DEPUTY COMMISSIONER OF SALES TAX LAW BOARD OF REVENUE TAXES ERNAKULAM Vs. CALCUTTA CHEMICALS COMPANY LTD

JUDGEMENT

(1.) THE assessment years concerned in these two revision cases are 1988-89 and 1989-90. THE common question arising in both these revisions is as to the rate of tax applicable to "fenoklin" dealt with by the assessee. THE assessee had collected tax at 6 per cent as applicable to all acids falling under entry No. 2 of the First Schedule to the Kerala General Sales Tax Act, 1963, as it stood at the relevant time. THE assessee has also remitted the said amount to the department. But the assessing authority has taken the view that "fenoklin" is a commodity falling under entry No. 42 of the First Schedule to the Kerala General Sales Tax Act, 1963 taxable at 8 per cent. This was confirmed by the Deputy Commissioner (Appeals), Agricultural Income-tax and Sales Tax, Ernakulam. On second appeal before the Kerala Sales Tax Appellate Tribunal, Additional Bench, Ernakulam, the Appellate Tribunal took the view that fenoklin cannot be treated as a chemical taxable at 8 per cent. But the Appellate Tribunal without going into the further question as to the rate of tax applicable to this commodity simply allowed the appeal. It is against this, the department has come up in revision before this Court.

(2.) AS already stated, the question is regarding the rate of tax applicable to "fenoklin" dealt with by the assessee. Before proceeding to consider the question any further, it is necessary to bear in mind the principles regarding the interpretation of an entry in a fiscal statute. It is by now well-settled that while interpreting items in fiscal statutes like the Sales Tax Acts resort must be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense. To the above effect is the decision of the Supreme Court in Commissioner of Sales Tax v. Jaswant Singh Charan Singh [1967] 19 STC 469 and reiterated in Indo International Industries v. Commissioner of Sales Tax, U. P. [1981] 47 STC 359. It was further observed in the decision second mentioned above, that if any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted.

(3.) THE first appellate authority, after referring to the observations of the assessing authority to the effect that in common and commercial parlance, fenoklin is known as a chemical, such as sanifresh and odopin without considering the matter independently took the view that considering the nature of the produce and its use, a different view on this issue is not possible. In other words, he also affirmed the view that fenoklin is a chemical falling under entry No. 42 of the First Schedule to the Act attracting levy of tax at 8 per cent. THE Sales Tax Appellate Tribunal, on the other hand, has taken the view that fenoklin is not an item coming under entry No. 42 of the KGST Act and is not taxable at the rate of 8 per cent as a "chemical". THE reason for taking the above view is found in paragraph 4 of the appellate order as follows : " This is a disinfectant fluid used for domestic hygiene hospitals, nursing homes, lavatories, etc. , mainly for destroying harmful micro organisms or inhibit their growth. According to the appellant's counsel 'chemical' means anything obtained or used in chemistry or a substance used for producing a chemical effect or produced by a chemical process. In support of his contention the counsel has invited our attention to the decision reported in [1970] 25 STC 85 (All.) [fb] (Commissioner, Sales Tax, U. P. v. Prayag Chemical Works ). THE assessing authority has taken the view that in commercial and common parlance, fenoklin is known as a chemical such as sanifresh, odopin, etc. , and has levied tax at the rate of 8 per cent. From the literature and details of composition pasted on the bottle of fenoklin, this is a powerful antiseptic deodorant and germicides for disinfecting hospitals, closets, etc. We notice that the assessing authority has not made out a case that fenoklin is produced by any chemical process. For an article to be qualified as 'chemicals', it must be an intermediary chemical product which can be utilised as such for producing other finished products. Fenoklin is in no way a chemical used as an agent for the purpose of producing any finished product. This item, even though made of certain ingredients which are in the form of chemicals cannot be treated to be a chemical by itself, since the use and utility of fenoklin cannot be said to produce any chemical effect or result in any chemical change. "