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TMI Blog2014 (11) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... the scrapped portion of the trunk of the rubber tree, this product is used. If it is used for the main purpose of coating on scrapped portion of the rubber plant, there was no reason why the second coating is applied on the polythene and kora cloth, as the protection is intended to the rubber plant because a leak proof material is put above the scrapped portion. Therefore, the very exercise how this compound is used during rain guarding process indicates only as a double proof to see that no water enters the scrapped bark of the rubber tree, they make the polythene guard as the skirt affixed to the trunk with double layers of rain guarding compound. The literature in local language (Malayalam) published by the Rubber Board, refers to the rain guarding compound as an adhesive product for the purpose of rain guarding during the rainy season. By no stretch of imagination, the entire process of rain guarding refers to the user of rain guard compound as a chemical or a water proof. If this has to be used as a water proof, then there is no use of polythene and kora cl to affix the polythene material to the rubber plant as such. Therefore, the entire process, what we understand fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at they have stated is that the item is chemical. We do not know what is the basis to hold that the chemical has plant-protection property. In fact, the other words used in the entry are pesticides and fungicides. It is common knowledge that polystik compound is essentially derived from bitumen, which is a petroleum product and it in no way is used as a chemical to protect plants. We are of the view that persons, who issued the certificates, based on which judgment is rendered by this court, are not competent to talk about chemicals protecting plants. We therefore do not approve the later decision of this court. We are of the view that since there is conflict of views expressed by two Division Benches, the matter should be referred to Full Bench. Accordingly, we refer this matter to Full Bench for decision by it. Registry will place the matter before the honourable Chief Justice for appropriate orders on posting . 2. The controversy in these revision petitions is, whether the item polystik compound or the rain guard compound can be classified as an adhesive or a rain guard coat or a chemical for the protection of plants. 3. According to the learned Government Pleader, the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the product rather than the actual use, a particular purchaser makes use of it. 6. As against this learned counsel for the respondents contends, the product how in common parlance is understood is nothing but how a common man understands, therefore, the certificate issued by the farmer/ common man is the criterion to decide what is the predominant use of the product and not based on the technical terms or technical analysis of a particular product. Hence, the certificates relied upon by the assessees would indicate how the material is used as a protection chemical on the plants, therefore these certificates must be taken into consideration while considering the property of the chemical as such. According to him, the product in question is nothing but a chemical, which is used as a leak proof, protecting the plant from the rain water. The learned counsel for the assessees/respondents, Mr. John- Ramesh, in support of his contentions relies upon the following citations, which would be referred to later:- (l)r Saraswati Industrial Syndicate Ltd. v. Commissioner of Income tax [1999] 237 ITR 1 (SC). (2) Commissioner of Income-tax v. D.L.F. United [2000] 243 ITR 855 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words, their lordships held that, item 3 of the First Schedule to the Act provides a general item as adhesive and the item in question polystik compound falls under the said general items. 9. In the latter decision of the Division Bench of this court, there were, two items, which came up for consideration of the Bench, one is rubber coat and rain guarding compound. The contention of the State before the Bench was that the rubber coat is entirely different from a rain guard compound, because rain guard compound is used as a material for fixing the rain guard on patta of a rubber during rainy season, whereas rubber coat though is applied, but it is applied as a chemical to protect the plants from fungicide, etc. Hence, both the items are having different purposes. The Division Bench after referring to the certificates issued by the Director of Common Facility Service Centre, Department of Industries, Government of Kerala, which had the opportunity to see the sample of the rain guarding compound sent by M/s. Wellworth Engineers and Polymers and by one Mr. K.T. Antony B.Sc (Eng.), M.Tech (Chemical Engineer), Enviro Designs and Equipments, Kochi, ultimately opined that, the rain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote from paragraph 3 of the orders of Tribunal; that the letter dated March 5, 2007 of the Chairman, Rubber Board addressed to the Secretary (Taxes), Government of Kerala, was one of the base for the opinion of the Tribunal, wherein it is noted that, the, Chairman in the said letter has stated that rain guarding is a compound used not for its adhesive properties on the trees, but to act as a protectant fungicide. It acts as sealant, which protects the plant from the seepage of water on to the tapping panel. There is another letter, which was taken into consideration by the Tribunal, dated September 6, 1999 of the Rubber Protection Commissioner, who opined that, this is a plant protection compound, though is having bituminous base but is essentially a material used for protecting the tapping panel from infection due to fungus and other microbes and hence it should be classified as a plant protection chemical. According to him rain guarding compound is used not for its adhesive properties on the trees but to act as a sealant to prevent seepage of water. The Tribunal has also referred to the method of rain guarding, described as per the book published by Rubber Research Institute of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sense which people conversant with the subject-matter with which the statute is dealing, would attribute to it . In other words, their lordships opined, the words must be used in popular sense and not in a technical or scientific sense. In the above case, timber was the article, which came up for consideration. While referring to the timber, though the timber has two meanings, ultimately, their lordships held the popular meaning of the same has to be taken into consideration and not technical sense. 