Madhya Pradesh High Court
M/S. Tirupati Starch And Chemicals Ltd. ... vs Commercial Taxes Department on 28 August, 2025
Author: Vivek Rusia
Bench: Vivek Rusia
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TR No.2/2015
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI
ON THE 28th OF AUGUST, 2025
TAX REFERENCE No. 2 of 2015
M/S. TIRUPATI STARCH & CHEMICALS LTD. INDORE
Versus
COMMERCIAL TAXES DEPARTMENT
WITH
TAX REFERENCE No. 3 of 2015
M/S. TIRUPATI STARCH & CHEMICALS LTD. INDORE
Versus
COMMERCIAL TAXES DEPARTMENT
TAX REFERENCE No. 4 of 2015
M/S. TIRUPATI STARCH & CHEMICALS LTD. INDORE
Versus
COMMERCIAL TAXES DEPARTMENT
TAX REFERENCE No. 5 of 2015
M/S. TIRUPATI STARCH & CHEMICALS LTD. INDORE
Versus
COMMERCIAL TAXES DEPARTMENT
TAX REFERENCE No. 6 of 2015
M/S. TIRUPATI STARCH & CHEMICALS LTD. INDORE
Versus
COMMERCIAL TAXES DEPARTMENT
Signature Not Verified
Signed by: TRILOK SINGH
SAVNER
Signing time: 28-Aug-25
1:39:53 PM
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TR No.2/2015
TAX REFERENCE No. 16 of 2016
M/S. TIRUPATI STARCH & CHEMICALS LTD. INDORE
Versus
COMMERCIAL TAXES DEPARTMENT
_____________________________________________________________
Appearance:
Shri Prakhar Karpe - Advocate for the petitioner.
Shri Bhuwan Gautam - Government Advocate for the respondent.
Reserved on : 07/08/2025
Pronounced on : 28/08/2025
_______________________________________________________________
ORDER
Per: Justice Vivek Rusia
1. This order shall govern the disposal of Tax Reference Nos. 2/2015,
3/2015, 4/2015, 5/2015, 6/2015 & 16/2016. Regard being had to the
similarity of the controversy involved in the Tax References described
above, they are heard analogously & disposed of by this common order.
2. The controversy arises when the Assistant Commissioner of
Commercial Tax, Indore, treated Maize oil & Maize cake as independently
taxable commodities & not as exempt by-products of Maize or Maize starch
& consequently imposed tax on these items under entries covering vegetable
oil & oil cake for all the above assessment periods.
3. The Commercial Tax Appellate Board, Bhopal, by a consolidated
order, has referred the questions of law for the opinion of this court arising
out of the dispute regarding the taxability of "Maize Oil & Maize Cake"
manufactured & sold by the applicant. These tax references arise out of
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reference applications filed by the applicant: M/s Tirupati Starch &
Chemicals Ltd. Indore under Section 70(1) of the Madhya Pradesh
Commercial Tax Act, 1994 registered as Reference Case Nos.71/CTAB/05,
72/CTAB/05, 73/CTAB/05, 29/CTAB/05, 30/CTAB/05 & 2/CTAB/10
pertaining to the assessment periods from 01.04.1994 to 31.03.1999.
4. The applicant is engaged in the manufacture & sale of Maize Starch,
Dextrose, Gluten, Maize Oil, Maize Cake & allied products. The principal
place of business is at Indore & the factory is situated at Ghata Billod in
District Dhar. The process of manufacturing starch yields, apart from starch
itself, certain derivatives such as Maize Oil & Maize Cake are by-products.
5. For various assessment periods from 01.04.1994 to 31.03.1999, the
applicant was assessed under the provisions of the M.P. Commercial Tax
Act, 1994. The Assistant Commissioner of Commercial Tax, Indore, treated
Maize Oil & Maize Cake as independently taxable commodities & not as
exempt by-products of Maize or Maize starch & consequently imposed tax
on these items under entries covering vegetable oil & oil cake for all the
above assessment periods.
6. Aggrieved by the said orders, the applicant preferred first appeals
before the Deputy Commissioner of Commercial Tax, Indore Division-I
which were partly allowed & the matters were remanded back to the
Assessing Officer for reconsideration observing that the applicant had not
been afforded adequate opportunity & the claim of exemption had not been
properly considered & the assessing officer was further directed to re-
examine the issue of tax liability on Maize Oil & Maize Cake.
