of the sales of unrefined and refined groundnut oil but not in respect of the sales of hydrogenated oil on
the ground that Vanaspatt was not "groundnut oil " but a
product of groundnut oil.
Held, .that the appellant was entitled to the deduction in
respect of the sales of hydrogenated groundnut oil also.
The
hydrogenated groundnut oil continued to be "groundnut oil" notwithstanding the processing which was merely for the purpose
of rendering the oil more stable. To be groundnut oil two conditions had to be satisfied-it must be from groundnut and it
must be "oil ". The hydrogenated oil was from groundnut
and in its essential nature it remained an oil. It continued to
be used for the same purposes as groundnut oil which had not
undergone the process.
A liquid state was not an essential
characteristic of a vegetable oil ; the mere fact that hydrogenation made it semisolid did not alter its character as an oil.
CIVIL APPELLATE JUBISDIOTION:
Civil Appeal
No. 498 of 1958.
Appeal from the judgment and order dated February 11, 1955, of the Andhra. Pradesh High Court in
T. R. C. No. 120 of 1953 a.rising out of the judgment
and order dated December 29, 1952, of the Sa.Jes Tax
Tribunal, Madras, in Tribunal A ppea.l No. 857 of 1951.
A. V. Viswanatha Sastri, M. Ranganatha Sastri and
M. S. K. Sastri, for the appellants.
D. Narasaraju, Advocate-General for the State of
,
•
2 S.C.R. SUPREME COURT REPORTS
15
Andhra Pradesh, T. V. R. Tatachari, D. Venkatappayya
I960
Sastri and T. M. Sen, for the respondent. .
M/s. Tungabhadra
1960. October 18. The Judgment of the Court Iudustries Ltd.
was delivered by
v.
The Commercial
AYYANGAR J.-This appeal on a certificate under
Ta" Officer,
Art. 133 of the Constitution granted by the High
K"rnool
Court of Andhr& Pradesh · raises for consideration
principally the question whether hardened or hydroA.yyanga• J.
gena.ted groundnut oil (commonly called Vanaspati) is
" groundnut oil " within the meaning of Rule 18(2) of
the Madras Genera.I Sales-Tax (Turnover and Assessment) Rules, 1939.
Tunga.bha.dra Industries Ltd.-the appellant in this
appeal-has a. factory of considerable size at Kurnool
in the State of Andhra. Pradesh. The company purchases groundnuts and groundnut kernels within the
State and manufactures groundnut oil and also refined
oil as well a.s hydrogenated oil all of which it sells.
The appeal is concerned with the assessment to sales.
tax of this company for the year 1949-50.
Section 3 of the Madras General Sales-Tax Act, 1939,
enacts:
"3. (1) Subject to the provisions of this Act,-
(a.) every dealer shall pay for ea.ch year a tax on
his total turnover for such year ; and
(b) the tax shall be calculated at the rate of three
pies for every rupee in such turnover.
(2) ................................................................ .
(3) ••..•..•...•...•..•.•••••..•••....•••••...•..•...••...•.••..••.
(4) For the purposes of this section and the other
provisions of this Act, turnover shall be determined
in accordance with such rules as may be prescribed :
Provided that no such rules shall come into force
unless they are approved by a resolution of the Legislative Assembly.
(5) The taxes under sub-sections (1) and (2) shall
be assessed, levied and collected in such manner and
in such instalments, if any, as may be prescribed:
Provided that

## Text

I,
I
I .
I
October 18.
14
SUPREME COURT REPORTS
(1961)
M/S. TUNGABHADRA INDUSTRIES LTD.
v.
THE COMMERCIAL TAX OFI<'ICER, KURNOOL.
(S. K. DAs, M. HIDAYATULLAH, K. C. DAs Gul'TA,
J.C. SHAH and N. RAJAGOPALA AYYANGAB, JJ.)
Sales
Tax__;.Hydrogenated
groundnut oil (Vanasf>ati), if
groundnut oil-Madras General Sales Tax (Turnover and Assessment) Rules, Ig39, rr. 4, 5 and I8.
The appellant purchased groundnuts out of which it manufactured gro1mdnut oil ; it also refined the oil and hydrogenated
it converting it into Vanaspati. It sold the oil in all the three
states. Under the Madras General Sales Tax Act, 1939, and the
Turnover and Assessment Rules, for determining the taxable
turnover the appellant was entitled to deduct the purchase price
of the groundnuts from the proceeds of the sale of all groundnut
oil. The High Court held that the appellant was entitled to the
deduction in respect of the sales of unrefined and refined groundnut oil but not in respect of the sales of hydrogenated oil on
the ground that Vanaspatt was not "groundnut oil " but a
product of groundnut oil.
