STATE OF KERALA Vs. INDIA OXYGEN LTD

JUDGEMENT

(1.) THESE six tax revision cases are filed by the revenue. The respondent-assessee is the same in all the cases, viz. , M/s. India Oxygen Ltd. , Cochin. Two questions arise for consideration in these cases. One is as to whether "nitrous oxide" is an item liable to be taxed under entry 71 of the First Schedule to the Kerala General Sales Tax Act (for short, "the Act" ). The other is as to whether hydrogen, argon, argon nitrogen mixture are "industrial gases" falling under entry 59 of the First Schedule to the Act.

(2.) THE assessee is a dealer in chemicals such as nitrous oxide, hydrogen, argon, argon nitrogen mixture, etc. THE assessment year concerned is 1981-82. In the assessment year concerned, the assessee contended that nitrous oxide is not an item specified in any of the entries in the First Schedule to the Act and that it is liable to be taxed only at the general rate as an unclassified item. Similarly it was contended that hydrogen, argon and argon nitrogen mixture are "industrial gases" falling under entry 59 of the First Schedule to the Act. THE assessing authority has taken the view that all the aforesaid items are chemicals falling under entry 71 of the First Schedule to the Act. THE first appellate authority allowed the appeal holding that nitrous oxide is an unclassified item taxable at multi-point. It was also held that hydrogen, etc. , come under entry 59 of the First Schedule to the Act. This was confirmed by the Tribunal in the appeal filed by the State. Hence these tax revision cases.

(3.) WE, thus find that nitrous oxide is a gaseous substance sold to hospitals and nursing homes for use as an anaesthetic agent. There is a specific entry 74 in the First Schedule regarding "medicine". Applying the user test or the functional test, prima facie, it would appear that this item will fall under the said entry. However, in these cases the Tribunal has entered a finding that nitrous oxide is not a chemical falling under entry 71 and therefore it is liable to be assessed at the general rate as an unclassified item. According to us the Appellate Tribunal ought to have addressed itself to the question as to whether nitrous oxide will fall under any of the other entries mentioned in the First Schedule before taking the view that it is an unclassified item. Instead, the Tribunal has straight away come to the conclusion that "nitrous oxide" is an unclassified item taxable at the general rate. WE are unable to accept the said finding of the Tribunal. The matter requires to be considered by the Tribunal as to whether nitrous oxide will fall under any other entry in the First Schedule to the Act particularly since we have already noticed entry 74 "medicine" in the First Schedule. But in regard to hydrogen, argon, argon nitrogen mixture, both the appellate authorities held that they are gases which are supplied to industries and therefore they are "industrial gas" falling under entry 59 of the First Schedule to the Act. WE are in agreement with the view taken by the Tribunal. WE uphold the finding of the Tribunal in that regard. So far as "nitrous oxide" is concerned we are of the view that the matter must go back to the Tribunal for considering the question whether "nitrous oxide" will fall under any of the other entries in the First Schedule to the Act. WE therefore set aside the order of the Tribunal in respect of nitrous oxide and remit the matter to the Tribunal for consideration whether this item will fall under any of the specific entries in the First Schedule to the Act including "medicine". The Tribunal will decide this question afresh with notice and opportunity to the respondent-assessee.