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The State of Gujarat Vs. Jayant Chemical Works Pvt. Ltd. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtGujarat High Court
Decided On
Case NumberSales Tax Reference No. 10 of 1970
Judge
Reported in[1975]36STC112(Guj)
ActsBombay Sales Tax Act, 1959; Gujarat Act, 1963 - Sections 14B, 20 and 24(3)
AppellantThe State of Gujarat
RespondentJayant Chemical Works Pvt. Ltd.
Appellant Advocate G.N. Desai, Govt. Pleader, i/b.,; M.I. Hava, Adv. of Bhaishanker Kanga & Girdharlal, Govt. Solic
Respondent Advocate D.D. Vyas, Adv.
Cases ReferredU.P. v. S.N. Brothers
Excerpt:
sales tax - assessment - entry 4 of schedule c to bombay sales tax act, 1959 - refined bentonite powder produced by assessee - such substance had chemical effect and comes within entry 4 of schedule c. - - ' 4. it appears clearly that entry no. negativing this contention, the court held as under :in our opinion the random house dictionary cannot serve as a safe guide in construing the words used in the list in the notification in question for the purpose of deciding whether or not the words used in entries nos......those paise in the with heading specified from rupee. 'rate of purchase time to time in tax' and entry schedules a, b, thereunder were c and d and in deleted - vide the preceding guj. act 11 of entries. 1961, section 20, with effect from 19th april,1961.' prior to this amendment, i.e., on and from 1st january, 1960, to 18th april, 1961, the entry read as under : ---------------------------------------------------------------------- 1 2 3 4 5 rate of purchase tax. ---------------------------------------------------------------------- '22. all goods other three naye do.** three naye paise in the than those paise in the rupee.' specified from rupee. time to time in schedules a, b, c and d and in the preceding entries. ----------------------------------------------------------------------.....
Judgment:

Mehta, J.

1. The question referred to us for our opinion in this reference is as under :

'Whether, on the facts and in the circumstances of the case, refined bentonite powder is covered by entry 4 of Schedule C to the Bombay Sales Tax Act, 1959, or is covered by residuary entry No. 22 of Schedule E to the said Act ?'

2. The opponent-company is a registered dealer manufacturing and selling chemicals and medicines. During the period of assessment for S.Y. 2019, the opponent-company sold refined bentonite powder and claimed that the material sold was covered by entry 4 of Schedule C to the aforesaid Act. The Sales Tax Officer, however, negatived this contention and held that it fell under entry 22 of Schedule E. The matter was taken in appeal by the opponent-company, wherein the order of the Sales Tax Officer was confirmed. The opponent-company, therefore, took the matter in second appeal before the Sales Tax Tribunal. The Tribunal after considering the nature of the description of the product known as bentonite powder as given in the British Pharmaceutical Codex, 1949, and having regard to its earlier decision in Anil Starch Product Ltd. v. State of Gujarat, in Appeal No. 10 of 1967 decided on 26th April, 1968, reached the conclusion that the substance in question had a chemical effect and was, therefore, a chemical liable to be taxed under entry 4 of Schedule C to the Act. At the instance of the State this reference has been made to this court.

3. The relevant two entries, namely, entry No. 4 of Schedule C to the Act and entry No. 22 of Schedule E to the Act, read as under :

'SCHEDULE C --------------------------------------------------------------------- Sl. Description of Rate of Rate of Remarks. No. goods sales tax. purchase tax. 1 2 3 4 5 --------------------------------------------------------------------- 4. Dyes and chemicals Two naye Two naye In columns 3 and 4, other than those paise in paise in the words 'Two naye specified in any the rupee. the rupee. paise in the rupee' other entry in were substituted this or any for the letters 'Do' other schedule. by Guj. Act 19 of 1963, with effect from 17th April, 1963.

