1975 (7) TMI 127 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of tax entry for ultramarine blue under the M.P. General Sales Tax Act, 1958.

Analysis:
The case involved a reference made by the Board of Revenue, Madhya Pradesh, under section 44 of the M.P. General Sales Tax Act, 1958, to decide whether ultramarine blue, commonly known as neel, should be taxed under a specific entry in Schedule II or under the residuary entry in Schedule II. The dispute centered around the classification of ultramarine blue for taxation purposes.

The relevant entry in Schedule II was revised over time, with changes in the description and tax rates applicable to items falling under it. The contention was that ultramarine blue should be classified as a dye and taxed accordingly due to the inclusion of "dyes" in the revised entry. However, ultramarine blue was not explicitly mentioned in any entry of Part II of Schedule II.

The court analyzed the characteristics of a dye according to scientific criteria, emphasizing the need for a substance to have suitable color, fixability to fabric, permanency, and resistance to external factors to be classified as a dye. Various definitions and classifications of dyes were discussed to determine whether ultramarine blue met the criteria of a dye.

The court differentiated between a dye and a pigment, highlighting that ultramarine blue, in the form of a powder used for laundry, did not meet the criteria of a dye. It was observed that ultramarine blue was not suitable for impregnating fabrics in a raw state, lacked permanency, and could not withstand washing or alkaline substances, thus not qualifying as a dye.

Ultimately, the court concluded that ultramarine blue, or neel, did not meet the criteria to be classified as a dye under the relevant tax entry. Therefore, it was held that ultramarine blue should be taxed under the residuary entry in Part VI of Schedule II, rather than under the specific entry in Part II.

In conclusion, the judgment clarified the classification of ultramarine blue for taxation purposes under the M.P. General Sales Tax Act, 1958. The decision provided a detailed analysis of the characteristics of dyes, pigments, and the specific properties of ultramarine blue to determine its appropriate tax treatment, ultimately ruling in favor of taxing it under the residuary entry.