Holding

A High Court exercising revision under Section 11 cannot overturn the factual findings of lower authorities unless those findings are perverse, based on erroneous principles, or result from an abuse of process.

Summary

Agarwal Oil Refinery Corp purchased burnt motor oil, refined it, and sold the refined product. The assessing authority taxed the burnt oil under Section 3‑AAAA of the U.P. Trade Tax Act, treating it as "old, discarded, unserviceable store". The Tribunal and the Additional Commissioner (J) held that the refined oil was a manufactured product and tax was payable at the point of manufacture, not at sale, quashing the tax. The Commissioner appealed, and the High Court, relying on the SIS Industrial Lubricants case, reversed the Tribunal’s factual findings and imposed tax. The Supreme Court held that under Section 11, a revisional court may not disturb concurrent factual findings of lower authorities unless they are perverse, erroneous, or constitute an abuse of process. Since the Tribunal’s findings were not perverse, the High Court’s order was set aside and the matter remanded for a fresh revision.

Issues considered

The scope of revisional jurisdiction under Section 11 of the U.P. Trade Tax Act, 1948, particularly whether a High Court can overturn factual findings of lower authorities.
Whether burnt motor oil qualifies as "old, discarded, unserviceable store" under Section 3‑AAAA and the appropriate point of tax liability.
Whether the High Court could rely on the SIS Industrial Lubricants decision, which is factually distinguishable, to overturn the Tribunal’s findings.

Legislation cited

U.P. Trade Tax Act, 1948s. 11, s. 3-AAAA
U.P. Trade Tax Ruless. 41(7)

Subjects

revisional jurisdictionSection 11Section 3-AAAAtrade taxfactual findingsperverse findingshigh courttribunal

Judgment

[2011] 9 S.C.R. 1076

t <

A M/S. AGARWAL OIL REFINERY CORPORATION, KANPUR
v.
THE COMMISSIONER OF TRADE TAX, U.P. LUCKNOW
(Civil AppE~al No. 2363 of 2007)
AUGUST 10, 2011
B
[DJ<. JAIN AND ASOK KUMAR GANGULY, JJ.]

U.P. Trade' Tax Act, 1948:

s. 11 - Revisional jurisdiction - Scope of - Held:
c Normally High Court while exercising revisionary powers u/
s. 11 should not interfere with concurrent findings of fact by the
lower authority, unless the findings recorded by the lower ~

authorities are perverse or based on apparently erroneous
principles which are contrary to law or where the finding of the
D lower authority was arrive'd at by a flagrant abuse of the judicial
process or it brings about a gross failure of justice - Revision.

s.3-AAAA - Dealer purchased uurnt mobil oil and refined
the same but the asses.sing authority. levied tax on the said
E burnt mobil oil u/s. 3-AAAA treating it as "old discarded
unserviceable store" - Statutory authorities and Tribunal held
that the refined mobil oiJ' is manufactured by the deafer from
burnt mobil oil and the said item is taxable at the point of .. "
manufacturer and is not .liable to be taxed at the point of sale
F to the consumer u/s.3-AAAA - High Court set aside the
concurrEmt finding and held that appellant was liable to be
taxed uls. 3-AAAA - Held: Tribunal as the second appellate
forum is the last fact finding authority - Unless High Court,
as a revisional authority, finds that the factual conclusions by
G both the appellate authorities are perverse, it cannot overturn • ,.
the same - The order of the High Court is not sustainable -
Matter remanded to the High Court for consideration afresh.
The case of the· appellant-dealer was that it

H 1076
AGARWAL OIL. REFINERY CORP, KANPUR v. COMMR. OF 1077
TRADE TAX, U.P LUCKNOW
• ;
purchased burnt mobil oil and refined the same but the A
. assessing authority levied tax on the said burnt mobil oil
under Section 3-AAAA of the U.P. Trade Tax Act, 1948
treating the said oil as "old discarded unserviceable
store". The authorities set aside the order of the
;
assessing authority. The Department filed revision before B
the High Court. The High Court reversed the concurrent
finding of the statutory authorities by relying on the
decision in *SIS Industrial Lubricants and held that the
appellant was liable to be taxed under Section 3-AAA
during the years under consideration. The instant appeal c
was filed challenging the order of the High Court.

