1997 (7) TMI 567 - SC - VAT and Sales Tax

Whether ultramarine blue is a pigment so that it falls under item 110 of the First Schedule to the Tamil Nadu General Sales Tax Act 1959 as contended by the sales tax authorities or a chemical so that it falls under item 138 thereof as contended by the assessees? Held that - Appeal dismissed. The Madras High Court in the judgment under appeal rightly relied strongly on the Calcutta High Court decision Nilsin Company v. Collector of Central Excise 1983 (7) TMI 51 - HIGH COURT AT CALCUTTA to come to the conclusion that ultramarine blue was a pigment and therefore liable to sales tax under item 110. Neither the assessees nor the sales tax authorities placed any evidence before the Tamil Nadu Sales Tax Appellate Tribunal or before the High Court.

Summary

Issues Involved:
1. Classification of ultramarine blue under the Tamil Nadu General Sales Tax Act, 1959.
2. Whether ultramarine blue is a pigment (item 110) or a chemical (item 138).

Issue-wise Detailed Analysis:

1. Classification of Ultramarine Blue:

The primary issue in these appeals is whether ultramarine blue should be classified as a pigment under item 110 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, or as a chemical under item 138. The sales tax authorities contended that ultramarine blue is a pigment, while the assessees argued it is a chemical.

2. High Court's Reference to Other Decisions:

The High Court at Madras referred to decisions from other High Courts to support the sales tax authorities' stance.

3. Madhya Pradesh High Court Decision:

In N. Ganu Bhai v. Commissioner of Sales Tax, Madhya Pradesh [1975] 36 STC 421 (MP), the issue was whether ultramarine blue, or "neel," was taxable under the entry for dyes or the residuary entry. The High Court concluded that ultramarine blue is a pigment, not a dye. This decision supports the sales tax authorities' position that ultramarine blue is a pigment.

4. Rajasthan High Court Decision:

In Assistant Commercial Taxes Officer, Jodhpur v. Rajasthan Chemical Corporation [1987] 65 STC 356 (Raj), the question was whether ultramarine blue is a pigment. The High Court concluded that ultramarine blue is not a pigment because it is used to whiten clothes and is not understood as a color in common parlance. However, the Supreme Court found difficulty with this reasoning, noting that ultramarine blue is used to whiten clothes, which implies it is a coloring material or pigment.

5. Gujarat High Court Decision:

In Union of India v. C.M.C. India, Ahmedabad [1979] ELT 298 (Guj), the Gujarat High Court focused on whether ultramarine blue is known as a pigment in common parlance. The High Court concluded that it is known only as ultramarine blue, not as a pigment. However, the Supreme Court found the focus misdirected, emphasizing that the real issue was whether ultramarine blue falls under the broader description of a pigment.

6. Calcutta High Court Decision:

The Madras High Court referred extensively to the Calcutta High Court decision in Nilsin Company v. Collector of Central Excise [1984] ECR 928. The Calcutta High Court concluded that ultramarine blue is a pigment based on dictionary definitions and its various uses, including whitening textiles and clothes. This decision strongly supported the sales tax authorities' position.

7. Supreme Court's Conclusion:

The Supreme Court concluded that ultramarine blue is a pigment, referencing dictionaries and literature mentioned in the discussed decisions. The Court emphasized that ultramarine blue is popularly understood to be a pigment due to its use as a whitener or coloring matter.

8. Evidence Before the Tribunal and High Court:

Neither the assessees nor the sales tax authorities provided evidence before the Tamil Nadu Sales Tax Appellate Tribunal or the High Court. They relied on the aforementioned High Court decisions.

9. Final Judgment:

The appeals were dismissed, and the Supreme Court affirmed that ultramarine blue is a pigment, thus falling under item 110 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The appeals were dismissed with no order as to costs.