Wipro Enterprises Pvt. Ltd. v. The State of Karnataka

What happened

The petitioner manufactures and trades hydraulic cylinders. In the relevant assessment years it procured hydraulic oil (HLP type) from suppliers outside the State and brought it into the local area for use in the cylinders it makes. Proceedings under the KTEG Act, 1979 alleged that entry tax had not been paid, and the assessing authority levied tax and penalty. The first appellate authority dismissed the appeals, and the Karnataka Appellate Tribunal's common orders of 30 March 2023 (STA Nos. 955/2016, 741/2016 and 334/2016) and 11 April 2023 (STA Nos. 948, 950, 951 and 949 of 2016) held that hydraulic oil is a petroleum product within Entry 67 of the First Schedule and Sl. No. 1(viii)(e) of the Notification dated 30 March 2002 and liable to entry tax. The questions admitted included whether hydraulic oil can be treated as a scheduled commodity, whether the requirement of section 6(1) was met, whether it is a consumable, and whether 'and others' in Entry 67 covers it. The petitioner argued that hydraulic oil is distinct from lubricating oil, is used to transmit hydraulic power, and is not specifically listed, relying on Carl Bechem Lubricants, Kluber Lubrication, Merlyn Hydrocarbons, Hyva India and Indian Aluminium Co. v. Assistant Commissioner of Commercial Taxes, AIR 2001 SC 795. The State relied on Hyva India (P) Ltd.

Questions before the court

• Is hydraulic oil liable to entry tax under Entry 67 of the First Schedule to the KTEG Act?

Why the court ruled this way

Section 6(1) permits reassessment of escaped or under-assessed turnover, the Tribunal found its conditions satisfied, and no jurisdictional infirmity was shown (paragraph 12). Entry 67 covers petroleum products and includes lubricating oil, transformer oil, brake and clutch fluid, bitumen, tar and others, excluding some specified items, and in Indian Aluminium Co. the Supreme Court held that the words 'and others' take in petroleum products other than those enumerated, the exclusion clause showing an intent to include all others (paragraphs 13 and 14). A Division Bench of this Court in Hyva India (P) Ltd. followed that and held that 'tar and others' is wide enough to include hydraulic oil, which is a consumable used in hydraulic systems and not a raw material, so entry tax is leviable (paragraphs 15 and 16). That decision directly governed the issue and bound the Court (paragraph 17). Carl Bechem Lubricants did not help, since the commodity there was base oil used as raw material in making grease, found on test certificates and manufacturing process (paragraph 18). The Tribunal had rightly held that hydraulic oil is a petroleum product within Entry 67 and Sl. No. 1(viii)(e) of the Notification, a consumable and not a raw material, so entry tax is leviable on it when brought into the local area for use (paragraph 23).

Controlling point

The questions on classification, 'and others', consumable status and the levy were answered against the petitioner, and the finding on section 6(1) was not disturbed.

Order and next steps

The revision petitions were dismissed, the Tribunal's orders of 30 March 2023 and 11 April 2023 were confirmed, and pending interlocutory applications were disposed of with no order as to costs.

Practical implications

A manufacturer bringing oils or similar petroleum-based consumables into the State should check whether they fall within Entry 67 and the notification before claiming exclusion, given that 'and others' is read widely.

Limits of this ruling

• The ruling treats hydraulic oil as a consumable under the Act and the schedule as it stood; it distinguishes commodities that are raw material or not petroleum products.