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TMI Blog2010 (7) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... t C can never be classified as "pigments" and brought under entry 16(iii) merely because such "dyes" are used the process of leather finishing works. Once we come to such a definite conclusion, we have no hesitation in answering the question in favour of the assessee and consequently, the order impugned in these revision petitions cannot be sustained. The impugned orders are set aside. The tax levied initially at the rate of 5% alone would survive. Any levy of tax over and above 5% is hereby set aside. X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners. We also heard Mr.Haja Naziruddin, learned Special Government Pleader for Taxes. 5. (i) The learned counsels for the petitioners by referring to the entries found in Serial No.49 of Part C as well as Serial No.16(iii) of Part E contended that the method adopted by the lower authorities, namely, the `user theory' was not proper and therefore the orders are liable to be set aside. (ii) According to the learned counsel for the petitioners, when admittedly what was sold by the assessee in the market were "dyes" and not "pigments", merely because the "dyes" sold to parties dealing with leather that by itself would not cover such sale under entry 16(iii) of Part E and therefore, the conclusion of the lower authorities is liable to be set aside. (iii) According to the learned counsel, when "dyes" have been specifically classified as a separate entry in Part C in Serial Number 49, there was no justification to bring it under entry 16(iii) of Part E and thereby enhance the rate of tax on the sole ground that such "dyes" were sold to the parties dealing with leather finishing. 6. (i) On the other hand, the learned Special Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght?" While the High Court took a view that the products manufactured by the assessee were to be treated as "drugs and medicines", the Honourable Supreme Court having regard to the nature of the products manufactured by the assessee in that case held that a detailed examination had to be made by the assessing authority in order to find out whether those items would fall within the definition of "drugs and medicines." The socalled drugs manufactured by the assessee in that case were zinc oxide adhesive plaster, balladona Plaster, capsicum plaster, surgical wound dressing, crepe bandages. It was in the abovestated background the Hon'ble Supreme Court held that the case called for a remand in order to make a detailed examination about the nature of products to find out whether such products would fall within the definition of "drugs and medicines". 8. In the case on hand, it will have to be stated that there is no dispute about the product manufactured by the assessee, namely, "dyes". The only other question to be determined is whether such "dyes" which were supplied to parties dealing with finishing of leather products woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lint papers, emery clothes, brushes, paint removers and stainers of all kinds. 10. It is not in dispute that the assessees were dealers selling "dyes" supplied by the manufactures. It is also not in dispute that what was sold by the assessees were only "dyes" and not "pigments". One other relevant fact to be noted is the very same "dyes" when sold to other parties, the rate of tax applied was 5% as specified under Sl.No.49 of Part C and when the "dyes" were sold to the merchants dealing with finishing of leather, the tax was levied at the rate of 12% as prescribed under entry 16(iii) of Part E. therefore, the only reason which weighed with the lower authorities for applying entry 16(iii) of Part E was that the said entry specifically bear the expression "leather finishes". In fact we are at a loss to understand as to what is meant by "leather finishes". In spite of our best efforts we were not highlighted as to whether there is any specific product called "leather finishes" available in the market. Apparently, since the expression "leather finishes" has been used along with the expression &qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter. 2.To stain; tinge.- v.t. 3. To take or give color: This cloth dyes badly. See synonyms under STAIN.-n. A fluid or coloring matter used for dyeing; also, the color or hue so produced. According to the method of application, dyes are classified as substantive, or direct, when they color by simple immersion; adjective, or mordant, when a fixing agent is used; ingrain, or ice, when deposited by chemical reaction; vat, when applied in an alkali-soluble state and oxidized; and sulfur, when used in a sodiun sulfide bath followed by oxidation. Homophone : die.(OE deagian deag dye, color)" Pigment 1.Any of a class of finely powered, insoluble coloring matters suitable for making paints, enamels, oil colors, etc. 2 Any substance that imparts color to animal or vegetable tissues, as chlorophyll. 3.Any substance used for coloring." From any of these meanings set out in the reputed dictionaries we are able to see that "dyes" can be authoritatively brought under the expression "pigment". 14. In the course of the submissions of the learned counsel, it was only stated that both "dyes" and "pigments" are colourants though they are two dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Office, Tuticorin Vs. T.S.Devinatha Nadar) the Hon'ble Supreme Court cited with approval the principle of strict interpretation of taxing statute as enunciated by Rowlatt, J in his classic statement in Cape Brand Syndicate Vs. Inland Revenue Commissioners (1921-1 KB 64), in paragraph 24 which reads as under: "24. Rowlatt, J. observed in Cape Brand Syndicate Vs. Inland Revenue Commissioners 1921-1 KB 64: "in a taxing Act one has to look merely at what is dearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." These principles have been accepted as correct both by the English Courts and the superior courts in this country. It is now well settled that if the interpretation of a fiscal enactment is in doubt, the construction most beneficial to the subject should be adopted even if it results in obtaining an advantage to the subject; the subject cannot be taxed unless he comes within the letter of the law and the argument that he falls within the spirit of the law cannot avail the department.&qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Part E. To put it differently, the "dyes" which squarely falls under entry 49 of Part C can never be classified as "pigments" and brought under entry 16(iii) merely because such "dyes" are used the process of leather finishing works. 17. Once we come to such a definite conclusion, we have no hesitation in answering the question in favour of the assessee and consequently, the order impugned in these revision petitions cannot be sustained. 18. The learned Special Government Pleader relied upon the decision in INDUSTRIAL GASES LTD. COMMISSIONER, SALES TAX, U.P., LUCKNOW, reported in Volume XXI 1968 STC 124 to support his contention that "user theory" applied by the assessing authority as well as the Tribunal are justified. The Division Bench of the Allahabad High Court in that decision considered the case where the assessee manufactured Oxygen gas for industrial and medical purposes. The question posed for consideration in that case was whether the oxygen so prepared is a chemical liable to be taxed under section 3-A at the rate of 0-1-0 anna per rupee or it is a medicine liable to be taxed under section 3 at a reduced rate. In the said decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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