Held, .that the appellant was entitled to the deduction in
respect of the sales of hydrogenated groundnut oil also.
The
hydrogenated groundnut oil continued to be "groundnut oil" notwithstanding the processing which was merely for the purpose
of rendering the oil more stable. To be groundnut oil two conditions had to be satisfied-it must be from groundnut and it
must be "oil ". The hydrogenated oil was from groundnut
and in its essential nature it remained an oil. It continued to
be used for the same purposes as groundnut oil which had not
undergone the process.
A liquid state was not an essential
characteristic of a vegetable oil ; the mere fact that hydrogenation made it semisolid did not alter its character as an oil.
CIVIL APPELLATE JUBISDIOTION:
Civil Appeal
No. 498 of 1958.
Appeal from the judgment and order dated February 11, 1955, of the Andhra. Pradesh High Court in
T. R. C. No. 120 of 1953 a.rising out of the judgment
and order dated December 29, 1952, of the Sa.Jes Tax
Tribunal, Madras, in Tribunal A ppea.l No. 857 of 1951.
A. V. Viswanatha Sastri, M. Ranganatha Sastri and
M. S. K. Sastri, for the appellants.
D. Narasaraju, Advocate-General for the State of
,
•
2 S.C.R. SUPREME COURT REPORTS
15
Andhra Pradesh, T. V. R. Tatachari, D. Venkatappayya
I960
Sastri and T. M. Sen, for the respondent. .
M/s. Tungabhadra
1960. October 18. The Judgment of the Court Iudustries Ltd.
was delivered by
v.
The Commercial
AYYANGAR J.-This appeal on a certificate under
Ta" Officer,
Art. 133 of the Constitution granted by the High
K"rnool
Court of Andhr& Pradesh · raises for consideration
principally the question whether hardened or hydroA.yyanga• J.
gena.ted groundnut oil (commonly called Vanaspati) is
" groundnut oil " within the meaning of Rule 18(2) of
the Madras Genera.I Sales-Tax (Turnover and Assessment) Rules, 1939.
Tunga.bha.dra Industries Ltd.-the appellant in this
appeal-has a. factory of considerable size at Kurnool
in the State of Andhra. Pradesh. The company purchases groundnuts and groundnut kernels within the
State and manufactures groundnut oil and also refined
oil as well a.s hydrogenated oil all of which it sells.
The appeal is concerned with the assessment to sales.
tax of this company for the year 1949-50.
Section 3 of the Madras General Sales-Tax Act, 1939,
enacts:
"3. (1) Subject to the provisions of this Act,-
(a.) every dealer shall pay for ea.ch year a tax on
his total turnover for such year ; and
(b) the tax shall be calculated at the rate of three
pies for every rupee in such turnover.
(2) ................................................................ .
(3) ••..•..•...•...•..•.•••••..•••....•••••...•..•...••...•.••..••.
(4) For the purposes of this section and the other
provisions of this Act, turnover shall be determined
in accordance with such rules as may be prescribed :
Provided that no such rules shall come into force
unless they are approved by a resolution of the Legislative Assembly.
(5) The taxes under sub-sections (1) and (2) shall
be assessed, levied and collected in such manner and
in such instalments, if any, as may be prescribed:
Provided that-
(i) in respect of the same transaction of sale, the
buyer or the seller, but not both, as determined by
such rules as may be prescribed, shall be taxed ;
16
SUPREME COURT REPORTS
[1961)
z96o
(ii) where a dealer has been taxed in respect of
M
T- bh d the purchase of any goods in accorda.nce with the
j~dus::t~= L;/" rules referred to in clause (i) of this proviso, he shall
v.
· not be taxed again in respect of any sale of such goods
The Commmial effected by him."
Tax Offi"'·
Rules were made by virtue inter alia of these proviKurnool
sions entitled " The Madras General Sales-Tax
Ayyangar 1 .
Turnover and Assessment Rules, 1939 ". Of these,
those relevant to the present context are Rules 4 & 5.
Rule 4 reads :
"4. (l) Save as provided in sub-rule (2) the gross
turnover of a dealer for the purposes of these rules
shall be the amount for which goods are sold by the
dealer.
