MYSORE AMMONIA P LTD Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) The question of law that arises for consideration is : whether "anhydrous ammonia" sold by the appellant in liquid form is to be treated as "industrial gas" falling under entry No. 121 of the Second Schedule, or is it a "chemical" falling under entry No. 79 of the Second Schedule to the Karnataka Sales Tax Act, 1957 ("the Act") ?

(2.) The appellant-company is a dealer carrying on business in chemicals, namely, anhydrous ammonia. It sells the product to various industrial units in the State like H.M.T., Widia (India), rubber industries, dairies and ice manufacturing units. For the assessment year 1981-82 the Commercial Tax Officer determined the assessee's taxable turnover at Rs. 15,00,411.16 and levied tax at 8 per cent under entry No. 79 of the Second Schedule, treating the product as a chemical. Subsequently, the Deputy Commissioner of Commercial Taxes initiated suo motu proceedings under section 21(2) of the Act, proposing to levy tax at 10 per cent under entry No. 121 of the Second Schedule, treating the product as "industrial gas". Accepting the contention that since the company had sold anhydrous ammonia in liquid form, and on the basis of the certificate issued by the Fertilisers and Chemicals Travancore Limited, to the effect that it is a chemical falling under entry No. 79 of the Second Schedule, revisional proceedings were dropped.

(3.) The Joint Commissioner of Commercial Taxes initiated further suo motu proceedings under section 22A of the Act proposing to treat anhydrous ammonia supplied by the appellant to various industrial units in the State as industrial gas and proposing to tax the same at 10 per cent under entry No. 121 of the Second Schedule. On consideration of the contentions raised by the appellant the Joint Commissioner took the view that since the appellant had sold anhydrous ammonia gas to various industrial units, the product has to be treated only as industrial gas liable to tax under entry No. 121 of the Second Schedule. It is the correctness and legality of this order that is challenged in this appeal.