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7. The issue in question, related to whether Maize Oil & Maize Cake are
produced during the starch manufacturing process, could be treated as
exempt by-products of cereals under Entry 91(ii) of Schedule I to the Act.
However, upon remand, the Assessing Officer passed a fresh order
reaffirming the original view & maintaining the levy of tax on Maize oil &
Maize cake as independent products.
8. Aggrieved by this order, the applicant preferred a second appeal
before the Commercial Tax Appellate Board. The Board vide common order
dated 25.08.2005 partly allowed the appeal & again remanded back the
matter to the assessing officer for recalculation of tax under Section 8A of
the Act. Against this common order, the applicant applied to the Board for
reference under Section 70 of the Act. The Board after hearing the
arguments advanced by both sides and perusing the record considered the
submission of applicant that Maize Oil & Maize Cake are by-products of
Maize starch & therefore exempt from tax under Schedule-I, Entry 91 of the
Act relying on the judgment of this court in Raja Ram & Bros. v. CCT, M.P.
& Others reported in (2010) 16 STJ 105 wherein Maize was treated as a
grain & its oil & cake were held to be its by-products. However, the Board,
after analysis, concluded that in the process of manufacturing starch, the
resultant Maize Oil & Maize Cake cannot be classified as by-products of
Maize starch as claimed, but are to be recognised as independent
commodities in trade & since they fall under separate entries as vegetable &
edible oil, they are taxable. However, considering that the matter raised
substantial questions of law touching the nature & classification of Maize
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Oil & Maize Cake, the Board vide order dated 16.11.2011 decided to refer
the same to this court for adjudication :
1. "Whether, on the facts & in the circumstances of the case, the M.P.
Commercial Tax Appellate Board was justified in law in holding that
"Maize Oil & Maize Cake " are by-products of Maize starch?"
2. "If the answer to question No.1 is the negative, whether "Maize oil &
Maize cake" are by products of Maize, a cereal & if so, whether they are
covered under schedule I, entry 91 (ii) of M.P. Commercial Tax Act,
1994 specifying therein "by products" of cereals & food grains," as
stood at the relevant time?"
3. • "Whether the Appellate Board was right in law in holding that entry
38 of part V of schedule II to the M.P. Commercial Tax Act, 1994
specifying "vegetable & edible oil except hydrogenated vegetable oil"
was a specific entry?"
• "If the answer to question No.1 is that Maize oil & Maize cake are
by-products of Maize, whether they are covered under entry 91 ii) of
Schedule 1 to the M.P. Commercial Tax Act, 1994 specifying therein
"By-products of cereals & food grains" exempted from tax & not
under entry 38 of part V of Schedule Il to the said Act?"
4. If the answer to question No.3 is in the negative, whether entry 38 of
part V of Schedule II specifying therein "vegetable & edible oil except
hydrogenated vegetable oil & entry 15 of part V of Schedule II specifying
therein "oil cake including de-oiled cake" as stood at the relevant time
were general entries?"
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5. " If the answer to question No.4 is the affirmative whether "Maize oil
& Maize cake" will be covered under entry 91 (ii) of Schedule II of the
M.P. Commercial Tax Act, 1994 exempted from payment of tax generally
&, therefore they were also exempt from payment of central sales tax u/s
8(2A) of the Central Sales Tax Act, 1956?"
Submissions of the Applicant
9. Shri Prakhar Karpe, learned counsel appearing for the applicant,
submitted that the assessing authority as well as the Board committed an
error by treating Maize Oil & Maize Cake as independent taxable
commodities. The manufacturing process undertaken by the applicant is
primarily for the production of Maize starch and in the course of such
process, Maize oil & Maize cake inevitably emerge as secondary/allied
products. These products by their very nature are inseparably linked with the
processing of Maize and cannot be regarded as commodities brought into
existence by any independent act of manufacture. Once the law under Entry
91(ii) of Schedule I to the M.P. Commercial Tax Act, 1994 specifically
exempts "by-products of cereals & food grains," the said entry squarely
covers Maize oil & Maize cake as they are nothing but by-products of
Maize, which is a cereal. The expression "by-products" has to be given its
natural & commercial meaning and in common parlance, whatever arises
incidentally in the course of manufacture from a cereal without any separate
or distinct process is a by-product. Learned counsel has placed reliance on
the judgment of this Court in the case of Raja Ram & Bros. v. CCT, M.P.