Disposing of the appeal and remitting the matter to
; the High Court, the Court
' D
HELD: 1.1. It is clear from the structure of Section 11
of the U.P. Trade Tax Act, 1948 that normally the High
Court under revision does not interfere with concurrent
findings of fact by the lower authority, unless the case
involves any question of law. Traditionally, in exercise of
revisional jurisdiction, High Court does not interfere with E
concurrent finding of fact, unless the findings recorded
by the lower authorities are perverse or based on an
apparently erroneous principles which are contrary to
" ~
law or where the finding of the lower authority was
arrived at by a flagrant abuse of the judicial process or it F
brings about a gross failure of justice. In this case none
of these principles were attracted. [Para 8, 9).[1084-8-C)
1.2. In the instant case, the Tribunal as the second
appellate forum is the lastfact finding authority. From the
admitted facts recorded by the Tribunal, it appeared that G
,. 1 the appellant-dealer manufactured refined mobil oil from
the. raw material, i.e., the burnt mobil oil which it
purchased· and then sold a virtually new item in the
market. In 1988-89 and 1989-90, the assessments were
made under Rule 41(7) of the U.P. Trade Tax Rules, but H
1078 SUPREME COURT REPORTS [2011] 9 S.C.R.

I <
A the said assessment was opened and a fresh assessment
was made. Aggrieved by the same, the dealer preferred
first appeal before the A.C.(J) who allowed both the
appeals holding that the dealer was not liable to pay and
quashed the imposition of tax upon dealer for the
B relevant assessment years. Aggrieved thereby, the
revenue preferred a sEicond appeal before the Tribunal.
The Tribunal held that the burnt mobil oil on which the
tax was imposed was purchased by the appellant from
unregistered dealer lil<e kabarie and hawkers in retail
c manner. The old PVC s;hoes and chappals purchased by
the dealer and convertEid into granules and sold by them
in the market are not treated under the category of 'old
discarded and unserviceable stores' The case of burnt
mobil oil is similar to the case of PVC shoes. The Tribunai
also came to a finding that the refined mobil oil is
0
manufactured by the dealer from burnt mobil oil. The item
is taxable at the point of manufacturer and is not liable
to be taxed at the point of sale to the consumer under
Section 3-AAAA of the Act. [Paras 12, 13) [1086-A-H; 1087-
E A]
1.3. Unless the High Court, as a revisional authority,
finds that the factual conclusions by both the appellate
authorities were perverse, it cannot overturn the same by
relying on a judgment which is factually distinguishable.
F In the judgment on which the High Court relied, there was
no finding by the Tribunal, the last fact-finding authority,
on the nature of the goc1ds, which was the subject matter
of the disputed transac~ion. The case on which the High
Court relied was not :the case of a dealer who after
G purchasing burnt mobil oil, manufactured refined mobil
oil from that raw material. But the Tribunal, in the instant
case, found on facts that the appellant manufactured
refined mobil oil from the burnt mobil oil. Therefore, there
was substantial factual difference between the instant
H c.ase and the case on which the High Court relied while
AGARWAL OIL REFINERY CORP., KANPUR v. COMMR. OF 1079
TRADE TAX, U.P. LUCKNOW
I l
dealing with the revision proceedings before it. The order A
of the High Court is not sustainable and is quashed.
[Para 14, 15) [1087-8-F]

*Commissioner of Sales Tax vs. SIS. Industrial
Lubricants 1984U.P.T.C. 1101 - Distinguished.
B
Case Law Refere.nce:
1984 U.P.T.C. 1101 distinguished Para 4, 6, 14
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2363 of 2007. C

From the Judgment & Order dated 15.12.2004 &
30.09.2005 of Trade Tax Revision Nos. 973 & 997of1996 and
Civil Misc. Rectification Application Nos. 56268 ·& 56273 of
2005. D
WITH
SLP (C) No. 2148 of 2008 .
.
B.S. Chahar, Jyoti Sharma, Vinay Garg, Aarohi Bhalla,
Gunnam Venkateswara Rao, Manoj Kumar Dwivedi, Aviral E
Shukla for the appearing parties.
The Judgment of the Court was delivered by
GANGULY, J. 1. Heard learned counsel for the parties.
2. This appeal is directed against the judgment and order F
passed by the High Court in Trade Tax Revisions in exercise
of its revisional jurisdiction under Section 11 of U.P. Trade Tax
Act, 1948(hereinafter referred to as the "Act"). The order of the
Tribunal dated 22nd April, 1996 relating to assessment years
1988-89 and 1989-90 was impugned in Revisions before the G
High Court.
3. The case of the appellant, who was the dealer is that it•
purchased burnt mobil oil and refined the same mobil oil, but
the assessing authority levied tax on the said burnt mobil oil H
1080 SUPREME CCU RT REPORTS [2011] 9 S.C.R.

A under Section 3-AAAA of the Act treating the said oil as "old
• •
discarded unserviceable store".

