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TMI Blog2008 (7) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... nded to the assessee and requires to be taxed at the lesser rate of tax at 2.5 per cent and not at the higher rate of 10 per cent under entry 74 of the First Schedule to the KGST Act. Revision allowed. - - - - - Dated:- 16-7-2008 - DATTU H.L. C.J. AND BASHEER A.K. , JJ. ORDER:- The order of the court was made by H.L. DATTU C.J. The question for consideration is, whether Deluxe Janatha Cem sold by the assessee is a lime product classifiable as an item falling under entry 74 of the First Schedule to the Kerala General Sales Tax Act, 1963, as claimed by the Revenue or under entry 28 of the Second Schedule of Notification SRO No. 1728/93 dated November 3, 1993, issued by the State Government in exercise of its powers under section 10 of the KGST Act, which speaks of lime and dehydrated lime as claimed by the assessee. The revision-petitioner is a dealer registered under the Kerala General Sales Tax Act, 1963, hereinafter for the sake of brevity referred to as, the Act, 1963 , and a dealer in hardware, paints and white-washing material. The dispute relates to rate of tax in respect of Deluxe Janatha Cem sold by the assessee. The assessing authority and the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords given in the exemption notification is to be gathered from the relevant entries/commodities in the notification. The exemption notification has to be interpreted as to give it true import and meaning, not to make it purposeless and nugatory. Notification by which exemption or other benefits are provided by the Government in exercise of its statutory powers normally have some purpose and policy decision behind it. Such purpose is not to be defeated nor those who may be entitled for it are to be deprived by interpreting the notification which may give it some meaning other than what is clearly and plainly flowing from it and lastly, the exemption notification is not to be construed liberally, but to be construed to effectuate the object of the notification. We will first consider whether Deluxe Janatha Cem sold by the assessee falls within the description of lime and dehydrated lime given in entry 28 of the Second Schedule of the notification. There are two expressions in this entry which require consideration; one is lime and other is dehydrated lime . Courts have observed time and again that the cardinal rule of interpretation which has always to be borne in mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51, the following discussion is to be found under the caption calcium oxide . Calcium oxide, commonly known as lime or quick lime, the monoxide of calcium derived from calcium carbonate . . . by purging all of its carbon dioxide content . . . It is a white or grayish white solid with specific gravity ranging from 3.25 to 3.38 and a melting point of 2,580OC. It is produced in large quantities by roasting limestone, chalk or oyster shells under controlled conditions. Lime is one of the oldest products of chemical reaction known to man. It has been used extensively as a building material and as a fertilizer . . . In the earlier edition (1972) of Encyclopedia Britannica, Vol. 14, p. 34, the topic is found under the caption lime . In common usage the term lime includes the various chemical or physical forms of quick lime, hydrated lime and hydraulic lime . . . Commercially quick lime is commonly produced by burning carefully graded limestone in rotary kilns, similar to those used in Portland cement manufacture, and in large stationary vertical kilns . . . Hydraulic lime is a type of cementitious lime that will set and harden under water in a manner similar to Portland ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill also give the same meaning. Therefore, according to common parlance, the words dehydrated lime mean the lime (calcium oxide) without mixing it with water or a lime in powdered form without water contents. Now, let us notice entry 74 of the First Schedule to the KGST Act. The entry speaks of lime, lime products and other white-washing materials. In the entry, apart from lime, there is specific inclusion of lime products and white-washing materials. The word product means a thing produced. A product obtained after being processed through mechanical process cannot be the same as its raw material. The expression lime products , therefore, means, anything produced or obtained from lime. Whether such derivation was by a simple physical process or by a chemical reaction would not make any difference to the end-product. There is yet another expression in the entry, namely, white-washing materials . The meaning of this entry could only be materials/articles which are specifically used for white-washing purposes. The user test has got a very limited application. It is neither a safeguard for interpretation nor it is conclusive. In cases where resort to the user test is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epending on the use to which they will be put by the purchasers. Secondly, the seller of the goods is also not a determinative of the nature of goods. Take for example a dealer in iron and steel. He may also effect sales of lime products and merely because it is sold by a dealer engaged in the business of selling iron and steel, the sale of lime products effected by him in the course of business activity cannot be brought under the entry iron and steel . Therefore, we say the findings and conclusions reached by the assessing authority and affirmed by the Tribunal are contrary to the settled legal position of interpretation of taxing statutes. Now, we refer to the decisions on which reliance was placed by learned counsel for the parties. The first decision on which reliance was placed by the learned counsel, Dr. Mohammed Kutty is, the decision of Full Bench of this court in the case of Kevi Hardwares v. State of Kerala [2003] 2 KLT 776. The question of law that came up for consideration before the Full Bench of this court was, whether the assessing authority was justified in levying tax on the sale of dolomite under entry 42 instead of entry 50 in the First Schedule to the KGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct. Can we again dispute the aforesaid legal position? Our answer is simple, no . In fact, we have reiterated the abovesaid legal principles in our earlier part of our judgment. But, at the same time, we are afraid the decision on which reliance is placed by the learned senior counsel would help him in anyway to substantiate his contention. The learned senior counsel has also brought to our notice the observation made by this court in the case of Southern Veneers and Wood Works Ltd. v. State of Kerala [1997] 104 STC 114; [1997] 5 KTR 437, wherein it is stated, that, what is relevant is the article which is subject to levy of tax. There is no difficulty in identifying the article. It is attempted to be understood in terms of its use which is not permissible. In a taxing statute, what is taxable is the article referred to in the entry and it cannot be understood in the context of its use. Again, in our view, we cannot have dispute with the legal principles enunciated by this court. The view expressed by this court is based on the first principle of interpretation of taxing statute and, therefore, we fully concur with the view expressed by this court in the aforesaid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 5 of the Act. The goods enumerated are, lime, lime products and other white-washing material. The assessee, in the instant case, is a dealer in hardware, paints and white-washing material. In the course of his business activity, he effects sale of Janatha Cem, which is a powdered form of lime without moisture content. It is used for varied purpose. If not for the notification issued by the State Government, in exercise of its powers under section 10 of the Act, in public interest, the commodity in question would have been certainly and obviously taxed under entry 74 of the First Schedule to the Act at the rate of 10 per cent either as lime product or white washing material. The State Government, by issuing SRO No. 1728/93, apart from granting total exemption from payment of tax to the goods mentioned in various Schedules, has also provided the reduced rate of tax for the goods mentioned in the Second Schedule of the notification. The entry 28 of the Second Schedule of the notification speaks of lime and dehydrated lime. As we have already discussed, dehydrated lime is nothing but lime powder without water contents. The assessee in the present case effects purchase of Jan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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