Per V.P. Elhence, Judicial Member - The assessee is aggrieved of the order dated 5-2-1987 of the learned Commissioner of Income-tax (Appeals), New Delhi for the assessment year 1982-83.

2. The assessee which is a limited company derives its income from the production and sale of Rice Bran extraction and the manufacture of laundry soap. For the assessment year in question it also earned commission income as import agents for Stearine and Acid Oils. The method of accounting is mercantile and the year ended on 30-6-1981. The first ground relates to the claim of sales-tax liability amounting to Rs. 13,68,680. The basic facts need to be narrated in order to clarify the controversy. The assessee company is running two Solvent Extraction Units for the extraction of Rice Bran Oil. This rice bran oil is being sold in the course of inter-State trade and commerce to various parties situated outside the territory of Punjab Under the Central Sales-tax Act, edible oil is liable to sales-tax @ 1% Against ‘C’ form if sold during the course of inter-State trade and commerce and @ 4% if it is a non-edible oil. The assessee despatched rice bran oil to its buyers at Bombay, Calcutta, Delhi and Ghaziabad. However it charged Central Sales-Tax from the buyers actually @ only 1% i.e. treating it as an edible oil. This realisation was paid by the assessee to the sales-tax authorities along with the sales-tax return. However rice bran oil had been sold by the assessee after hydrogenation to M/s which sales-tax @ 1% had been charged and paid. The case of the assessee is that Hindustan Lever Limited, Bombay and to M/s. Tata Oil Mills Ltd., Ghaziabad on the differential amount of Central Sales Tax between 4% and 1 % comes to Rs. 13,68,680 which should be allowed to it according to the following details:-

The amount of Rs. 13,68,680 has been claimed as estimated sales-tax liability for the assessment year in question on the basis that the Sales-tax Department had been charging Central Sales-tax @ 4% on Rice Bran Oil in other cases like M/s. Chattar Extractions Pvt. Ltd., M/s. Veekay Oils Pvt. Ltd., M/s. Bhatinda, Chemicals and Vanaspati (P.) Ltd., etc. The further case of the assessee was that the estimate of the assessee stood established by the subsequent assessment made by the Sales-tax Department wherein it had charged Central Sales-tax @ 4% on these oils. In this connection it had been pointed out that subsequent to the filing of the Income-tax return for the assessment year in question a show-cause notice fixing 22-8-1985 for hearing was received from the Sales-tax Department as to why Rice Bran Oil be not charged @ 4% instead of 1 % treating the same as non-edible oil. The said show cause notice was disposed of by the Sales-tax Assessing Authority, Ward No. 9, Ludhiana-Ion 30-12-1985 holding that rice bran oil was liable to be taxed @ 4%. The assessee however admits that its appeal against the same is pending for disposal before a Division Bench of the Punjab & Haryana High Court, The said assessing authority, in coming to that demon, relied upon the decision of Punjab and Haryana High Court in the case of M/s. Chhator Extractions (P.) Ltd. v. Excise & Taxation Commissioner of Punjab [1986] 61 STC 374. However, the claim as to differential liability of Central Sales-tax was negatived by the IAC (Assessment) on the ground that up to the date of the hearing, no claim had been raised by the Sales tax Department @ 4%.

3. In appeal, the learned Commissioner of Income-tax (Appeals) confirmed the disa