18. He places reliance upon State of A. P. v. General Electronic Corporation [2000] 118 STC 514 (AP), wherein their lordships had an occasion to consider what exactly M-seal means, whether, it is an adhesive or not. Ultimately, it was held that M-seal is not an adhesive and it is not covered by entry 191 of the First Schedule to the Andhra Pradesh General Sales Tax Act of 1957. According to them, it was used as a blocking agent to block the leakages of liquids and is covered by entry general goods. 19. He also relies upon Mukesh Kumar Aggarwal and Co. v. State of Madhya Pradesh [1988] 68 STC 324 (SC) ; CDJ 1987 SC 372, to contend that common parlance test is to be applied and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved in polythene skirt rainguarding are (Plate 34.b) given below:- Frill the polythene at equal distance using a sewing machine, ensuring 40 per cent reduction in length. Using a scraper, lightly scrape the dry bark 10 cm above the tapping cut and parallel to it (Plate 35.a). The scraped brand should extend a minimum of 15 cm from front and back end of the tapping cut. After removing the dust, firmly smear a thin film (roughly 2 mm thick and 4 cm wide) of rainguard compound on the scraped band (Plate 35.b) Fix the frilled polythene on this, ensuring that only the lower half (2 cm) of the rainguard compound is covered by the polythene. Fix the kora cloth ribbon of around 2 cm width firmly using suitable stapler pins over the cut end of the polythene in such a that 1 cm width of the cloth will be over the polythene and the remaining portion over the compound (Plate 35.c). It is desirable to use medium-quality cloth, as it ensures infiltration of the rainguard compound and thereby proper binding. Then apply the second coat of the compound to completely cover the cloth ribbon (Plate 35.d) 24. Apart from this, we also have the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oof. As we understand from this literature, bitumen based compound is mainly used for the rain guarding of rubber trees, because of its high quality of adhesive nature. No doubt, water proofing quality is also one of the properties of the product, but, the fact that, it is used below the polythene sheet and again above the polythene sheet would only indicate that to safeguard the placement of the polythene sheet and kora cloth over the scrapped portion of the trunk of the rubber tree, this product is used. Another layer put above the polythene and kora cloth is, so as to see that kora cloth and polythene cover would not come out from the rubber tree, due to pressure of the water during the rainy season. 26. The argument of the learned counsel for the assessee, is that, the staple pins with the stapler are used to keep the kora cloth and polythene, but the fact remains over the bitumen based adhesive, the polythene is fixed to see that the polythene sheet gets affixed to the rubber plant, which cannot be easily pulled out by human hand or during the rainy season. The second coat is nothing but a cautious method to see that rain guard proofing does not come out from the rubber tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he predominant use of the product would come into play and one has to go by the predominant use of the product rather than other incidental uses of the product in question. In none of the literature, it refers the user of the product as a plant protector, though, at some places, it says, the bitumen can be used as a water proof material. So far as the predominant use of the material and how it has to be dealt with is concerned, we refer to Appplico v. State of Kerala [2000] 118 STC 567 (Ker) ; [2000] 1 KLT 581, paragraph 6 of the said decision is relevant which reads as under (pages 569 and 570 in 118 STC):- Predominant test can be applied with regard to the price, the proportion of the major metallic component and such other relevant factors. In fact in a controversy of this nature common parlance test is a good guide. Expression common parlance has a definite connotation. It means, identify of a commodity as understood by a common man or a person in the commercial field dealing with that product. As a necessary consequent of the principle that words are understood in their ordinary or natural meaning in relation to the subject-matter, in legislation relating to a partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has to be understood, which reads as under (page 334 in 46 STC):- Once it is found that the commodity which forms the subject-matter of the transaction of sale or purchase is directly covered by an entry in the First Schedule the benefit of the concessional rate becomes available to the assessee and that will not be lost by reason of the fact that the goods purchased were used by the assessee for a purpose other than what is regarded as the predominant or ordinary use of that article. We are therefore of the opinion that the Tribunal was right in holding that since what the assessee had purchased was only firewood, the fact that a good part of the total quantity purchased during the first two assessment years and the entirety of what was purchased during the 3rd year had been utilised as raw material for the manufacture of hardboard would not operate to deprive the assessee of the benefit of the concessional rate available on account of the inclusion of the commodity in the First Schedule. No interference is, therefore, called for by, this Court with the order sought to be revised. These tax revision cases are accordingly dismissed, but, in the circumstances without any d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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