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TMI Blog1991 (4) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appellate authority, though held "ultramarine blue" to fall under item 110, was of the view that it was pigment. Before the Tribunal, it was held to be a chemical falling under item 138 of the First Schedule. Hence, the revision by the State. 3.. T.C. No. 1387 of 1984-The Revenue is the petitioner and the assessee being the same as in T.C. No. 1108 of 1981. For the assessment year 1979-80, the sales of "ultramarine blue" to the tune of Rs. 14,90,016 was subjected to levy under item 110 of the First Schedule. On appeal, the appellate authority held the same to fall under item 138 following an order of the Tribunal in respect of the assessment year 1978-79. Before the Tribunal, the Revenue filed an enhancement petition objecting to the claim in respect of "ultramarine blue" and contending that it is covered by item 110. The Tribunal rejected the claim and, therefore, the Revenue has filed the above revision. 4.. T.C. No. 248 of 1989.-The Revenue has filed this revision. The assessee is a dealer in "ultramarine blue". For the assessment year 1983-84, the sales have been subjected to 10 per cent tax apparently treating them to fall under item 110 of the First Schedule havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing authority pertaining to assessment years 1984-85, 1980-81 and 1981-82, respectively. For the assessment year 1984-85, an order of assessment has been made. So far as the assessment years 1980-81 and 1981-82 are concerned, the writ petitions have been filed to quash the pre-assessment notice issued invoking the powers under section 16 of the Act proposing to revise the assessment by subjecting the turnover relating to sales of "ultramarine blue" to tax at 10 per cent treating the commodity as a "pigment" as against the earlier rate of 8 per cent applied. The core as well as the sum and substance of the submission of the petitioners in the above writ proceedings are that "ultramarine blue" falls under item 138 as has been held by the Tribunal in their cases on earlier occasions, that applying the principles of ejusdem generis, "ultramarine blue" could not be considered to fall under any of the heads mentioned in item 110 of the First Schedule, that by the deletion of entries "dyes and chemicals" from the Schedule, the sales of "ultramarine blue" is to be treated as subject to multi-point rate of tax of 5 per cent and that it was not open to the department to take inconsistent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a "chemical" or a "medicine". The assessee in that case manufactured oxygen gas by the industrial process known as "fractional distillation" of liquid air and sold them both for industrial and medicinal purposes. The Division Bench held that "oxygen" is a "chemical" to be taxed as such when sold for industrial purposes and "medicine" when sold for medicinal purposes and taxed as such. The said view was arrived at applying the principle that if an article was capable of being used for different purposes, the question as to the description into which it will fall would depend upon how it was treated by the vendor. In Commissioner, Sales Tax v. Prayag Chemical Works [1970] 25 STC 85, a Full Bench of the Allahabad High Court held ("sodium silicate" to fall within the expression "chemicals of all kinds" and in coming to such a conclusion, applied the principle that when otherwise the commodity concerned satisfied a particular description, the use to which the particular vendor puts the commodity becomes irrelevant but has to be construed with reference to the general properties which make it saleable to the entire range of prospective buyers. 11.. In Har Narain Purshottam Dass v. Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not capable of diluting acids or alkalies. It is not seriously disputed that neel is used after the clothes are washed, usually at the first rinsing, and that with each rinsing it gets washed away. It cannot resist or withstand the use of detergents or even washing-soda which is alkaline in nature. Finally, it is neither a direct dye nor a mordant." 13.. A Division Bench of this Court, in a decision reported in State of Tamil Nadu v. Indian Eyelets Industries [1984] 55 STC 354, considered the scope of item 138 of the First Schedule and the question as to whether "Fiksol-S. 69", an all purpose adhesive used for binding various surfaces such as leather, rubber, etc., though made of certain ingredients which are in the form of chemicals, can be treated as a chemical by itself when the use of it by itself cannot be said to produce any chemical effect or result in any chemical change, viz., "dyes and chemicals". The court opined that the commodity in question sold as an adhesive is not an intermediary product producing a chemical effect, but is an end-product which is to be used only as an adhesive and the use of which does not produce any chemical effect or bring about any chemica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to convey colouring, by particular colour. 'Neel' (ultramarine blue) is not a colour. In common parlance, 'neel' (ultramarine blue) is understood as a substance, which is used to whiten clothes. It is not understood as colour. It is a whitening agent for laundry purposes, used by washermen or by house-holders. Ultramarine blue is not a colour as it is used to whiten clothes." 