JUDGMENT

ANIL R. DAVE, J. -Leave granted. Being aggrieved by the judgement and order dated 22nd September, 2006, delivered in S.T.R. NO. 569 OF 2004 by the High Court of Kerala at Ernakulam, the appellant has filed this appeal.

2. The short question which arises for consideration in this appeal is whether sale of margarine is to be taxed at 8% or 4% under the provisions of Kerala General Sales Tax Act, 1963 (hereinafter referred to as "the Act").

3. The Sales Tax Officer held that margarine is a lubricant and animal fat, which is used for making bakery products, is neither edible nor inedible oil. According to him, edible oil is defined in circular no.2439/96/TD dated 19.2.96, where it is stated that edible oil includes refined or hydrogenated oil such as ground nut oil, refined oil and vanaspathi and, therefore, he held that margarine is not edible. As margarine is not consumed directly, according to him, it is inedible oil. Entry 90 in the First Schedule specifically uses the phrase "and margarine" which establishes the fact that the same is neither edible nor inedible oil. Hence, margarine would come only under Entry 90 and, therefore, would be taxable at the rate of 8% and not at the concessional rate of 4%. Hence, the sale of margarine would be subjected to tax at 8%.

4. The appellant preferred an appeal before the Appellate Assistant Commissioner, Commercial Taxes, Ernakulam. The appeal was dismissed and the order of the Sales Tax Officer was upheld. Aggrieved by the above order, the appellant preferred an appeal against the said order before the Kerala Sales Tax Appellate Tribunal.

5. The Tribunal set aside the order of the Appellate Assistant Commissioner in so far as it related to the rate of tax on margarine. According to the Tribunal:

"..........margarine could be considered as "edible oil". According to New Webster's Dictionary, margarine is "a substitute for butter consisting of a mixture of prepared edible fats extracted from vegetable oils, and treated with lactic acid bacilli". According to Chambers Twentieth Century Dictionary, margarine is "any imitation butter". According to Concise Oxford Dictionary, margarine is "butter substitute made from edible oils and animal fats with milk". Thus, margarine is considered as a substitute for butter".

6. The Tribunal further held that by virtue of Circular No. 2439/83/96/TD dated 19.2.1996, the Government had clarified the doubt as to whether hydrogenated edible oil like vanaspathi oil would come within the ambit of edible oil. In the words of the Tribunal :

"The Government clarified that the expression edible oil would include hydrogenated oil such as groundnut oil, gingely oil, refined oil and vanaspathi. But this does not mean that margarine cannot be considered as edible oil. Further it is to be noted that the expression used in the above Government notification is "such as" and hence, it is not an exhaustive list. It is only illustrative. In any case, it is pertinent to note that margarine has been classified in Entry 90 (as extracted in para 2 above) which relates to oils. Hence, the intention of the legislature is to treat margarine as oil. Thus, the authorities below cannot take the stand that margarine is not oil. Considering all the above facts, we are of the view that margarine could be considered as edible oil. Since margarine is edible oil, the appellant is entitled to the benefit of the reduced rate of tax of 4 % as provided in Entry 17A of the Second Schedule of the Government notification S.R.O. No. 1725/93".

7. Against the order of the Tribunal, the respondent - State Government filed a revision petition in the High Court of Kerala at Ernakulam. The question raised in the revision petition was whether the Tribunal was justified in granting concessional rate of tax on BISBRI brand of bakery margarine sold by the appellant by treating it as an edible oil under Entry17A of the Second Schedule as per notification SRO 1728/1993 for the assessment year 1997-98.

8. Th