1. In this tax appeal filed by the assessees against the orders of the Board of Revenue, the question arises as to whether the oil known as armature coil winding oil can be taken as varnish mentioned in item 110 of the First Schedule to the Tamil Nadu General Sales Tax Act.
2. The assessees are dealers in armature coil winding oil. For the assessment year 1974-75, their taxable turnover was determined at Rs. 32,952. The assessing officer treated the said article sold by the assessees as coming under item 110 of the First Schedule to the Act and taxed the relevant turnover accordingly. The assessees filed an appeal before the Appellate Assistant Commissioner contending that armature coil winding oil cannot be classified as varnish and brought under item 110 of the First Schedule and it is liable to be taxed only at multi-point rate and as the turnover fell below the taxable limit of Rs. 50,000, they are not liable to be taxed at all. The Appellate Assistant Commissioner accepted the contention of the assessees and held that the substance called armature coil winding oil sold by the assessees is a spirit-based adhesive oil used for winding armature coil, and, in the business circle, it is treated as an adhesive and not as varnish. The Appellate Assistant Commissioner also examined the oil produced by the assessees and he found that it could be used only as an adhesive and that it has no use as varnish as generally understood in common parlance. He, therefore, felt that it will not fall under item 110 of the First Schedule, and therefore, it has to be treated as multi-point goods only and since the turnover of the assessees is less than Rs. 50,000, which is the taxable limit, the assessment made on the assessees was cancelled. The Board of Revenue thereafter called for the records of the Appellate Assistant Commissioner, and in exercise of its suo motu powers, cancelled the orders of the Appellate Assistant Commissioner and restored the order of the assessing authority on the ground that the Appellate Assistant Commissioner was in error in treating the product sold by the assessees as not a varnish. According to the Board of Revenue, since the article like the one sold by the assessees has been referred as insulating spirit varnish in Indian Standards Specification, it should be taken to be one kind of varnish and the expression 'varnish' used in item 110 of the First Schedule being general, it will take in all kinds of varnish including the insulating spirit varnish sold by the assessees. The view taken by the Board is under challenged before us in this appeal.
3. After due consideration of the matter, we are inclined to take the view that the armature coil winding oil sold by the assessees cannot be taken as varnish so as to bring it under item 110 of the First Schedule. The Board appears to proceed on the basis, since the product in question contains ethyl alcohol, it should be taken to fall within the term 'varnish' which also contains ethyl alcohol. The other basis adopted by the Board of Revenue is that since the armature coil winding oil has been referred to as insulating spirit varnish in Indian Standards Specification, it should be treated as one kind of varnish, and therefore, it should be taken to fall under item 110 of the First Schedule. It is seen that the assessees are producing the armature coil winding oil on the basis of D.L. 2 licence issued under the Tamil Nadu Denatured Spirit Methyl Alcohol and Varnish (French Polish) Rules, 1959. The licence issued under form D.L. 2 enables the licensee to possess and use denatured spirit/methylated spirit/methyl alcohol either as such and/or for use in the manufacture of specified commodities other than varnish. As per the D.L. 2 licence obtained by the assessees, they are not entitled to manufacture varnish. That shows the article manufactured by the assessees, namely, armature coil winding oil, is not treated as varnish by the authorities administering the said Rules. The said Rules specifically provide for a separate form of licence for the manufacture of varnish. D.L. 5 is the form of licence for the manufacture of varnish. That licence enables the licensee to possess and use denatured spirit in the manufacture of varnish and use or sale of varnish. Thus, it is clear that the Tamil Nadu Denatured Spirit Methyl Alcohol and Varnish (French Polish) Rules, 1959, makes a distinction between varnish and other articles manufactured out of denatured spirit. It is not, therefore, possible to agree with the Board of Revenue that every article which is manufactured by use of ethyl alcohol or denatured spirit should be taken to be varnish. According to the Rules, it is only the French polish which can be taken to be varnish and not all the commodities in the manufacture of which denatured spirit is used as a raw material. Even assuming that the article sold by the assessees has been referred to in the Indian Standards Specification as insulting varnish, that cannot straightaway be taken as a conclusive factor. The nature of the article and the use to which it is put cannot be completely lost sight of. In this case, the article manufactured by the assessees is used only as an adhesive in the process of armature coil winding and it is not used for polishing any surface. The varnish is normally understood as a substance which is used for polishing wooden or metallic surface. The varnish which is to be applied to a surface is a substance which will quickly evaporate making the surface glassy. Therefore, varnish is a substance used for a purpose different from the one for which the oil produced by the assessees is used. Having regard to the nature of the substance and also the use to which it is put, the oil so produced and sold by the assessees cannot in any sense be called a varnish which is used only for polishing purposes and not as an adhesive. It is well-established that a term occurring in a statute should be given a popular meaning, i.e., a meaning by which a common man will understand the said term. Adopting the popular meaning, the term 'varnish' can be taken to refer to a substance which is used in polishing. If one were to go to a market and ask for varnish, no one will offer an adhesive, for, every one knows the use for which varnish is put to and an adhesive cannot be an equivalent to a varnish.
4. We are not inclined to agree with the Government Pleader when he says that among the mechanics who deal with armature coils and undertake the operation of armature coil winding know the adhesive which is produced by the assessees only as varnish. Even so, that will not be the popular meaning. The fact that certain persons call a product as a particular kind of varnish cannot be taken as a popular meaning, a meaning that a common man will attribute to that article. In our view, in this case, the Board of Revenue is not justified in revising the orders of the Appellate Assistant Commissioner holding that the armature coil winding oil is not varnish. In this view, the order of the Board of Revenue is set aside, and that of the Appellate Assistant Commissioner is restored. No costs.