(2) In the case of the undermentioned goods the
gross turnover of a dealer for the purposes of these
rules shall be the amount for which the goods are
bought by the dealer-
(a) groundnut-".
The result of the combined operation of s. 4(1)&(2)
in the case of those who purchased groundnut and
having crushed them sold the oil obtained was, that
they had to pay tax on both their purchases of groundnut and their sales of oil produced therefrom. This
was considered by the rule making authority to be an
unfair burden and relief was accordingly provided by
Rules 5 and 18 of the same rules, the material portions
of which ran :
"5. (1) The tax or taxes under section 3 ...... shall
be levied on the net turnover of a dealer. In determining the net turnover the amounts specified in
clauses (a) to (I) shall, subject to the conditions specified therein, be deducted from the gross turnover of a
dealer.
Clause (k) of this rule reads :
(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 that rule."
(This rule was amended by a notification dated
November 9, 1951, by the addition of the ·words
"(other than refined groundnut oil)" after the word
2 S.C.R. SUPREME COURT REPORTS
17
~ "groundnut oil", but this modification of the rule is
I960
not relevant to the present case which is concerned Mi T-bh d
with the assessment of a period anterior to the modifiI~dus:;.!: L~d.ra
cation).
v.
l
l
h
The Commercial
· Ru e 18 r.eferred to here reads, to quote on y t e
Ta:r Officer,
material words:
Kurnool
" 18. (1) Any dealer who manufactures groundnut
oil and cake from groundnut and/or kernel purchased
Ayyangar J.
by him may, on application to the assessing authol'tty
havingjurisdiotion 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 net turnover.
Explana.tion.-For the purpose .of this sub-rule--
(a.) 143 lb. of groundnut shall be taken to be
equivalent to 100 lb. of kernel;
(b) 143 lb. of groundnut or 100 lb. of kernel when
converted into oil will normally be taken to yield 40
lb. of oil; and
(c) one candy of oil shall be ta.ken to be equivalent to 500 lb. of oil."
Then follow other provisions not relevant for the
purposes of the present appeal.
The appellant was registered as a me.nufa.oturer of
groundnut oil under r. 18(1). That the appellant purchased the groundnuts, the value of which was claimed as a deduction in the turnover withi1;1 the State and
. pa.id tax on such purchase to the State wa.s not in
f dispute. Nor was there any controversy that the sale.
3
18
SUPREME COURT REPORTS
[1961]
I960
price of the oil expressed out of and sold either as raw ,.
-
groundnut oil, refined oil or hydrogenated oil was
.l~l/s. TttnJ;abhadra.
l d
.
h
f
Iudustdei Ltd. me u ed m t e turnover. o the appellant.
v.
The Deputy Commercial Tax Officer, Kurnool, who
Thi Commmial completed the assessment of the appellant accepted
Ta.v Officer.
the figures of purchases and sales submitted by it, and
Kimioel
dealing with the claim for the deduction of the purAyyaugwr J.
chase price of the groundnuts from the proceeds of
th• sale of .. n oil by the company-raw, refined and
hydrogenated-granted a deduction in respect of the
purchase price of the groundnuts attributable to the
11nrefi11ed oil sold by the appellant, but held that t,he
appellant was not entitled to the deduction claimed in ,
respect of the refined and hydrogenated oil for the
reason that it was only unrefined or unprocessed
groundnut oil that w~ connoted by the expression
'groundnut oil' in rule 5(l)(k) read with rule 18(1)
and (2) of the Turnover and Assessment Rules. This
order of the Deputy Commercial Tax Officer was
affirmed by the Commercial Tax Officer on appeal and
the appellant filed a further appeal to ~he Sales-Tax
Appellate Tribunal. The second appellate authority
upheld the contention of the appellant in regard to
~
the sale of refined oil but rejected it in so far as it
related to the sales of hydrogenated oil.
The matter
was thereafter brought up before the High Court of
Andhra P1·adesh by a Tax Revision Case filed under
s. 13(b)(l) of the Act and the learned Judges upheld
the view of the Tribunal and disallowed the claim of
the appellant to the deduction claimed in regard to
the sales turnover of hydrogenated oil. They granted the certificate under Art. 133 which has enabled ,
the appellant to file a.n appeal to this Court.
