Karnataka High Court Upholds Entry Tax Levy On Hydraulic Oil Dismisses Wipro's Challenge

The Karnataka High Court on 11 August dismissed seven revision petitions filed by Wipro Enterprises Pvt. Ltd. challenging the levy of entry tax on Hydraulic Oil brought into Karnataka for use in the manufacture of Hydraulic Cylinders.

A Division Bench comprising Justices S.G. Pandit and K. Manmadha Rao upheld the Karnataka Appellate Tribunal's orders sustaining the levy under the Karnataka Tax on Entry of Goods Act, 1979 (KTEG Act). The judges held:

“..the questions as to whether Hydraulic Oil is covered by Entry 67 of the First Schedule, whether the expression 'and others' is wide enough to include Hydraulic Oil, whether Hydraulic Oil is a consumable liable to entry tax and whether the levy affirmed by the Tribunal is sustainable, stand answered against the petitioner...”

Wipro challenged to the Tribunal's orders concerning Hydraulic Oil procured from outside Karnataka and brought into the local area for use in the manufacture of Hydraulic Cylinders.

It argued that Hydraulic Oil is different from lubricating oil and is primarily used for transmission of hydraulic power and generation of mechanical force. It contended that since Hydraulic Oil was not specifically mentioned in Entry 67 of the First Schedule to the KTEG Act or the notification dated 30 March 2002, it could not be subjected to entry tax.

Rejecting the contention, the High Court relied on the Supreme Court's interpretation of the expression “and others” occurring in Entry 67. It held that the expression is wide enough to cover petroleum products other than those specifically enumerated in the entry. It also noted that the specific exclusions in the entry indicated the legislative intent to cover other petroleum products.

Further, the Bench relied on its earlier decision in Hyva India (P) Ltd. v. Additional Commissioner of Commercial Taxes and others, where Hydraulic Oil was held to be a consumable and not a raw material, with no new product emerging from its use.

It consequently held that Hydraulic Oil falls within Entry 67 and is liable to entry tax when brought into a local area for consumption, use or sale. It also upheld the Tribunal's finding that the requirements for reassessment under Section 6(1) of the KTEG Act were satisfied.

Accordingly, the High Court dismissed all seven revision petitions filed by Wipro Enterprises and confirmed the Karnataka Appellate Tribunal's orders sustaining the entry tax levy.

For Petitioner: Venkatesh S. Arabatti, Advocate

For Respondent: Jyoti M. Maradi, HCGP