(1) The short question for decision in this case is whether sandalwood oil will fall within one of the articles mentioned in the classification of goods serially numbered as item 51 in the First Schedule to the Madras General sales Tax Act, 1959, which gives a description of goods in respect of which single point sales tax is levied under sub-sec. (2) of S. 3 of the Act, and the rate of such levy.
(2) In the year of assessment the appellant who is a manufacturer of sandalwood oil had a very large turnover in sandalwood oil exceeding rupees eleven lakhs, the bulk of which were export sales and about rupees a lakh and odd were sales in this State. The assessing authority levied tax on the single point basis at 6 per cent on the sales treating them as falling under Serial No. 51, which refers to 'scents and perfumes, powders, snows and scented hair oils'. The assessees appealed to the Sales Tax Appellate Tribunal. In the view of the majority of the Tribunal sandalwood oil was a perfume within this category. But the dissentient minority opinion of the Accountant Member was that it falls under serial No. 6(a) of the Second Schedule, which refers to
'oil seeds, other than cardamom, and groundnut, that is to say, seeds yielding non-volatile oils used for human consumption or in industry, or in the manufacture of varnishes soaps and the like or in lubrication and volatile oils used chiefly in medicines, perfumes, cosmetics and the like'.
and which is assessable at 2 per cent. The assessee's contention was that sandalwood oil fell under neither of these categories but was a vegetable oil falling within serial No. 20 of the First Schedule assessable at two per cent. The majority opinion of the Tribunal prevailed and the assessment was confirmed. This revision is filed before this Court against that finding.
(3) Learned counsel for the petitioner drew our attention to the fact that serial No. 6(a) of the second Schedule deals with oil seeds, which are then split up into two groups, those which yield non volatile oils and those which yield volatile oils. The view of the minority of the Tribunal holding that the sandalwood oil fell under the second group is clearly wrong, because sandalwood oil is not a volatile oil yielded by oil seeds.
(4) The next question is whether it is a perfume as found by the majority. the word 'perfume' is defined in the shorter Oxford dictionary as 'volatile particles, scent, or odour emitted by any sweet, smelling substance'. A book of reference on 'Chemical Process Industries' by Horris shrove (Mac Crew Hill service publication) which appears to deal with the matter fully and authoritatively was supplied to me by the learned counsel for the petitioner. It defines 'perfume' as any mixture of pleasantly odoriferous substances incorporated in a suitable vehicle. the constituents of a perfume are three-fold (1) a vehicle or solvent, (2) a fixative, and (3) an odoriferous element. The vehicle is usually a preparation of highly refined ethyl alcohol mixed with more or less water. Fixatives are defined as substances which are of a lower volatility than the odoriferous elements and which retard and even up the rate of evaporation of the various oderous constituents. They may be of animal nature like a civet or they may be of vegetable nature like a rasin. Odoriferous elements include essential oils which are defined as volatile odoriferous oils of vegetable origin. This will include sandalwood oil. How the purpose served by each of these three constituents of a perfume is also explained in the book above referred to.
(5) Some of the essential oils like sandalwood oil are used both for their odoriferous as well as fixative properties. The odoriferous element vaporises at a high temperature which ranges between 285 to 290 c in the case of sandalwood oil. A perfume, to have its full effect, must volatilise readily at the ordinary air temperature, For this purpose a solvent like alcohol which has two irritant properties of its own and which vaporises readily at air temperature is used. but to even up the rate of vaporisation of two substances with highly differing volatile temperatures like the solvent on the one hand and the odoriferous element on the other, fixatives are used. It is clear from the above discussion of the nature of perfumes and the part that an essential oil like sandalwood oil plays in the manufacture of perfumes that sandalwood oil can best serve only for the purpose of providing two out of the three constituents of a perfume, namely, the fixative and the odoriferous clement, but because of it high temperature of vaporisation, by itself without the admixture of a proper solvent, it cannot serve as a perfume, in the ordinary as well as the technical sense of the term. It is also common experience that sandalwood oil as sold in the market does not vaporise readily, to serve the purpose of a common perfume. It has to be rubbed hard on the hand or some other part of the body so that the temperature can be raised by fiction and better vaporisation takes place. Therefore, it has to be used in mixture with other substances like oil or alcohol or soap so that the resultant product can emit the peculiar perfume characteristic of sandal.
(6) Learned counsel for the Government Pleader, urged that for construing the meaning of the word, its ordinary meaning should be used and not the technical meaning. A reference to the various articles mentioned in serial no. 51 of Schedule (1) shows that they are ordinary articles used for cosmetic purposes. They must be in such a form as can be used forthwith by the customer without taking further trouble of putting them through some other process, to make them ready for use.
(7) It is, therefore, legitimate to infer that the articles 'Scent' or' perfume' in the schedule even in their ordinary meaning were intended to refer to articles which are in a state, ready for use for their cosmetic properties. Therefore, a perfume must be one which is ready for use because of its odoriferous and high volatile character, after the admixture of proper solvents, fixative and odoriferous substances. The foregoing discussion would show that the sandalwood oil as produced and sold by the assessees is only and essential oil and that proper processes had to be performed on it, before it can be classified as a perfume or scent as described in Serial No. 51 of the Schedule.
(8) Learned counsel for the petitioner also drew our attention to the fact that the bulk of the sales of the petitioner in the year was in large containers holding from 5 lbs. to 50 lbs; and that the intention in effecting such sales was to sell the oil only as a base for preparing perfumes and other articles. It was also mentioned that the sandalwood oil is a medicine used for pharmaceutical purposes. Reference was made in this connection to the authority of the Allahabad High Court in Bishambar Dayal Srinivas v. Commissioner of Sales Tax, 1963 14 STC 184 , where it is observed:
'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 revolved 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. If, therefore, an article is capable of being used as a chemical and also as a colour, the answer to the question what was sold would depend upon how it was treated by the vendor. If he stocked and sold it as a chemical, it would be a sale of chemical and more so if it was bought by the vendee also as such'.
Learned counsel for the petitioner also referred to a decision under the Income-tax Act reported in East India Housing and Land Development Trust, Ltd. v. Commr. of Income-tax. W. b. : 42ITR49(SC) , where it was observed that if the income from a source fell within a specific head set out in S. 6 (Indian Income-tax act, 1922) that fact that it might indirectly be covered by another head would not make the income taxable under the latter head. from the foregoing discussion it would appear that there is no difficulty in holding that sandalwood oil, in the form sold by the petitioners, would not fall either under Serial No. 51 of the first Schedule or under serial No. 6(a) of the second Schedule.
(9) There remains serial No. 20 of the first schedule under which, according to the petitioner, it would fall. That serial number deals with vegetable oil. the word 'vegetable' has been defined in the Shorter Oxford Dictionary as meaning (1) a living organism belonging to the vegetable kingdom or the lower of the two series of organic beings; a growth devoid of animal life; a plant and (2) a plant cultivated for food; especially an edible herb or root used for human consumption and commonly eaten. sandalwood oil will certainly fall within the first of the meanings above, and, therefore, there appears to be no difficulty in classifying it as a vegetable oil falling within serial No. 20 of the First Schedule of the Sales Tax Act and excluding it from both Serial No. 51 of the First Schedule and Serial No. 6-A of the Second Schedule. The revision case is allowed and the assessing authority will revise the assessment in the light of our findings above. there will be no order as to costs.
(10) Revision allowed.