'
The claim of the appellant to the deduction under
r. 18(2) on the so.Jes of refined groundnut oil is no
longer in dispute. The ground upon which both the
Tribunal as well as the High Court decided against
the allowance of the deduction in respect of the sales
of hydrogena.ted oil, while upholding the appellants'
case as regards refined oil ma.y be briefly stated thus :
The exemption or deduction from the sale-turnover •
' under r. 18(2), is on its terms applicable only to the
sale of the oil in the form in which it is when extracted
.
/
2 S.C.R. SUPREME COURT REPORTS
19
> out of. the kernel. . When r~w groundnut oil is ~on.
r96o
verted mto refined 011, there 1s no doubt processing,
--
b t th.
.
l .
.
f
d M,'s. Tung<1bhaba
u
is consists mere y in removing rom raw groun ·
Industries Ltd.
nut oil that constituent part of the raw oil which is
· v.
not really oil. The elements removed in the refining The Commercial
process consist of free fatty acidfl, phosphotides and
Ta1r Officer,
unsitponifiable matter. After the removal of this nonK 14rnool
oleic matter therefore, the oil Continues to be ground.
Ayyangar ].
nut oil and nothing more. The matter removed from
the raw groundnut oil not being oil cannot be used,
after separation, as oil or for any purpose for which
oil could be used.
In othe.r words, the processing
1' consists in the non.oily content of the raw oil being
separated and removed, rendering the oily content of
the oil 100 per cent.
For this reason refined oil
continues to be groundnut oil within the meaning of
rules 5(l)(k) and 18(2) notwithstanding that such oil
does not possess the characteristic colour, or taste,
odour, etc. of the raw groundnut oil.
But in the case of hydrogenated oil which is prepared from refined oil by the process of passing
hydrogen into heated oil in the presence of a catalyst
.., (usually finely powdered nickel), two a.toms of hydro·
gen are absorbed.
A portion of the oleio acid which
formed a good part of the content of the groundnut
oil in its raw state is converted, by the a.bsorptioll of
the hydrogen ·atoms, into stearic acid and it is this
which gives the characteristic appearance as well as the
semi-solid condition which it attains. In the language
of the Chemist, an inter-molecular or configurational
chemical change takes place which results in the
hardening of the oil. Though it continues to be the
~ same edible fat that it was before the hardening, and
its nutritional properties continue to be the same, it
has acquired new properties in that the tendency to
rancidity is greatly removed, is easier to keep and to
transport. Both the Tribunal as well as the learned
Judges of the High Court held that the hydrogenated
oil (or Vanaspati) ceased to be groundnut oil by
reason of. the chemical changes which took place
r which resulted in the acquisition of new properties
including the loss of its fluidity. In other words,
20
SUPREME COURT REPORTS
[1961)
r96o
they held that Vanaspati or hydrogenated oil was not ,.
-
" groundnut oil " but a product of groundnut oil,
M}"d T~ngab1~:ra manufactured out of groundnut oil and therefore not
• us ~-"
· entitled to the benefit of the deduction under r. 18(2).
The Commercial
The arguments of Mr. Visvanatha Sa,stri for the
Tax Officer,
appellants were briefly two: (1) The reasons behind
Kurnool
the rules 5(k) & 18(2) which were designed to afford
relief against what would amount practically to
Ayyangar f.
double taxation of the same assessee both when he
purchased and when he sold the goods, required that
the appellants' claim should be allowed. (2) Hydrogenated groundnut oil was no less groundnut oil than
either refined or even unrefined oil. The fact that
the quality of the oil had been improved does not
negative its continuing to be oil and the materials
before the departmental authorities and the Court
established that it continued to be oil and was nothing more ..
The argument based on the reason of the rule cannot carry the appellant far, since in the present case
it is a.n exemption from tax which he invokes and of
which he seeks the benefit. If the words of the rule
a.re insufficient to cover the case, the reason behind
•
the rule cannot be availed of to obtain the relief. Nor
could it be said to be a case of double taxation of the
same goods at the purchase and sale points which is
forbidden by s. 3(5) of the Act. If the view adopted
by the learned Judges of the High Court that hydrogenated groundnut oil is not "groundnut oil " but a
product of groundnut oil were correct, learned Counsel cannot urge that he would still be entitled to the
deduction for which provision is made in r. 18(2).
Consequently it is the second of the submissions '
alone which really requires to be examined. In doing
so it would be convenient to consider the reasoning
on the basis of w hioh the view that hydrogenated oil
was not" groundnut oil " was sought to be sustained
before us.
