M.C. Desai, C.J.
1. The following question has been referred to this Court for its opinion by the Judge (Revisions) Sales Tax:
Whether red lead and zinc oxide are covered by the term 'dyes and colours' within the meaning of the Notification No. ST.-1429/X-1012-1948, dated 30th March, 1949, or fall under the head of 'chemicals of all kinds' under the Notification No. ST-117-X-923-1948, dated 8th June, 1948, under the U. P. Sales Tax Act.
2. The question is for assessment of the sales tax for the years 1950-51 and 1952-53. The assessee is a manufacturer of glassware and dealer in glassware, zinc oxide and red lead in Firozabad, which is well-known for its bangle industry. It imports zinc oxide and red lead, uses some in manufacturing glass and sells the rest as a part of its business. Zinc oxide in known popularly as safeda and red lead as sindur. Under Notification No. ST-117/X-923-1948, dated June 8, 1948, issued by the State Government in exercise of the powers conferred by Section 3-A of the Act, the State Government have directed that proceeds of sale of the goods entered in the Schedule attached thereto would not be included in the turnover of any dealer, except at the point in the series of sales by successive dealers mentioned in the Schedule. The relevant entries in the schedule are :
10. 'Dyes, colours, and the compositions thereof'.
11. 'Chemicals of all kinds'.
3. The notification came into effect on 9th June, 1948. It was amended with effect from 30th March, 1949, by a Notification No. ST-1429/X- 1012-1948, and 'dyes, colours and the compositions thereof are to be taxed on all points of sale at a certain rate. This rate is lower than the rate at which these goods were to be taxed at a single point under the earlier notification. A controversy arose between the assessee and the Sales Tax Authorities in respect of the rate to be applied to the turnover in respect of zinc oxide and red lead sold by the assessee during the two assessment years. The assessee claimed that they were colours and, therefore, came within the scope of the second notification, whereas the Sales Tax Authorities claimed that they were chemicals and were governed by the earlier notification. The Sales Tax Officer held them to be chemicals and not dyes or colours, but did not assign any reasons for his view. The Judge (Appeals) agreed with it and did not give any reasons. The Judge (Revisions) agreed with them and the view taken by him was that these articles are not by their nature dyes or colours and that they are also not used as such. He seemed to be of the opinion that they are pigments and that pigments are not dyes ; he did not consider whether pigments are colours or not. Then at the instance of the assessee he referred the above question.
4. There is no doubt that the articles are pigments. In the Railway Tariff Rules both are treated as 'dyes and colours' like barium sulphate, copper sulphate and copper oxide. Red lead, which is lead oxide, and zinc oxide are chemicals also. Like barium sulphate and copper sulphate they are pigments and, therefore, come within the phrase 'dyes and colours'. Certain chemicals are 'dyes and colours'. It was not contended by Sri Chaturvedi that the two articles are dyes ; they are not soluble in water and some other liquids. 'Colour', according to dictionaries is 'a colouring material and includes a dye, a pigment and a paint' : see Webster's, Standard, Shorter Oxford and Murray's. According to Noel Heaton's 'Outlines of Paint Technology', page I, colour means a coloured substance which has the power of reflecting light of a particular colour. The meaning of red lead, according to Shorter Oxford and Murray's dictionaries, is an oxide of lead largely used as a pigment. Noel Heaton also treats it as a pigment. In 'Pigments' by Remington and Francis it is said at page 145 that red lead, also known as minium, is one of the oldest pigments being known from before the Christian era. Zinc oxide is a pigment according to Noel Heaton (pages 25 to 27). In T. I. Williams' 'The Chemical Industry', Pelican Series, page 163, it is described as a white pigment. Remington and Francis write at page 18 (supra) that zinc oxide must be looked upon as a modern pigment, though known to the alchemists. It is also known as zinc white, snow white and Hubbuck's white. It is stated by T. I. Williams at page 162 that pigments are allied to dyes and in everyday language are often not distinguished from them at all, that the difference between them is essentially one of solubility or insolubility in water or other liquids and that pigments are used as insoluble particles suspended in the liquid or medium to be coloured, such as linseed oil for paint or rubber. It is clear from these authorities that the two articles are pigments, and as such colours. This position was accepted by Sri Shanti Bhushan. What he contended was that they were not sold as colours or for use as colours. The assessee is not a dealer in dyes and colours and had stocked and sold them not as colours but as articles used in glass manufacture. There are many glass manufacturers in Firozabad and the articles are presumably sold to them for use in glass manufacture. According to the Encyclopaedia Britannica, zinc oxide is used in a large proportion in the manufacture of optical glass and tableware in order to impart special properties and not for colouring. Neither optical glass nor tableware is coloured and they remain uncoloured in spite of the other ingredients being mixed with zinc oxide in large proportion. According to Remington and Francis, page 31, zinc oxide is one of the ingredients necessary to make many types of glass and that without its use such varieties of glass as lamp chimneys and the chemical resistance glass used for flasks, beakers, etc. would be impossible. It is also used in conjunction with selenium in the manufacture of ruby glass. The percentage of zinc oxide in various types of glasses varies from 1.29 to 15.22. All this use of the two articles in glass manufacture is not as colours but as chemicals. We reject the contention of Sri Chaturvedi that the use must be treated as use as colours because the use is for fixing certain colours in the glass. Merely because a certain article is used along with a colouring matter in order to fix the colour in the glass it does not become a colour. An article does not become a colour merely because it must be used along with a colour and without its use the colour would be practically useless. What is required under the notifications is an article to be used as colour.
5. The articles are undoubtedly chemicals ; they may also be colours. For purposes of the sales tax they must be placed in one category or the other because the Sales Tax Act applies one rate on sale of colours and another rate on sale of chemicals. It was contended that when there is a choice of two rates the rate favourable to the assessee should be applied, or that if there is an ambiguity in a law it should be interpreted in a manner favourable to the taxpayer. The question before us is how an article which comes within two categories to which different rates are applied, is to be classified. We do not think that the only rule to be applied to resolve the ambiguity is that every ambiguity should be resolved in favour of the taxpayer. Having regard to the intention of the Legislature to tax sales, any ambiguity as to the category in which an article should be placed should be resolved with reference to its sale. If an article is sold as an article belonging to one category it must be treated as a sale of an article of that category even though it answers the description of another category. The Legislature has fixed different rates for taxation for different categories according to certain principles it has in mind. If a colour is sold it charges sales tax on it at a certain rate, whereas if a chemical is sold it charges sales tax at a higher rate. If an article though capable of being used as a colour is sold as a chemical, it would be more in consonance with the legislative intention to assess sales tax on it as a chemical. When a question is put 'what was sold by the assessee ?', it would be truer to say that he sold a chemical than to say that he sold a colour. If an article is capable of being used as a chemical and also as a colour, the answer to the question what he sold would depend upon how it was treated by the vendor. If he stocked and sold it as a chemical, it would be a chemical sold by him and more so if it was bought by the vendee also as such.
6. We, therefore, hold that the two articles were chemicals and that the tax on the proceeds of their sale is governed by the earlier notification of 8th June, 1948.
7. We direct that copies of this judgment shall be sent under the seal of the High Court and the signature of the Registrar to the Judge (Revisions) Sales Tax and the Commissioner of Sales Tax, U. P., as required by Section 11(6). We further direct that the Commissioner of Sales Tax will get his costs of this reference, which we fix at Rs. 100.