GIRJA SHANKER DUBEY Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) THE following questions have been referred to us under section 11 of the U.P. Sales Tax Act :

(2.) THE circumstances under which the above-mentioned questions arose are as follows : The assessee M/s. Girja Shanker Dubey and Company describes itself as "chemical dealers" at Firozabad, but it claims to be "an agriculturist holding substantial agricultural farms" and "as such appointed agents of various companies for the imports and redistribution of Chilean nitrate which is used as manure". It was assessed on an estimated turnover of Rs. 40,000 for each of the two years 1954-55 and 1955-56 for payment of sales tax on sales of imported Chilean nitrate which were treated as chemicals. The contention on behalf of the assessees was that the Chilean nitrate sold by them was a "fertilizer" exempt under the provisions of Notification No. ST-119/X-1948 dated 7th June, 1948. This notification was issued under section 4 of the U.P. Sales Tax Act exempting from the provisions of section 3 of the U.P. Sales Tax Act a number of goods including fertilizers which are mentioned as item No. 11 on the List which came into effect from the 1st of April, 1948. The term "fertilizer" is used here without any qualification whatsoever, and, prima facie, it includes all kinds of fertilizers. On behalf of the department, reliance is placed upon another Notification No. ST-117/X-923-1948 dated 8th June, 1948. Item No. 11 in the List No. I of this notification is : "Chemicals of all kinds". These are made taxable at the rate of 6 pies per rupee. On 16th July, 1956, another Notification No. S.T. 3470/X was issued, under section 4 of the U.P. Sales Tax Act, 1948, by which four items were exempted from the payment of sales tax. The last of the items in this notification was : "Fertilizers other than chemical fertilizers". There is no express mention in this last notification that the previous Notification No. S.T. 118/X-1948 was superseded by it so far as fertilizers are concerned. Nevertheless, it can be inferred that the reason for this fresh notification of 1956 was that the State Government realised that the first notification regarding exemption of fertilizers was wide enough to include chemical fertilizers. Apparently, it was for this reason that the last-mentioned notification of 1956 clearly excluded chemical fertilizers from the category of exempted fertilizers altogether. It also appears that for the assessment years 1952-53 and 1953-54, the two years preceding the years with which we are now concerned, Chilean nitrate was considered by the Sales Tax Authorities themselves to be exempt from sales tax as it was a fertilizer. Again, if Chilean nitrate is a chemical fertilizer, it would not be exempt from sales tax after the last-mentioned notification of 1956. We are, however, concerned only with the period prior to the notification of 1956 declaring that chemical fertilizers did not fall in the category of fertilizers exempt from sales tax.

(3.) MR . Swami Dayal, on behalf of the assessee, contended that Chilean nitrate was not a chemical at all but was a mineral used for purposes of fertilization. He referred to an article on Chile in the Encyclopaedia Britannica, Volume V, where, under the heading "Mining", the following passage occurs :