The learned Advocate-Genera.I of Andhra Pradesh
who appeared for the respondent-Commercial Tax
Officer sought to support the decision of the High ,
Court by two lines of reasoning. The first was that
•
2 S.C.R. SUPREME COURT REPORTS
21
the exemption applied only to the sale of the oil as it
r960
)
emerged from the presser and that any processing of
-
·
th
'l ' l d'
fi •
·
d
·
Mfs. TungabhadrlJ
e .01 m? .u mg re ning, m o~ er to remove even Ind1<stries Ltd.
the impurities and free fatty amds, took it out of the
v.
category of "groundnut oil " as used in the r,ule.
In Ths Commercial
support of this submission he referred us to the Table
Tax Officer,
of Conversion of groundnuts and kernel into oil set
I<urnool
out in the Explanation to r. 18(2), extracted earlier,
and submitted that the 40 lb. of oil for every 100 lb.
Ayyangar J.
of kernel was based on the yield of raw groundnut oil
and that this was an indication that nothing other
than raw groundnut oil was intended to be covered
by the expression "groundnut oil " in the rule .
.,.
We must however point out that this last submission has no factual basis to support it; It is not
known whether the proportion of 40 lb. of oil for
every 100 lb. of kernel represents the average weight
of oil extractable from different varieties of groundnut
kernels or is the average of the different types of oils
which may be produced out of different varieties of
kernels. In the absence of any definite data in this
regard it is impossible to accept the argument that
the Table of Conversion justifies any particular con-
·--!
struction of what was meant by "groundnut oil" in
the ma.in pa.rt.of the rule.
Nor is the learned Ad vocate-Genera.l well•founded
in his submission that the processing of the oil in
order to render it more acceptable to the customer by
improving its quality would render the oil a. commodity other than " groundnut oil " within the meaning
of the rule. For instance, if the oil as extracted were
kept still in a vessel for a. period of time, the sediment
_.,,
normally present in the oil would settle at the bottom
leaving a clear liquid to be drawn out. Th.e learned
Advocate-Genera.I cannot go so far a.s to say, that if
this physical process was gone through, the oil that
was decanted from the sediment which it contained
when it issues out of the expresser, ceased to be
" groundnut oil" for the purposes of the rule. If the
removal of impurities by a process of sedimentation
does not render groundnut oil a.ny the less so, it
! follows that even the process of refining, by the
22
SUPREME COURT REPORTS
[1961]
196o
application of chemical methods for removing impuri-
--
ties in the oil, would not detract from the resulting
Mj;;a,1:.:;:;~;b~;:.'• oil being "grouo.dnut oil " for the purpose of the rule.
v.
It may be ment10ned that processes have been dis.
The Commercial covered by which even on extraction from the oil
Ta• Offim,
mill, the oil issues without any trace of free fatty
K"rnnol
acids. It could hardly be contended that if such processes were adopted what comes out of the expresser is
Ayyatigar ].
not groundnut oil. The submission of the learned
Advocate-General based on a contention that the
Tribunal and the learned Judges of the High Court
erred in holding that even refined groundnut oil was
"groundnut oil" for the purpose of the rule, must be
rejected.
The next question is whether if beyond the process
of refinement of the oil, the oil is hardened, again by
the use of chemical processes it is rendered any the
less groundnut oil". In regard to this, the learned
Advocate-General first laid stress on the fact that
while normally oil was a viscous liquid, the hydrogenated oil was semi-solid and that this change in its
physical state was itself indicative of a substantial
modification of the identity of the substance. We are
unable to accept this argument. No doubt, several
oils are normally viscous fluids, but they do harden
and assume semi-solid condition on the lowering of
the temperature. Though groundnut oil is, at normal
temperature, a viscous liquid, it assumes a semi-solid
condition if kept for a long enough time in a refrigerator. It is therefore not correct to say that a liquid
state is an essential characteristic of a vegetable oil
and that if the oil is not liquid, it ceases to be oil.
Mowrah oil and Dhup oil are instances where vegetable oils assume a semi-solid state even at normal
temperatures. Neither these, nor cocoanut oil which
hardens naturally on even a slight fall in temperature,
could be denied the name of oils because of their not
being liquid. Other fats like ghee are instances
where the physical state does not determine the identity of the commodity.
