High Court rules maize oil and maize cake taxable under Schedule II and not exempt as by-products of cereals under Schedule I.
Meetu Kumari | Sep 14, 2025 |
MP High Court Holds Maize Oil and Maize Cake Taxable under Specific Entries
The matter arose from assessments framed under the Madhya Pradesh Commercial Tax Act for the periods between 1994-95 and 1998-99. The assessing authority had treated maize oil and maize cake as distinct taxable commodities and levied tax under the entries relating to vegetable oil and oil cake. Appeals before the first appellate authority led to remand, but upon remand the view of the assessing authority was reaffirmed. The Board upheld that position and referred questions of law for opinion.
The core problem was whether maize cake and maize oil, acquired during the production of starch, could be regarded as cereal by-products and hence qualify for exemption under Schedule I, or whether they fell under individual taxable lines in Schedule II.
Arguments were advanced on whether starch could be classified as a cereal and whether products emerging from its processing carried independent commercial recognition. The Board’s reference required the High Court to examine these aspects and determine the correct classification.
Main Issue: Whether maize oil and maize cake are exempt as by-products of cereals under Schedule I or are taxable under the specific entries of Schedule II of the Act.
HC’s Decision: The Court observed that starch is not a cereal and hence the products in question cannot be considered as by-products of cereals in terms of Entry 91(ii) of Schedule I. It held that maize oil and maize cake are separate commercial goods of distinctive market identity, and that their classification must be determined by the particular entries of Schedule II. 38 of Part V relating to vegetable and edible oil, and Entry 15 of Part V relating to oil cake were found applicable.
It was concluded that the products are not entitled to exemption under Schedule I nor under Section 8(2A) of the Central Sales Tax Act. The references were therefore disposed of by answering the questions of law against the assessee and in favour of the Revenue.
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