Prior to the above amendment, i.e., for the period on and from 1st January, 1960, to 16th April, 1963, the entry read as under :

--------------------------------------------------------------------- 1 2 3 4 5 --------------------------------------------------------------------- '4. Dyes and chemicals Do.* Do.* other than those specified in any other entry in this or any other schedule. *Here 'Do', have reference to 'two naya paise in the rupee. This change is made consequent upon change in rate of tax in entry 3 in this schedule.' ---------------------------------------------------------------------- SCHEDULE E ---------------------------------------------------------------------- Sl. Description of Rate of Rate of general Remarks. No. goods. sales tax. sales tax. 1 2 3 4 5 ---------------------------------------------------------------------- 22. All goods other Three naye Do.** (1) On and from than those specified paise in 27th December, 1961, from time to time the rupee. in this entry, in section 14B in column 2, and in Schedules after the words A, B, C and D 'from time to and in the time', the words preceding entries. figures and letter 'in section 14B and were inserted - vide Guj. Act 50 of 1961, section 6.'

Prior to this amendment, i.e., for the period on and from 19th to 26th December, 1961, the entry read as under :

---------------------------------------------------------------------- 1 2 3 4 5 ---------------------------------------------------------------------- '22. All goods other Three naye Do.** (2) Column 5 together than those paise in the with heading specified from rupee. 'Rate of purchase time to time in tax' and entry Schedules A, B, thereunder were C and D and in deleted - vide the preceding Guj. Act 11 of entries. 1961, section 20, with effect from 19th April,1961.'

Prior to this amendment, i.e., on and from 1st January, 1960, to 18th April, 1961, the entry read as under :

---------------------------------------------------------------------- 1 2 3 4 5 Rate of purchase tax. ---------------------------------------------------------------------- '22. All goods other Three naye Do.** Three naye paise in the than those paise in the rupee.' specified from rupee. time to time in Schedules A, B, C and D and in the preceding entries. ---------------------------------------------------------------------- In Schedule E the rate of sales tax and general sales tax from time to time against this entry is as under : Period Rate of sales Rate of general sales tax. tax. 1-1-1960 to 16-4-1963 3 per cent. 2 per cent. On and from 17-4-1963 3 per cent. 3 per cent. --------------------------------------------------------------------- '**Here 'Do.' have reference to the 'Three naye paise in the rupee' on and from 17th April, 1963, vide Guj. Act 19 of 1963, section section 24(3). Prior to this date, i.e., during the period on and from 1st January, 1960, to 16th April, 1963, 'Do', have reference to 'two naye paise in the rupee.' ----------------------------------------------------------------------

4. It appears clearly that entry No. 4 of Schedule C so far as it relates to dyes and chemicals is itself a residuary entry in so far as no specific provision is made in other entries of Schedule C or in any other schedule. The Tribunal has considered the nature of the product, namely, bentonite powder, the manner in which it is produced, the contents of the same and the uses to which it can be put and also to the prevalent market price of the raw bentonite and the bentonite powder. It appears from the British Pharmaceutical Codex, 1949, at page 139, that bentonite is a native, colloidal, hydrated aluminum silicate, the principal constituent being montuprillenite, Al2O3, SiO3, H2O. The description of the substance is that it is a very fine, pale buff or cream-coloured powder which swells when added to water, free from grit, odourless; taste slightly earthly. It is put to medical and industrial use and the gels are suitable for suspending powders in aqueous preparation and for ointment and cream bases. It is also used for preparation of industrial barrier creams and cosmetics. It is, therefore, clear that it is a substance obtained by a certain process and used for producing certain chemical effects in the industrial and medical preparations. We are, therefore, of the opinion that there cannot be any doubt that bentonite powder is a chemical. However, on behalf of the revenue it was urged that assuming that this bentonite powder is a chemical, it cannot be taxed under entry No. 4 of Schedule C to the Act, as the entry prescribes dyes and chemicals other than those specified in any other entry to Schedule C or any other schedule and it should, therefore, be taxed under the residuary entry No. 22 of Schedule E. It was submitted that all chemicals cannot be taxed under entry No. 4 of Schedule C to the Act, as the meaning of the word 'chemicals' would take its colour from the preceding word 'dyes' described in the said entry. In support of this contention reliance was placed on the decision of the Supreme Court in Commissioner of Sales Tax, U.P. v. S.N. Brothers ([1973] 31 S.T.C. 302 (S.C.)), where the court was concerned with the question as to the appropriate entry under which food colour and essence should be taxed. On behalf of the revenue in that case, the contention was to tax the food colour and syrup essences under the entries of dyes and colours. Reliance in that case was placed by the revenue on the dictionary meaning of the word 'colour' and on the basis of the dictionary meaning, food colours were sought to be included in the entry of dyes and columns. Negativing this contention, the court held as under :

