1990 (11) TMI 371 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the "castable refracting binding materials" sold by the assessee, Southern Refractories and Minerals, fall under item 34 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959.
2. Whether the refractory materials called cumicrete sold by Carborandum Universal Limited fall under item 34 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959.

Issue-wise Detailed Analysis:

1. Castable Refracting Binding Materials:
The common question in T.C. Nos. 302 of 1981, 303 of 1981, and 250 of 1990 is whether the "castable refracting binding materials" sold by Southern Refractories and Minerals fall under item 34 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, and thus subject to single point tax as per section 3(2) of the Act, or whether they should be subject to multi-point tax under section 3(1) of the Act. The assessment years in question are 1974-75, 1975-76, and 1984-85, respectively.

The Tribunal and lower authorities held that the disputed turnovers relating to the products of the assessee fall under item 34, both before and after the amendment of the description of goods in item 34. The Tribunal's decision relied on the understanding that the term "cement" in item 34 includes "white cement" and "refractory cement." However, the High Court observed that the term "cement" was not defined in the Act or Rules and should be understood in common parlance. The court noted that white cement is a special variety of ordinary cement and is used sparingly due to its high price.

The court referred to various sources, including "Roger's Manual of Industrial Chemistry," which described a refractory cement called "luminite" with properties similar to Portland cement but with refractory characteristics. Despite this, the court concluded that simply because the word "cement" is used in describing refractory materials, it cannot be termed as cement within the meaning of item 34. The court emphasized the importance of popular or commercial meaning over dictionary meanings and technical classifications.

The court also considered the Indian Standards Institute's classification, which did not categorize the assessee's materials as cement. Additionally, the Central Board of Excise and Customs classified fire clay/refractory mortars under item 68, not item 23 (cement), of the Central Excise Tariff. The court concluded that the refractory materials sold by the assessee are not popularly or commercially known as cement and thus do not fall under item 34.

2. Refractory Materials Called Cumicrete:
In T.C. No. 187 of 1986, the issue was whether cumicrete, sold by Carborandum Universal Limited, falls under item 34 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The relevant assessment year is 1983-84.

The court noted that cumicrete is a refractory mortar and not popularly or commercially known as cement falling under item 34. Cumicrete is a monolithic refractory covering castables, ramming masses, and plastics. The court referred to the "1987 Annual Book of ASTM Standards," which provides standard definitions for terms related to refractories, including castable, fire clay, monolithic refractory, heat setting mortar, and refractory mortar.

The court reiterated that the products in question, despite having bonding properties similar to cement, are primarily fire-resistant or refractory materials. The court emphasized the need to consider the popular or commercial meaning of the term "cement" and concluded that cumicrete does not fall under item 34.

Conclusion:
The High Court held that the refractory materials sold by Southern Refractories and Minerals and Carborandum Universal Limited do not fall under item 34 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, both before and after the amendment. Consequently, these materials are subject to tax at the multi-point rate under section 3(1) of the Act, rather than the single point rate under section 3(2) of the Act. The court allowed the revision petitions in favor of the assessees and modified the orders of the authorities below, with no costs awarded.

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