4. Admittedly, the first appeal, which was filed by the dealer
against such assessment, was allowed and then again a further
8
appeal was filed by the Commissioner of Trade Tax against the
order of the first appellate authority. The said appeal by the
-
Commis'sioner was also dismissed. Thereupon, the
Commissioner, Trade Tax filed the revision before the High
Court and the revisional Court overturned the concurrent finding
of the statutory authorities. In doing so, the High Court came to
C a finding that the present controversy is covered by a decision
of the High Court in th1~ case of Commissioner of Sales Tax
vs. SIS. Industrial Lubricants reported in 1984 U.P.T.C. 1101.
5. Following the said decision, the High Court held that
D burnt mobil oil purchas1~d by the dealer, the appellant herein,
is covered under the entry of "old, discarded and unserviceable
store" being purchased from unregistered dealer and sold in
the same condition. According to the l;ligh Court they are liable
to be taxed as such under Section 3-AAAA of the Act during
E the years under consideration.

6. Learned couns1~I for the appellant while assailing the
said finding of the High Court, submitted that the case is not
covered by the decision rendered by the High Court in the case "·
of SIS. Industrial Lubricants (supra). The only reasoning on the
F basis of which the High Court in SIS Industrial Lubricants
(supra) allowed the revision is that mobil oil after having been
used does not retain the character of mobil oil but it becomes
"old, discarded and unserviceable store" and that is why the
High Court agreed with the revenue that the burnt mobil oil,
G being old, discarded or unserviceable store, is liable to be
taxed under the notifications dated 1.12.1973 and 4.11.1974
@ 3.5% and 4% respectively.

7. Reference in this connection may be made to the
. H provision of Section 11 of the said Act to appreciate the extent
AGARWAL OIL REFINERY CORP., KANPUR v. COMMR. OF 1081
TRADE TAX, U.P. LUCKNOW [ASOK KUMAR GANGULY, J.]
I • of revisional jurisdiction of High Court in dealing with the · A
concurrent finding of fact. Section 11 of the said Act is set out
below:

11. Revision by High Court in special cases.-(1) Any
person aggrieved by an order made under sub-section (4) B
;
or sub-section (5) of Section 10, other than an order under
sub-section (2) of that section summarily disposing of the
appeal, or by an order passed under Section 22 by the
Tribunal, may, within ninety days from the date of service
of such order, apply to the High Court for revision of such
order on the ground that the case involves any question of
c
law.

(2) Any person aggrieved by an order made by the
'_j
Revising Authority or an Additional Revising Authority
refusing to state the case under this section, as it stood D
immediately before April 27, 1978, hereinafter referred to
as the said date, may, where the limitation for making an
application to the High Court under sub-section (4), as it
stood immediately before the said date, has not expired,
likewise apply for revision to the High Court within a period E
of ninety days from the said date.

(3) Where an application under sub-section (1) or sub-
~ section (3), as they stood immediately before the said
~.
date, was rejected by the Revising Authority or an
F
Additional Revising Authority on the sole ground that the
.period of one hundred and twenty days for making the
reference, as specified in the said sub-section (1 ), has
expired, such applicant may apply for revision of the order
made under sub-section (2)of Section 10, to the High
Court within sixty days from the said date on the ground G
..• i that the case involves any question of law.
(4) The application for revision under sub-section (1) shall
precisely state the question of law involved in the case, and
it shall be competent for the High Court to formulate the H
1082 SUPREME COURT REPORTS [2011] 9 S.C.R.

I
A question of law or to allow any other question of law to be '
raised.

(5) Every application for making a reference to the High
Court under sub-section (1) or sub-section (3), as they
stood immediately before the said date, pending before
B
the Hevising Authority or an Additional Revising Authority
on the said date, shall stand transferred to the High Court.
Every ·such application upon being so transferred and
every application under sub-section (4), as it stood
immediately before the said date, pending before the High
c Court on the said date, shall be deemed to be an
application for revision under this Section and disposed

D
of accordingly.