14.. In Union of India v. C.M.C. India [1979] ELT 298, a Division Bench of the Gujarat High Court considered the dutiability of "ultramarine blue" under item 14 of the Excise Tariff. The Division Bench was of the view that "ultramarine blue" is not known to manufacturers, traders and common people as "pigment" and consequently not dutiable under item 14(1)(5) of the Excise Tariff. The learned judges repelled the plea based on the booklet published by the Indian Standards Institution containing "specification for ultramarine blue for paints" where "ultramarine blue" was found described as a "pigment", and came to the conclusion that the product is known to consumers and commercial community only as "ultramarine blue". While considering further the question as to whether the said "ultramarine blue" can be cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in popular mind, "Ultramarine blue" is not associated with pigments, colours and paints. The publication of the Indian Standards Institution was also taken into account. After such analysis in great detail, Chittatosh Mookerjee, J., rendered his ultimate findings as hereunder: "(13) The respondents in paragraph 17 of the affidavit-in-opposition have averred that in paints like emulsion paints or water paint, pigment finishes for leather, printing ink, textile printing, ultramarine blue is compounded in larger proportion. They have also set out in paragraph 18 of their affidavit-in-opposition the definition of the expression 'pigment' given in various dictionaries. In the book Modern Surface Coating by Paul Nylen and Edward Sunderland, at page 349, of the said book has described 'pigment' as the 'internationally accepted term for the powdered material intended to be dispersed in liquid or solid binders for the production of paints, printing inks, plastic materials, rubbers, vitrine enamels'. In the said book ultramarine blue has been classified as a synthetic and inorganic pigment. The respondents have also relied upon Webster's 3rd International Dictionary, 1968, page 1714, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcludes certain substances including whiting. Mr. Bhattacharyya is not correct in contending that ultramarine blue is whiting because according to the said dictionary, whiting is entirely a distinct product consisting of finely ground, naturally occurring calcium carbonate derived from chalk, limestone, etc., and used as filler, putty, etc. One of the properties of ultramarine blue is that it is a whitener, i.e., of white pigment of colorant used in the paper and textile industries (vide Condensed Chemical Dictionary, page 1096). Therefore, I conclude that the Condensed Chemical Dictionary, 10th Edn. relied upon by the petitioner shows that ultramarine blue is a pigment having various uses, one of which is whitening or brightening textiles and clothes. (15) For the foregoing reasons, I conclude that there is overwhelming evidence that ultramarine blue is a pigment. Ultramarine blue does not constitute a separate product as contended by the petitioner. People conversant with and dealing with the said product understand ultramarine blue as a pigment, i.e., as a colorant. It is used for imparting colour to various substances'. Thus, not only from the standpoint of its physical const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular view with reference to an article, produced and sold by a particular individual, that could not be taken as a statutory notification or order applicable to all the assessees and that as there could be no estoppel against a statute, whatever view the Board of Revenue might have taken in respect of a particular individual, will not estop the Government from enforcing the statutory provisions. 17.. Reliance was also placed on the decision of the Apex Court in Mathra Parsad and Sons v. State of Punjab [1962] 13 STC 180 (SC); AIR 1962 SC 745, that there can be no estoppel against a statute and that any assurance that tax would not be collected under a particular circumstance would not bind the Government whenever the State chose to collect it in terms of the statutory provisions contained in an enactment. 18.. After a careful consideration of the above materials and the plea of the counsel on either side, we are of the view that "ultramarine blue" will squarely fall under item 110 of the First Schedule to the Act. Where no definition as such is provided in the statute itself for ascertaining the correct meaning of a fiscal entry, mere reference to the dictionary meaning alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch it has been found used in item 110. As to what is a "pigment" has been considered at length in the decision of the Calcutta High Court in Nilsin Company's case [1984] ECR 928 (Cal). "Ultramarine blue" is found uniformly defined or classified as an inorganic pigment used in a low percentage to intensify whiteness and white elements. Pigment is also described as a natural or synthetic inorganic or organic substance that imparts a colour including black or white to other materials. It is also a whitener, i.e., white pigment having regard to its ordinary use by those who deal in them. People conversant with "ultramarine blue" and dealing with the same understand it to be valuable for imparting colour to various substances. Having regard to the fact that among various other uses, ultramarine blue is used for brightening or whitening textiles and clothes, the same will answer the description of "pigment" falling within item 110. In view of what has been stated above, "ultramarine blue" will not fall under item 138 and it also cannot be considered to be a commodity attracting multi-point levy under section 3(1) of the Act since, in our view, it falls under item 110 of the First Schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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