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TMI Blog1984 (3) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... emical Works, Bombay. For the years 1974-75 and 1975-76, the assessing officer levied tax on the turnover of the petitioner in respect of sale of trichlorethylene at the rate prescribed under section 5(1) of the "Act" treating that chemical as a solvent falling under "other chemicals" and not as a "heavy chemical" falling under item No. 79 of the Second Schedule. Item No. 79, as it then stood reads: "Heavy chemicals (such as sulphuric acid, dydrochloric Eight per cent." acid, caustic soda, etc.)" Item No. 79 prescribes a higher rate of tax on the sale of "heavy chemicals" -the term which has not been defined in the Act. By way of illustrations, the legislature has classified the sulphuric acid, hydrochloric acid, caustic soda, as heavy ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e action of the Deputy Commissioner, preferred appeals to the Karnataka Appellate Tribunal. The Tribunal also concurred with the view of the Deputy Commissioner and dismissed the appeals. The Tribunal mainly relied upon the decision of this Court in State of Mysore v. U.M. Gulam and Sons [1975] 36 STC 254 and summarised its conclusion as follows: "It is obvious that what makes a chemical heavy chemical is its manufacture in bulk quantities at cheap rate per unit. The fact that an article is manufactured in bulk should necessarily lead to an inference that the rate per unit is low. In the case before us, the mere fact that the turnover from trichloroethylene was of the order of several lakhs at the hands of one dealer should be enough ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r "ordinary chemicals" in the absence of acceptable evidence. Perhaps, that is the reason why the Legislature has how obliterated the distinction between "heavy chemicals" and "ordinary chemicals" for taxing purposes. Item No. 79 has been amended by Karnataka Act No. 18 of 1978 deleting the word "heavy" preceding the word "chemicals" and that amendment came into force with effect from 1st September, 1978. The result of this amendment is that the turnover of all the varieties of chemicals is liable to be taxed uniformly at the rate prescribed under item No. 79. 11.. There is no definition of the term "heavy chemicals" in the Act. This Court, however, in State of Mysore v. U.M. Gulam and Sons [1975] 36 STC 254 after referring to a passage fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lutary rule that the subject is not to be taxed except by plain words should not be forgotten. There was no material before the Tribunal as to the comparative price structure of the chemicals much less the rates at which the other undisputed heavy chemicals are available for consumers. In the absence of any such evidence, the inference drawn by the Tribunal that "trichloroethylene" must necessarily be a cheap product has no support of reason. 14.. Mr. Kumar next contended that this Court differentiating a "heavy chemical" from an "ordinary chemical" by applying the test of bulk production and at cheap rate cannot be conclusive in every case and it must primarily depend upon how a chemical is understood in common parlance. He urged that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be the rate at which it should be available in the market must depend upon various circumstances and factors and indeed, there cannot be any uniform pattern in this regard to guide the discretion of the authorities. Confronted with this difficulty, the department, if we may so, rightly, did not think it advisable and proper to classify trichloroethylene as heavy chemical till 1978. 17.. What made the department to include it in the bulletin of the year 1979 is not so clear. The decision perhaps depends upon the view taken by this Court in Gulam and Sons' case [1975] 36 STC 254. In the first place, the two tests suggested by this Court in that case are not conclusive and secondly, one of the tests laid down by this Court, particularly t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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