1991 (2) TMI 374 - HC - VAT and Sales Tax

Summary

Issues:
Identification of alkyl benzene sulphonate as a chemical or a detergent for taxation under the Tamil Nadu General Sales Tax Act, 1959.

Analysis:
The judgment of the Madras High Court addressed the issue of whether alkyl benzene sulphonate should be classified as a chemical or a detergent for taxation purposes under the Tamil Nadu General Sales Tax Act, 1959. The Sales Tax Appellate Tribunal had ruled that alkyl benzene sulphonate should be taxed as a detergent due to its detergent properties, referencing various authorities and expert opinions. The Tribunal highlighted the cleansing properties, surface tension reduction, emulsifying action, and foam formation capabilities of alkyl benzene sulphonate, classifying it as a detergent based on these characteristics. Additionally, the department had consistently taxed the commodity under the detergent category.

However, the High Court disagreed with the Tribunal's classification, emphasizing that the essence of the law dictates that detergents are taxed under a specific item while chemicals fall under a different category. The Court noted that while alkyl benzene sulphonate exhibits detergent properties, these characteristics are not exclusive to detergents and can be found in various chemicals. The Court clarified that goods should be understood in their common parlance, and the amendment to item 37 of the First Schedule includes specific detergent products like detergent powders and liquids. Despite acknowledging the detergent-like properties of alkyl benzene sulphonate, the Court concluded that it should be classified as a chemical unless proven otherwise.

Therefore, the High Court set aside the Tribunal's decision, ruling in favor of classifying alkyl benzene sulphonate as a chemical rather than a detergent for taxation purposes under the Tamil Nadu General Sales Tax Act, 1959. The judgment restored the order of the Appellate Assistant Commissioner and allowed the tax case without imposing any costs.