1993 (1) TMI 273 - HC - VAT and Sales Tax

Issues Involved:

1. Classification of maleic resins under the Gujarat Sales Tax Act, 1969.
2. Binding nature of a determination order by the Deputy Commissioner of Sales Tax on other officers.
3. Tribunal's appreciation of evidentiary value of documents produced by the applicant.

Issue-wise Detailed Analysis:

Issue 1: Classification of Maleic Resins

The primary issue was whether maleic resins should be classified under entry 9 of Schedule II, Part A, or the residuary entry 13 of Schedule III to the Gujarat Sales Tax Act, 1969. The Tribunal initially contended that maleic resins are covered by entry 9, which pertains to "dyes and chemicals." The applicant argued that maleic resins, used as raw materials in varnish manufacturing, should fall under residuary entry 13 and not be considered chemicals in common parlance. The Tribunal, however, relied on its earlier decision in the case of Hoechst Dyes and Chemicals Ltd., holding that synthetic resin groups are chemicals covered by entry 9.

The Tribunal's decision was supported by various opinions and certificates, including one from the Chief Chemist of Saurashtra Chemical Manufacturers' Association, which stated that maleic resins are polymerised industrial plastic materials and not chemicals as understood in common parlance. However, the Tribunal concluded that maleic resins are obtained by chemical processes and are chemical products.

The court referred to previous judgments, including State of Gujarat v. Jayant Chemical Works Pvt. Ltd., which held that the term "chemicals" in entry 9 should not be limited by the preceding word "dyes." The court also considered the judgment in Vijay Foundry & Machinery Works, which supported the Tribunal's interpretation that maleic resins are chemicals.

Ultimately, the court held that maleic resins are covered by entry 9 of Schedule II, Part A, as they are chemical products used as raw materials in manufacturing various items. The court rejected the applicant's contention that maleic resins are end-products and should be classified under residuary entry 13.

Issue 2: Binding Nature of Determination Order

The second issue was whether the determination order dated May 29, 1964, by the Deputy Commissioner of Sales Tax (Appeals), Gujarat State, Ahmedabad, should be automatically binding on Sales Tax Officers and Assistant Commissioners while assessing other dealers, including the applicant. The Tribunal held that the determination order is not automatically binding on other officers. Instead, the officers are bound to follow the Tribunal's decision in the case of Hoechst Dyes and Chemicals Ltd. This view was supported by the court's decision in Bavishi & Sons v. State of Gujarat.

The applicant did not press this question further, and the court answered it in the affirmative, in favor of the Revenue and against the assessee.

Issue 3: Tribunal's Appreciation of Evidentiary Value

The third issue was whether the Tribunal was justified in appreciating the evidentiary value of all documents produced by the applicant. The Tribunal had reviewed various opinions and certificates presented by the applicant to support their claim that maleic resins are not chemicals in common parlance. Despite this, the Tribunal concluded that maleic resins are chemical products.

The court upheld the Tribunal's decision, stating that the Tribunal was justified in its appreciation of the evidentiary value of the documents and in recording its findings that maleic resins are covered under entry 9 of Schedule II, Part A, to the Gujarat Sales Tax Act, 1969.

Conclusion:

The court concluded that the sales of maleic resins made by the applicant are covered under entry 9 of Schedule II, Part A, to the Gujarat Sales Tax Act, 1969. The Tribunal was justified in its appreciation of the evidentiary value of the documents produced and relied on by the applicant. The determination order by the Deputy Commissioner of Sales Tax is not automatically binding on other officers. The reference was answered accordingly, with no order as to costs.

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