1993 (5) TMI 29 - SC - VAT and Sales Tax

Summary

Issues Involved: Interpretation of Notification No. ST-II-333/X-1012-1971 under Section 3A of the U.P. Sales Tax Act, 1948 regarding taxation of Phosphorous Bronze.

Interpretation of Notification Entry:
The appellant contended that Phosphorous Bronze manufactured by them falls within the relevant entry of the notification. They argued that the presence of a small quantity of Phosphorous in the bronze does not make it an essential substance of the alloy. However, it was acknowledged that without Phosphorous, Phosphorous Bronze cannot be produced, and some amount of Phosphorous remains in the final product.

Respondent's Argument:
The respondent contended that Phosphorous Bronze is an alloy that includes Phosphorous along with copper and tin, thus not meeting the criteria of the notification entry. They emphasized that the entry covers alloys made solely from copper, tin, nickel, or zinc, and the inclusion of any other substance would disqualify the alloy from the exemption.

Precedent and Legal Interpretation:
Reference was made to a previous case where the sale of an alloy named Phosphorous Bronze, containing additional substances like lead, was held taxable due to not meeting the criteria of the notification. The court highlighted the significance of the term "only" in the entry, indicating that alloys must consist exclusively of the specified metals to qualify for the tax exemption.

Court's Decision:
After considering various dictionary meanings of Phosphorous Bronze and the arguments presented, the court concluded that the presence of Phosphorous, even in a small amount, in the alloy prevents it from falling within the scope of the notification entry. As the disputed alloy contained Phosphorous alongside copper and tin, it did not meet the criteria of being an alloy made solely from the specified metals. Consequently, the appeal was dismissed, affirming the High Court's decision to tax the Phosphorous Bronze as an unclassified commodity at a rate of 3.5%.