(supra), wherein Maize grain, its oil and Maize cake were all treated as by-
products of Maize & it was held that such commodities were entitled to
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exemption. Learned counsel further submitted that the authorities failed to
appreciate that the legislature intended to exempt all incidental products
derived from cereals & food grains and, therefore, no liability of tax could be
imposed on Maize oil & Maize cake. The attempt of the Department to
classify these items under Entry 38 of Part V of Schedule II, which refers to
vegetable and edible oil except hydrogenated vegetable oil and Entry 15
referring to oil cake, including de-oiled cake, is misconceived. The general
scheme of the fiscal act is that where a commodity is exempted under
Schedule I, the same cannot be brought into the tax net through a general
entry in Schedule II. Thus, it is prayed that the referred questions be
answered in favour of the applicant, holding that Maize oil & Maize cake are
by-products of Maize starch and covered under Entry 91(ii) of Schedule I
and consequently, no tax should be levied.
Submission of Respondent/ State
10. Shri Bhuwan Gautam, learned Government Advocate for the
respondent, supported the orders of the assessing authority and the Board
and submitted that Maize oil & Maize cake cannot be treated as mere
incidental or residual by-products of starch as they are independent
commodities known in trade & commerce with separate commercial identity
and use. He further submitted that Maize oil is directly marketed and sold as
a cooking medium and edible oil, while Maize cake is utilised in the cattle-
feed industry as oil cake. Both of these articles are separately dealt with by
traders and consumers and are not merely waste or incidental outputs of the
starch industry. The scheme of the M.P. Commercial Tax Act makes a clear
distinction between commodities that are exempted under Schedule I and
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those specifically taxable under Schedule II. Entry 38 of Part V of Schedule
II expressly mentions vegetable & edible oil except hydrogenated vegetable
oil and Entry 15 of Part V covers oil cake, including de-oiled cake. These are
specific entries and once a commodity is covered by a specific entry in the
taxing schedule, it cannot be relegated to a general exemption clause, and to
treat Maize oil & Maize cake as exempt merely on the ground that they arise
from Maize, would amount to rewriting the legislative entries. Thus, the
learned Government Advocate prayed that the reference questions be
answered in favour of the respondent department by affirming the view that
Maize oil & Maize cake are distinct taxable commodities falling under
Schedule II of the Act and are subject to tax.
We have heard the learned counsel for the parties at length and
perused the record.
11. The aforesaid references have been admitted on the following
questions of law framed by this court:-
(1) Whether, on the facts & circumstances of the case, the
Tribunal was justified in holding that "Maize oil & Maize cake"
are by products of Maize starch covered under Schedule I, entry
91(ii) of M.P. Commercial Tax Act, 1994 & they were also
exempted from payment of central sales tax under Section 8(2A)
of the Central Sales Act, 1956? &
(2) Whether, in the facts & circumstances of the case, the
Tribunal was justified in holding that entry 38 of part V of
Schedule II to the M.P. Commercial Tax Act, 1994 specifying
"vegetable & edible oil except hydrogenated vegetable oil" was a
specific entry?
12. The applicant asserts that while producing starch from maize, Maize
oil & Maize cake come out as by-products in its industry, therefore, they are
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liable to be exempted as incidental or secondary products. In the
Commercial Tax Act, as per Entry No. 91 Schedule I, the by-products of
cereals are exempted from the tax, and starch is a cereal, hence according to
the applicant, all the by-products of starch are liable to be exempted. The
Maize oil & Maize cake are also the products of the applicant, apart from the
starch, which are being sold in the market. In the dictionary meaning the by-
product means 'an incidental or secondary product made in the
manufacturing of something else'. The learned Tax Board has held that the
Maize oil & Maize cake can be a by-product of starch but not the by-product
of Maize, and Maize is a cereal. The main manufacturing product of the
applicant is starch from Maize or Makka, and during this process, Maize oil
& Maize cake are manufactured as by-products, but they have an
independent identity in the market. Therefore, the learned Board has rightly
said that the Maize oil & the Maize cake are the by-products of starch and
not the by-product of Maize or Makka, which is a cereal. Under Entry 91 of
Schedule I, by-products of cereal are exempted and the starch is not cereal,
whereas Maize or Makka is a cereal which was not considered by the
Division Bench while deciding Raja Ram & Bros. v. CCT, M.P. (supra).