The next submission of the learned Advocate-General was that in the course of hydrogenation the oil
' -
;
-4
•
' '
~
2 S.C.R. SUPREME COURT REPORTS
· 23
absorbed two atoms of hydrogen and that there was
r96o
an inter-molecular change in the content of the sub- JI
T- bl d
stance. This however i~ not decisive of t~e matter.
1
}~au:i:i:: {~d:a
The question that has li't1ll to be answered 1s whether
v.
hydrogenated oil continues even after the change to The Commercial
be" groundnut oil". If it is, it would be entitled to
Tax Officer,
the benefit of the deduction from the turnover, or to
Kurnool
Put it slightly differently, the benefit of the deduction
from the turnover cannot be denied, unless the hydrogenated groundnut oil has ceased to be " groundnut
oil". To be groundnut oil, two conditions have to be
satisfied. The oil in question must be from groundnut and secondly the commodity must be "oil".
That the hydrogenated oil sold by the appellants was
out of groundnut not bei"ng in dispute, the only point
is whether it continues to be oil even after hydrogenation. Oil is a chemical compound of glycerine with
fa.tty acids or rather a glyceride of a mixture of fatty
acids-principally oleic, linoleic, stearic and palmitic,
the proportion of the particular fat varying in the
case of the oil from different oil-seeds and it remains
a glyceride of fatty acids even after the hardening
process, though the relative proportion of the different
types of fatty acids undergoes a slight change. In its
essential nature therefore no change has occurred and
it remains an oil-a glyceride of fatty acids-that it
was when it issued out of the press.
In our opinion, the learned Judges of the High
Court laid an undue emphasis on the addition by way
of the absorption of the hydrogen atoms in the process of hardt:ning and on the consequent inter-molecular changes in the oil. The addition of the hydrogen atoms was effected in order to saturate a portion
of the oleig and linoleic constituents of the oil and
render the oil more stable thus improving its quality
and utility. But neither mere absorption of other
matter, nor inter-molecular changes necessarily affect
the identity of a substance as ordinarily understood.
Thus for instance there are absorptions of matter and
inter-molecular changes which deteriorate the quality
or utility of the oil and it might be interesting to see
if such additions and alterations could be taken to
Ayyangar ].
24
SUPREME COURT REPORTS
[1961)
i96o
render it any the less" oil". Groundnut oil when it
Ml, T- bh 4 issues out of the expresser normally contains a large
'· unga a ra
t"
f
t
d "
"d
1 ·
d l"
1,;4ustries Lid. propor ion o unsa urate is.tty a.01 s-o e10 a.n
mov.
leic-wh,ich with other fa.tty acids which a.re sa.tura.tTh• Commeroiol ed are in combination with glycerine to form the glyT•" Officer;
ceride which is oil. The unsaturated fa.tty acids are
Kurnool
unstable, i. e., they are subject to oxidative changes.
Ayyang!'• J.
When raw oil is exposed to a.ir pa.rtfoularly if humid
and wa.rm, i.e., in a climate such a.s obtains in Madras,
oxygen from the atmosphere is gradually absorbed
by the unsaturated acid to form an unstable peroxide
(in other words the change involves the addition of
two atoms of oxygen) which in its turn decomposes
breaking up into aldehydes.
It is this oxida.tive
change a.nd pa.rticula.rly the conversion into aldehydes
that is believed to be responsible for the sharp unpleasant odour, and the characteristic taste of rancid
oil. If nothing were done to retard the process the
rancidity p:ia.y increase to such e:xtent as to render it
unfit for human consumption. The change here is
both additive and inter-molecular, but yet it could
hardly be said that rancid groundnut oil is not
groundnut oil. It would undoubtedly be very bad
groundnut,oil but stiUit would be groundnut oil and
if so it does not seem to accord with logic tha.t when
the quality of the oil is improved in that its resistance
to the na.tura.l processes of deterioration' through
oxidation is increased, it should be held not to be oil.
