The Karnataka High Court has held that hydraulic oil brought into a local area is liable to entry tax under the Karnataka Tax on Entry of Goods Act, 1979, observing that the expression “and others” appearing in the entry relating to petroleum products is wide enough to cover petroleum products that are not specifically enumerated.

A Division Bench comprising Justice S.G. Pandit and Justice Dr. K. Manmadha Rao ruled that hydraulic oil is a consumable and not a raw material. 

The seven civil revision petitions filed by Wipro Enterprises Private Limited and upheld the orders passed by the Karnataka Appellate Tribunal confirming the entry tax demands.

Buy Now: 70+ Judgements Indirect Tax – July 2026 | E-Magazine

The petitions arose from proceedings initiated against the company over hydraulic oil procured from suppliers located outside Karnataka and brought into a local area for use in hydraulic cylinders manufactured by it.

The assessing authorities took the view that entry tax had not been paid on the value of the hydraulic oil and consequently levied tax and penalty. After the company’s appeals were rejected by the First Appellate Authority, it approached the Karnataka Appellate Tribunal.

The Tribunal dismissed the appeals and held that hydraulic oil was a petroleum product covered by Entry 67 of the First Schedule to the KTEG Act, read with Serial No. 1(viii)(e) of the notification dated March 30, 2002. The company then approached the High Court through seven revision petitions.

Before the High Court, the company argued that hydraulic oil was distinct from lubricating oil and was primarily used to transmit hydraulic power and generate mechanical force in hydraulic systems.

It contended that merely because hydraulic oil also possessed lubricating properties, it could not be classified as lubricating oil or treated as a commodity covered by Entry 67 of the First Schedule.

The company further submitted that hydraulic oil was not specifically mentioned either in Entry 67 or in the March 30, 2002 notification. According to it, a commodity that was not expressly enumerated in the relevant entry could not be brought within the charging provision by implication.

It also challenged the reassessment proceedings on the ground that the statutory requirements prescribed under Section 6(1) of the KTEG Act had not been fulfilled.

The State authorities, however, maintained that hydraulic oil was admittedly a petroleum product and was squarely covered by Entry 67, read with the relevant notification.

The State argued that the issue had already been settled by the High Court in Hyva India (P) Ltd. v. Additional Commissioner of Commercial Taxes, wherein hydraulic oil was held to be a consumable liable to entry tax.

The High Court noted that Entry 67 of the First Schedule deals with petroleum products and includes lubricating oil, transformer oil, brake fluid or clutch fluid, bitumen, tar “and others.” The entry specifically excludes aviation fuel, liquefied petroleum gas, kerosene and naphtha used in the manufacture of fertilizers.

The Court relied on the Supreme Court’s decision in Indian Aluminium Company Limited v. Assistant Commissioner of Commercial Taxes, which interpreted the scope of the expression “and others” appearing in Entry 67.

It observed that the Supreme Court had categorically held that the expression would bring within its scope petroleum products other than those expressly mentioned in the entry.

The existence of a specific exclusion clause also demonstrated the legislative intention to include all petroleum products, except those commodities that had been expressly excluded, the High Court explained.

Consequently, the omission of the words “hydraulic oil” from the statutory entry was held to be inconsequential. Once the expression “and others” had been authoritatively interpreted as covering petroleum products not specifically enumerated, hydraulic oil could not escape taxation merely because it was not individually named in the schedule.

The High Court further relied on its earlier Division Bench ruling in Hyva India, which had directly considered whether hydraulic oil brought into a local area and used in tippers and dumpers was liable to entry tax.

In that case, the Court had held that the expression “tar and others” was wide enough to include hydraulic oil.

The earlier judgment had also examined the nature and use of hydraulic oil and concluded that it was a consumable used in hydraulic systems rather than a raw material employed in manufacturing a finished product.

No new product emerged from the use of hydraulic oil, and it was therefore liable to entry tax under the KTEG Act, the earlier Division Bench had held.

Applying that principle, the High Court found that the issue raised by Wipro Enterprises was substantially identical to the question already answered in Hyva India. The Court said it was bound by the coordinate Bench’s ruling and found no error in the Tribunal’s reliance on that precedent.

The company also relied on the decision in Carl Bechem Lubricants (India) Private Limited, where the levy of entry tax on IPOL Cylinder Oil 1200 had been set aside.

The High Court, however, found that the ruling was based on materially different facts. In that case, the commodity was found to be base oil used as a raw material in the manufacture of grease and not lubricating oil.

The product underwent further processing before the finished commodity emerged. It was in that factual context that the entry tax levy had been held unsustainable.

In contrast, hydraulic oil had already been classified in Hyva India as a consumable from whose use no finished product emerged. The Court observed that the distinction drawn in Carl Bechem between a raw material and a finished consumable product supported, rather than weakened, the reasoning adopted in Hyva India.

The Court also upheld the Tribunal’s decision to distinguish the rulings in Kluber Lubrication (India) Private Limited and Merlyn Hydrocarbons Private Limited. It noted that those cases involved different commodities and did not raise an issue identical to the taxability of hydraulic oil.

Addressing the challenge to the initiation of reassessment proceedings, the High Court explained that Section 6(1) of the KTEG Act empowered the assessing authority to reassess escaped turnover, under-assessed turnover, turnover assessed at a lower rate, or cases where an exemption or deduction had been wrongly granted.

The Tribunal had examined the material on record and found that the conditions prescribed under Section 6(1) were satisfied.

The High Court held that the company had failed to demonstrate any jurisdictional defect or patent illegality in that finding which could justify interference in the exercise of revisional jurisdiction.

It therefore rejected the company’s objection to the validity of the reassessment proceedings.

The High Court ultimately held that hydraulic oil is a petroleum product falling within Entry 67 of the First Schedule to the KTEG Act and Serial No. 1(viii)(e) of the March 30, 2002 notification.

It further held that hydraulic oil is a consumable and not a raw material, and entry tax becomes payable when it is brought into a local area for consumption, use or sale.

The Court found that the Tribunal’s findings were fully supported by the law declared by the Supreme Court and the Karnataka High Court’s coordinate Bench. It concluded that the Tribunal’s orders did not suffer from perversity, illegality or any error of law warranting interference.

Membership Required to Access Case Details & Order Copy

To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.

Read More: CENVAT Credit Can’t Be Denied for Non-Disclosure in ST-3 Returns or Delayed Availment: CESTAT