(6) VVhere the High Court has before the said date, required
the Revising Authority or an Additional Revising Authority
.-

to state the case ancl refer it to the Higli Court under sub-
section (4), as it stood immediately before the said date,
such authority shall, as soon as may be, make reference
accordingly. Every reference so made, a.nd every
E reference made by such authority before the said date in
compliance with the requirement of the High Court under
sub..section (4), as it stood before the said date, shall be
deemed to be an application for revision under this section
and disposed of accordingly. .. "
F (6-A)Where the Revising Authority or an Additional
Revising Authority has, before the said date, allowed an
application under sub-section (1) or sub-section (3), as they
stood immediately bE~fore the said date, and such authority
has not made referemce before the said date, it shall, as
G soon as may be, make reference, to the High Court. Every
such reference, and every reference already made by such " .....
authority before the :;aid date and pending before the High
Court on the said date, shall be deemed to be an
application for revision under this section and dispose of
H accordingly.
AGARWAL OIL REFINERY CORP., KANPUR v. COMMR. OF 1083
TRADE TAX, U.P. LUCKNOW (ASOK KUMAR GANGULY, J.]
) >
(7) Where an application under this section is pending, the A
High Court may, on an application in that behalf, stay
recovery of any disputed amount of tax, fee or penalty
payable, or refund of any amount due, under the order
sought to be revised:
...... .I 8
Provided that no order for the stay of recovery of such
disputed amount shall remain in force for more than thirty
days unless the applicant furnishes adequate security to
the satisfaction of the Assessing Authority concerned.

(8) The High Court shall, after hearing the parties to the c
revision, decide the question of law involved therein, and
where as a result of such decision, the amount of tax, fee
or penalty is required to be determined afresh, the High
..J
) Court may send a copy of the decision to the Tribunal for
fresh determination of the amount, and the Tribunal shall D
thereupon pass such orders as are necessary to dispose
of the case in conformity with the said decision.
(8-A) Alf applications for revision or orders passed under
.Section 10 in appeals arising out of the same cause of
E
action in respect of the same assessment year shall be
heard and decided together:
j Provided that where any one or more of such
~
applications have been heard and decided earlier, if the
High Court, while hearing the remaining applications, F
considers that the earlier decision may be a legal
impediment in giving relief in such remaining application,
it may recall such earlier decisions and may thereafter
proceed to hear and decide all the applications together.
G
(9) The provisions of Section 5 of the Limitation Act, 1963,
- i
shall, mutatis mutandis, apply to every application, for
revision under this section.
Explanation.- For the purpose of this section, the
H
1084 SUPREME COURT REPORTS [2011) 9 S.C.R.

A expression "any person" includes the Commissioner and ;
•
the State Government."

8. It is made clear from the structure of Section 11 that
normally the High Court under revision does not interfere with
concurrent findings of fact by the lower authority, unless the ,... .
B
case involves any question of law.

9. Traditionally in exer~ise of revisional jurisdiction, High
Court does not interfere with concurrent finding of fact, unless
the findings recorded by t11e lower authorities are perverse or
c based on an apparently erroneous principles which are contrary
to law or where the finding. of the lower authority was arrived at
by a flagrant abuse of the judicial process or it brings about a
gross failure of justice. In this case none of these principles are
attracted.
D
10. In this connection,, we may refer to the relevant provision
'
of the Act to find out th13 real con~roversy in issue. Section
3AAAA of the Act which has come up for consideration in this
case is set out hereinbelow:
E "Section 3-AAAA- Liability to tax on purchase of
goods in certain ci1rcumstances-Subject to the provision
of Section 3, every dealer who purchases any goods liable
to tax under this Act- \

F (a) from any registered dealer in circumstances in
which no tax is payable by such registered dealer, shall
be liable to pay tax on the purchase price of such goods
at the same rate at which, but for such circumstances, tax
would have been payable on the sale of such goods;
G (b) from any person other than a registered dealer
whether or not tax is payable by such person, shall be
liable to pay tax on the purchase price of such goods at
" '

the same rate at which tax is payable on the sale of such
goods;
H
AGARWAL OIL REFINERY CORP., KANPUR v. COMMR. OF 1085
TRADE TAX, U.P. LUCKNOW [ASOK KUMAR GANGULY, J.]
i '
Provided that no tax shall be leviable on the purchase price A
of such goods in the circumstances mentioned in clauses
(a) and (b), if -

(i) such goods purchased from a registered dealer have
already been subjected to tax or may be subjected to tax 8
under this Act;

(ii} tax has already been paid in respect of such goods
purchased from any person other than a registered dealer;

(iii} the purchasing dealer resells such goods within the c
State or in the course of inter-State trade or commerce or
exports out of the territory of India, in the same form an.d
condition in which he had purchased them;

(iv) such goods are liable to be exempted under Section
4-A of the Act".
0

11. The relevant entries which are covered in this
controversy as per notification dated 7th September, 1981 and
31st May, 1985 are as under: . ·
S.No Description of goods Point of Tax Rate of Tax E
x x x x

- 31. Oil of all kinds, other than
those covered by any· other
Mor I 4 per cent

entry of this list or by any F
other notification issued
µnder the Act
32. Old, discarded, unservice- Sale to 8 per cent
centable or obsolete mac- consumer
hinery, stores or vehicles G
including waste products
·except cinder, coal ash and
such items as are included
in any other notification
issued under the Act. H
1086 SUPREME COURT REPORTS [2011] 9 S.C.R.