13. By-product of a cereal is a general entry under Entry 91 of Schedule I,
whereas vegetable & edible oil are a specific entry under Entry No.12 of Part
6 of Schedule II. Admittedly, Maize oil & the Maize cake are vegetable and
edible oils. The Supreme Court of India in the case of Commissioner of
Commercial Tax, U.P., Vs. M/s A.R. Thermosets Pvt. Ltd. reported in
2016(16) SCC 122 held that resort can be made to a residuary heading only
when, by liberal construction, the specific Entry cannot cover the goods in
question. In the case of Hindustan Poles Corporation Vs. Commissioner of
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Central Excise reported in 2006(4) SCC 85 also the Apex Court held that
the residuary entry is meant to cover only those categories of goods which
clearly fall outside the ambit of the main entry. It is also not in dispute that
the Maize oil & Maize cake are independently declared as goods as edible
oil under the Commercial Tax Act/VAT Act.
14. In the case of this present applicant, these two products, viz. Maize oil
& the Maize cake are being manufactured while manufacturing the starch.
This could be one of the methods of production of Maize oil & Maize cake.
Therefore, the same cannot be treated as a by-product of cereals. In the case
of M/s A.R. Thermosets Pvt. Ltd (supra), the Apex Court held that the nature
and composition of the product or the goods and the particular entry in the
classification table are important. Matching of the good with the Entry or
Entries in the Schedules is tested based on the identity of the goods in
question with the Entry or the contesting entries and by applying the
common parlance test, i.e. whether the goods as understood in the
commercial or business parlance are identical or similar to the description of
the Entry. Where such similarity in popular sense of meaning exists, the
generic entity would be construed as including the goods in question.
Sometimes, under certain circumstances, the end use test, i.e., use of the
good & its comparison with the Entry is applied. In the case of the State of
Maharashtra Vs. M/s. Bradma of India Ltd. Reported in 2005(2) SCC 669,
the Supreme Court of India observed that the general principle is that the
specific entry would override a general entry. In the case of Commercial
Tax Officer Vs. M/s Jalani Enterprises reported in 2011(4) SCC 386, also
the Apex Court held that while dealing with the question of Sales Tax / VAT
under the Rajasthan Sales Tax Act, if from the record it was established that
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the product in question could be brought under a specific entry, then there is
no reason to take resort to the residuary entry. The revenue cannot be
permitted to travel to the residuary entry when the product can be covered
under the specific entry, but in the present case, the applicant is relying on a
residuary entry, whereas the revenue is insisting that so-called by-product
Maize oil & the Maize cake are covered under the specific entry as an
independent product.
15. In the present case, the applicant is relying on a general entry,
whereas, as per the case of the Department, there is a specific entry for
vegetable oil & vegetable cake. Therefore, instead of applying the general
entry/residuary entry that all the by-products of cereals are exempted, the
applicant is not entitled to exemption.
16. The applicant is admittedly engaged in the manufacturing of starch,
dextrose, gluten, Maize oil, Maize cake and their sale. Therefore, the
applicant is manufacturing and selling Maize oil & Maize cake as
independent products along with other products. By chance, they are being
manufactured while manufacturing the main product, i.e. starch. Admittedly,
starch is not exempted; therefore, its by-products, Maize oil & Maize cake,
cannot be treated as exempted.
17. Therefore, the question of law No.1 framed by the Appellate Board
vide order dated 16.11.2011 that whether on the facts & circumstances of the
case, the M.P. Commercial Tax Appellate Board was justified in law in
holding that "Maize oil & Maize cake" are by-products of Maize starch, is
answered in the affirmative in favour of the Revenue Department. Therefore,
the question of law No.2 need not be answered as the Maize oil & Maize
cake are not the by-products of cereal & food grains. Resultantly, question
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No.3 is also answered in favour of the Revenue Department, that the
Appellate Board was justified in law in holding that Entry 38 of Part V of
Schedule II of the M.P. Commercial Tax Act, 1994 specifying "vegetable &
edible oil except hydrogenated vegetable oil" was a specific entry. Since the
answer to question No.3 has been answered in the affirmative, question No.4
is not required to be answered. Since the Maize oil & Maize cake are not
covered under Entry 91(ii) of Schedule II of the M.P. Commercial Tax Act,
1994, for the purpose of exemption from payment of tax, therefore, they are
also not exempted from payment of central sales tax under Section 8(2A) of
the Central Sales Tax Act, 1956.
18. In view of the above, all the Tax References answered and are
disposed of.
19. Signed order be kept in the file of TR No.2/2015 and a copy thereof
be placed in the file of TR Nos 3/2015, 4/2015, 5/2015, 6/2015 & 16/2016.
(VIVEK RUSIA) (BINOD KUMAR DWIVEDI)
JUDGE JUDGE
trilok