Both the Tribunal a.swell as the High Court ha.ve
pointed out that except for its keeping quality without rancidity and ease of pa.eking a.nd transport
without lea.ka.ge, hydrogenated oil serves the sa.me
purpose a.s a. cooking medium a.nd has identical food
value as refined groundnut oil. There is no use to
which the groundnut oil ca.n be put for which the
hydrogenated oil could not be used, nor is there a.ny
use to which the hydrogenated oil could be put for
which the raw oil could not be used. Similarly we
consider that hydrogenated oil still continues to be
" groundnut oil " notwithstanding the processing
which is merely for the purpose of rendering the oil
more stable thus improving its keeping qualities for
'
•
•
•
··' '
. .;
2 S.C.R. SUPREME COURT REPORTS
25
those who desire to consume groundnut oil. In our
r960
opinion, the assessee-compa.ny was entitled to the
1111
--
b
fi
f h d d
.
f h
h
.
f h
s. Tungabhadra
ene t o t e e uct1on o t e pure ase pnce o t e 1,,dustries Ltd
kernel-or groundnut, under r. 18(2), which went into
v.
·
the manufacture of the hydrogenated groundnut oil The Commercial
from the sale turnover of such oil.
Tax Officer,
One other point which is involved in the appeal
Kurnool
relates to the claim of the appellant to a deduction ia
Ayyangar J. ·
respect of the freight-charges included in the price of
the commodity. Under r. 5(l)(g) of the Turnover and
Assessment Rules, in determining the net turnover of
a dealer he is entitled to have deducted from bis gross
turnover " all amounts falling under the following
two heads, when specified and charged for by the dealer
separately, without including them in the price of the
goods sold:
(i) freight;
(")
"
11 .................. .
The. appellant claimed exemption on a sum of
Rs. 3,88,377 -13-3 on the ground that it represented
the freight in respect of the goods sold by the appel.
lant asserting that they had been charged for separately. The assessing-officer rejected the claim and
this rejection was upheld by th!;l departmental authorities and by the High Court in Revision. It would
be seen that in order to claim the benefit of this
exemption the freight should (1) have been specified
and charged for by the dealer separately, and-fii) the
same should not have been included 'in the price of
the goods sold. The learned Judges of the High Court
held that neither of these conditions was satisfied by
the bills produced by the appellant. We consid·er,
the decision of the High Court on this point was
correct. In the specimen bill which the learned
Counsel for the appellants has placed before us, after
setting out the quantity sold by weight (23,760 lb.)
the price is specified as 15 annas 9 pies per lb. and
the total amount of the price is determined at
Rs. 23,388-12-0. From this the railway freight of
Rs. 1,439-12-0 is deducted and the balance is shown
a.s the sum on which sales-tax has been computed.
4
26
SUPREME COURT REPORTS
[1961]
r960
From the contents of this invoice it would be seen
-
that the appellant has charged a price inclusive of
M1/.'-dT•,•gabLh•,dd'.a the railway freight and would therefore be outside the
""'"".
f
(1)()
h'h
.
h.
d
v.
terms o r. 5
g w 1c
reqmres t at m or er to
The Commercial enaple a dealer to claim the deduction it should be
r. .. Officer,
charged for separately and not included in the price
Kurnool
of goods sold. The conditions of the rule not having
been complied with, the appe. Hant was not entitled to
·Ayyangar ].
the deductio.n in respect of freight.
1960
October :i8.
,
The result therefore is that the appeal is allowed in
part and 'the order of the High Court in so far as it
denied to the appellant the benefit of the deduction in
the turnpver provided by r. 18(2) of the Turnover and
Assessment Rules is set aside.
In view of the appellant having succeeded only in
part, there will be no order as to costs in this appeal.
Appeal allowed in part.
THE STATE OF MAHARASHTRA
v.
VISHNU RAMCHANDRA
(M. HIDAYATULLAH and J. c. SHAH, JJ.)
Externment-Order, if can relate to antecedents of convicted
offenders-Statute, if prospective or retrospective-Bombay Police
Act, r95r (n of r95r), ss. SJ(I), r4z-Indian Penal Code, ss. II4,
380, 4rr.
· On November 16, 1949, the respondent was convicted under
ss. 380 and II4 of the Indian Penal Code. On October 15, 1957•
the Deputy Commissioner of Police, Bombay, acting under s. 57(1)
of -the Bombay Police Act passed an order externing him. from
the limits of Greater Bombay. Later he was prosecuted and
convicted under . s. 142 of the Bombay Police Act by the
Presidency Magistrate for returning to the area from which he
was externed. On an application for revision the High Court
acquitted the respondent upholding his contention that s. 57 of the
Bombay Police Act was not retrospective and was not applicable
unless the conyiction on which the externment was based took
place after the Act came into force. On appeal by the appellant
with the special leave of this Court it was
·