1993 (11) TMI 222 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of tax liability on lime under the Orissa Sales Tax Act, 1947.
2. Determination of whether lime is taxable as paint or an unspecified commodity.
3. Analysis of whether lime can be taxed under entry 63 as limestone.

Analysis:
The judgment by the Orissa High Court, delivered by Justice A. Pasayat, pertains to a reference made by the Revenue under the Orissa Sales Tax Act regarding the tax treatment of lime. The primary issue was whether lime should be classified as paint and taxed at 7%, or considered an unspecified commodity. The case involved M/s. Konark Hardware Mart, where the assessing officer found that the assessee had paid tax at 7% on lime sales, contending it should be taxed at 10% like limestone. The Assistant Commissioner upheld the 10% tax, stating that lime was used in various industries and not solely as paint. The Tribunal disagreed with the lower forums, noting that lime's primary use was not as paint but in whitewashing buildings and in the paper industry.

Upon analyzing the legal provisions, the Court addressed the classification of lime under the tax entry for paints and varnishes. The entry in question, numbered 66, included paints, varnishes, and related items. The Court applied the principle of ejusdem generis to interpret the term "paints," emphasizing that it referred to liquid substances used for coloring or shining other materials. Citing precedents, the Court highlighted that paint is a color substance mixed with a vehicle, while varnish produces a glossy surface when dry. In contrast, lime was described as a caustic earth material, distinct from paints and varnishes in common parlance.

The Court concluded that lime did not qualify as paint under the tax entry and should be taxed as an unspecified commodity at 7%. However, the question of whether lime could be taxed at the rate applicable to limestone was left unanswered as it was not a point of contention before the Tribunal. Justice R.K. Patra concurred with the decision, and the reference was answered in the affirmative, disposing of the application without costs. The judgment provides a detailed analysis of the tax treatment of lime under the Orissa Sales Tax Act, clarifying its classification and tax liability based on established legal principles and industry usage.