GENERAL FOODS P LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) THIS T. R. C. raises a ticklish but interesting question, whether industrial stearine fatty acid is covered by entry 65 of the First Schedule to the Kerala General Sales Tax Act, 1963 (for short, "the Act"), which refers to "all acids". While completing the original assessment, the assessing authority levied tax on the sales of industrial stearine fatty acid at the rate of four per cent treating the item as unclassified. Later, he reopened the assessment and held that the industrial stearine fatty acid falls under entry 65 of the First Schedule of the Act and taxed the same accordingly. The contention of the revision-petitioner before the assessing authority was that the industrial stearine fatty acid sold by it, is not in the nature of "acid" at all and, therefore, that deserves to be taxed as unclassified item at the rate of four per cent. It was submitted by counsel for the revision-petitioner before the assessing authority that the acids are basically chemical, which would be corrosive and dangerous in nature. But the industrial stearine fatty acid is derived by soliting the fatty acid, which are made out of oil and they being neither corrosive nor dangerous in nature, do not fall in the category of acids, as understood in common parlance.

(2.) THE dispute was carried before the Kerala Sales Tax Appellate Tribunal, which found as follows : " Acid is one which neutralises the base. For example, caustic soda plus any acid gives a salt, i. e. , sodium salt. Or lime plus any acid gives calcium salt. Acid may be classified under different categories such as organic, inorganic, commercial acid, or edible or non-edible etc. Organic acids are like free fatty acid (FFA), formic acid, citric acid, etc. Certain organic acids are edible. For example, citric acid is edible when diluted to five per cent or less. Free fatty acid is not edible as the oil is separated even though it is an organic acid. Entry 65 of the First Schedule deals with "all acids". "all acids" mean every acid whether organic or inorganic or commercial etc. THE entry covers every item which is an acid. THE item in question i. e. , industrial stearine fatty acid is a free fatty acid (FFA) which is commercially very much an acid. Commercially also free fatty acid is an acid. . . . . "