'In our opinion the Random House Dictionary cannot serve as a safe guide in construing the words used in the list in the notification in question for the purpose of deciding whether or not the words used in entries Nos. 10 and 37 cover food colours and syrup essences; indeed this dictionary is apt to be a somewhat delusive guide in understanding the meanings of the words and expressions with which we are concerned in the context in which they are used. This dictionary gives all the different shades of meanings attributable to the words referred but that is hardly helpful in solving the problem raised in the present controversy. The words 'dyes and colours' used in entry No. 10 and the words 'scents and perfumes' used in entry No. 37 have to be construed in their own context and in the sense, as ordinarily understood and attributed to these words by people usually conversant with and dealing in such goods. Similarly, the words 'food colours' and 'syrup essences' which are descriptive of the class of goods, the sales of which are to be taxed under the Act have to be construed in the sense in which they are popularly understood by those who deal in them and who purchase and use them ....'

5. After referring to the authorities cited at the Bar, the Supreme Court proceeded to observe further as under :

''Food colours' and 'syrup essences' being themselves known articles of common use, the question arises whether the words and the expressions used in entries 10 and 37 of the list are intended to take within their fold goods popularly known in common parlance by the names of 'food colours' and 'syrup essences'.

It cannot be gainsaid that 'food colours' and 'syrup essences' are edible goods whereas 'dyes and colours and compositions thereof' and 'scents and perfumes' as specified in entries Nos. 10 and 37 of the list do not seem prima facie to connote that they are edible goods. This is the reasoning of the High Court and it appears to us to be both logical and rational ...'

6. We are therefore not inclined to accede to this contention of the revenue for the simple reason that in the first instance, the word 'chemicals' should not by any stretch of imagination in this particular entry be said to take a limited meaning from the preceding word 'dye-stuff'. It should be noted that this particular entry No. 4, namely, dyes and chemicals other than those mentioned in other entries of Schedule C or of those in other schedules, is a residuary entry as far as the dye-stuff and chemicals are concerned. It takes in its purview all types of dyes and chemicals which are not specifically mentioned in other entries of Schedule C or in any other entries of any schedules. Secondly, entry No. 22 is again a larger residuary entry inasmuch as it tries to take in its purview all other articles and goods which are not specifically mentioned in any other entries to other schedules. As it has been rightly held by the Tribunal, having regard to the uses, composition and description, that the bentonite is a chemical, it necessarily comes within entry No. 4. The entry with which the Supreme Court was concerned in Commissioner of Sales Tax, U.P. v. S.N. Brothers ([1973] 31 S.T.C. 302 (S.C.)) was dyes and colours and, therefore, necessarily the term 'colour' must take its import from the preceding word dye-stuff and any attempt by the taxing authority to take within the mischief of that entry any other edible colours such as food colours would not be justified. In our opinion, the decision of the Supreme Court is not at all helpful for the interpretation of the entry with which we are concerned in this case.

7. The result is that we do not see any justifying reasons to differ from the decision reached by the Tribunal. We, therefore, answer the question referred to us that refined bentonite powder is covered by entry No. 4 of Schedule C to the Bombay Sales Tax Act, 1959. The State should pay the costs to the opponent.

8. Reference answered accordingly.


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