./ <

A 12. In the instant case, the Tribunal as the second appellate
forum is the last fact finding authority. From the admitted facts
recorded by the Tribunal it appears that the appellant-the dealer
manufactures refined mobil oil from the raw material, i.e., the
burnt mobil oil which it purchases and then sells a virtually new .... -
B item in the market. In 1988-89 and 1989-90 the assessments
were made under Rule 41("7) of the U.P. Trade Tax Rules, but
the said assessment has be:en opened and a fresh assessment
has been made. Aggrieved by the same, the dealer preferred
first appeal before the A.C.(J) who allowed both the appeals
c by an order dated 26.5.19B5 holding therein that the dealer is
not liable to pay and quashed the imposition of tax upon dealer
for the relevant assessment years. Aggrieved thereby, the
revenue preferred a second appeal before the Tribunal. Before
the said appellate authority, the revenue urged that the .burnt
..
<.

mobil oil which is purchased by the assessee who was the
D
manufacturer of refined oii is taxable at the point of sale to the
consumer as it comes undler the category of old and discarded
material. The Tribunal did not accept the said contention by
examining the facts and the records of the case. The Tribunal
came to the following finding:
E
"... it is undisputed that the burnt mobil oil on which the tax
has been imposed, has been purchased by the assessee
respondent from unregistered dealer like kabarie and ~
-'

hawkers in retail manner. However, in the like manner the
F old PVC shoes and c:happals purchased by the dealer who
converted into granules and sold them in the market, they
have not been treated under the category of 'old discarded
and unserviceable stores' as held by the case laws cited
by the assessee's counsel Sri S Rais, Advocate. In our
G opinion, the case of burnt mobil oil is similar to the case
of PVC shoes etc. which are purchased by dealer for •
manufacture of plastic granules etc. by purchasing them
from kabaris and hawkers etc. in retail manner."

H
AGARWAL OIL REFINERY CORP, KANPUR v. COMMR. OF 1087
TRADE TAX, U.P. LUCKNOW [ASOK KUMAR GANGULY, J.)
' )
13. The Tfibunal also came to a finding that the refined A
mobil oil is manufactured by the dealer from burnt mobil oil. The
item is taxable at the point of manufacturer and is not liable to
be taxed at the point of sale to the consumer under Section 3-
AAAA of the Act.
-'
B
14. We are of the opinion that unless the High Court, as a
revisional authority, finds that those factual conclusions by both
the appellate authorities are perverse, it cannot overturn the
same by relying on a judgment which is factually distinguishable.
In the judgment on which the High Court relied, there is no
finding by the Tribunal, the last fact-finding authority, on the c
nature of the goods, which was the subject matter of the
disputed transaction. The case on which the High Court relied,
_t namely, in the case of S/S. Industrial Lubricants (supra), is not
the case of a dealer who after purchasing burnt mobil oil,
manufactures refined mobil oil from that raw material. But the D
Tribunal in the instant case has found on facts that the appellant
herein manufactured ~efined mobil oil from the burnt mobil oil.
Therefore, there is substantial factual difference between the
present case and the case on which the High Court relied while
dealing with the revision proceedings before it. We are of the E
view that the High Court was not correct in relying on a decision,
which is factually distinguishable.

·" 15. For the reasons afore-stated, we cannot sustain the
order of the High Court. The order of the High Court is quashed. F
16. We remand the matter to the High Court and request
the High Court to decide the revisions on the facts of the present
case on the principle of revisional jurisdiction indicated
hereinabove. We hope that the High Court will come to a
reasoned conclusion in the facts and circumstances of the G
~ ~
case.
17. We further make it clear that we have not expressed
any opinion on the merits of the finding recorded by the Tribunal
since the High Court is to re-examine the same afresh. With H
1088 SUPREME COURT REPORTS [2011] 9 S.C.R.

A these observations, .the appeal is allowed and the matter is . ' .
remanded to the High Court for a fresh decision· of the revision
proceedings on the lines indicated above.
18. lri the facts of thei case, there will be no order as to
costs. f--
8
S.L.P.(C) NO. 2148 OF 2008

Delay condoned.
C We do not find anymeirit in the special leave petition, which
is accordingly dismissed.
D.G. Matters disposed of.