MARIAMMAN INDUSTRIES Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) IN this tax appeal filed by the assessees against the orders of the Board of Revenue, the question arises as to whether the oil known as armature coil winding oil can be taken as varnish mentioned in item 110 of the First Schedule to the Tamil Nadu General Sales Tax Act.

(2.) THE assessees are dealers in armature coil winding oil. For the assessment year 1974-75, their taxable turnover was determined at rs. 32, 952. THE assessing officer treated the said article sold by the assessees as coming under item 110 of the First Schedule to the Act and taxed the relevant turnover accordingly. THE assessees filed an appeal before the appellate Assistant Commissioner contending that armature coil winding oil cannot be classified as varnish and brought under item 110 of the First schedule and it is liable to be taxed only at multi-point rate and as the turnover fell below the taxable limit of Rs. 50, 000, they are not liable to be taxed at all. THE Appellate Assistant Commissioner accepted the contention of the assessees and held that the substance called armature coil winding oil sold by the assessees is a spirit-based adhesive oil used for winding armature coil, and, in the business circle, it is treated as an adhesive and not as varnish. THE Appellate Assistant Commissioner also examined the oil produced by the assessees and he found that it could be used only as an adhesive and that it has no use as varnish as generally understood in common parlance. He, therefore, felt that it will not fall under item 110 of the First Schedule, and therefore, it has to be treated as multi-point goods only and since the turnover of the assessees is less than Rs. 50, 000, which is the taxable limit, the assessment made on the assessees was cancelled. THE Board of Revenue thereafter called for the records of the Appellate Assistant Commissioner, and in exercise of its suo motu powers, cancelled the orders of the Appellate Assistant commissioner and restored the order of the assessing authority on the ground that the Appellate Assistant Commissioner was in error in treating the product sold by the assessees as not a varnish. According to the Board of Revenue, since the article like the one sold by the assessees has been referred as insulating spirit varnish in Indian Standards Specification, it should be taken to be one kind of varnish and the expression "varnish" used in item 110 of the First Schedule being general, it will take in all kinds of varnish including the insulating spirit varnish sold by the assessees. THE view taken by the Board is under challenged before us in this appeal.