JUDGMENT
K. Shivashankar Bhat, J.
1. These appeals by the assessee under the provisions of the Karnataka Sales Tax Act, 1957 (“the Act”, for short) involve the question whether “lime” is an item falling under chemicals vide entry 79 of the Second Schedule or whether it is a pesticide falling under entry 117 of the Second Schedule. The question arose in respect of the years 1981-82, 1982-83 and 1983-84.
2. The Revenue contended that “lime” is a chemical under entry 79 of the Second Schedule which refers to chemicals of all kinds. This contention was accepted in the order made by the Commissioner of Commercial Taxes in the proceedings initiated by him under section 22A of the Act. The assessing authority has accepted the contention of the assessee that the article in question was sold by the assessee to coffee estate who purchased the same as pesticide.
3. Sri Ramabhadran, learned counsel for the assessee, contended that the meaning attributable to a word or phrase in an entry of this sort is the meaning attributed to the same by the persons involved in the trade. The learned counsel contended that those who dealt with the lime in question dealt with the same as pesticide. The assessee sold the article as pesticide as the purchasers wanted the same to be used as pesticide in the coffee estate.
4. In Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan pointed out the test as follows :
“Now, in determining the meaning or connotation of words and expressions describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well-settled it is that the words or expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. It is they who are concerned with it, and it is the sense in which they understand it that constitutes the definitive index of the legislative intention when the statute was enacted.”
5. The learned counsel referred to the above passage. It no doubt supports the contention of the assessee in the sense that in the instant case, lime was sold as pesticide and the consumer purchased the same accordingly.
6. In Deputy Commissioner of Sales Tax v. G. S. Pai & Co. , the Supreme Court was concerned with the meaning attributable to the phrase “water supply …… fittings”. The question was whether the G.I. pipes were to be treated as “water supply ….. fittings”. The Supreme Court pointed out that even for the purpose of determining whether G.I. pipes sold by the assessee are “water supply ……. fittings”, it would have to be found as to what is the purpose for which they were meant to be used and since the said question was not considered by the authorities, the matter was remanded back.
7. In Atul Glass Industries (P.) Ltd. v. Collector of Central Excise , the Supreme Court applied the said test of functional character of the product in question. That was a case where the court had to consider whether mirror was treated as “glass and glassware”. The Supreme Court held thus :
“It is a matter of common experience that the identity of an article is associated with its primary function. It is only logical that it should be so. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identifies it in his mind. In the case of a glass mirror, the consumer recalls primarily the reflective function of the article more than anything else. It is a mirror, an article which reflects images. It is referred to as a glass mirror only because the word ‘glass’ is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The basic or fundamental character of the article lies in its being a mirror.”
8. In the above case, the Supreme Court was concerned with a particular article and was not concerned with the usage of the article, that is, the use for which it was put to. The Supreme Court had no occasion to consider whether user by a class of consumer would alter the nature of the article attracting a different levy of tax under the Act; in other words, whether a particular goods should be treated differently for the purpose of levy of sales tax depending upon the purpose for which the consumer purchases the same.
9. Relevant test seems to be the one pointed out by the Supreme Court in Mukesh Kumar Aggarwal & Co. v. State of Madhya Pradesh . The question was whether leftovers after the extraction of “poles” and “ballies” of eucalyptus trees are to be considered as “timber” or “fire-wood”. The High Court had held that the goods in question was “timber” and not “firewood”. The High Court stated that the dealers in the said goods offered to purchase the said goods for manufacture of woodware, furniture, etc., as well as manufacture of pulp and that they were dealing in timber. Therefore, the article in question was treated as timber. This reasoning was found to be faulty by the Supreme Court. At page 566 of AIR (at page 329 of STC) the Supreme Court held thus :
“Here again, pushed to its logical conclusions, the reasoning incurs the criticism of proceeding to determine the nature of the ‘goods’ by the test of the use to which they are capable of being put. The ‘user-test’ is logical; but is, again inconclusive. The particular use to which an article can be applied in the hands of a special consumer is not determinative of the nature of the goods. Even as the description of the goods by the authorities of the forest department who called them varyingly as ‘eucalyptus fuel-wood’, ‘eucalyptus wood-heep’, etc., is not determinative, the fact that the purchasers were dealers in timber is also not conclusive.”
10. The Supreme Court has pointed out that the particular use to which an article can be applied in the hands of a special consumer is not determinative of the nature of the article.
11. An article may be subjected to a tax. If tax has to be levied depending upon the purpose for which it is purchased, the Revenue may have to examine individual cases before deciding as to how the particular goods should be treated for the levy of tax. Same article may be subjected to different rates of tax under the Act depending upon the purpose for which the goods were purchased by different classes of consumers. That cannot be the legislative intention at all. The intention of the Legislature seems to levy the same, particular rate of tax, in respect of sales transactions pertaining to a particular goods as enumerated in the Schedules to the Act.
12. Lime is normally understood as a chemical. There is a detailed discussion on this of Gujarat v. Shah Bhagwanji Manekchand [1982] 50 STC 147 (Guj). At page 152, the High Court concluded thus :
“These standard works clearly go to support the finding of the Tribunal that lime, especially hydraulic lime, is used as a cementing material in the building construction industry, and that it is an agent which, when mixed with other substances, gives the same service as portland cement. Lime, therefore, is a chemical which is an intermediate product used to obtain the end-product which is used in the construction industry.”
13. In State of Mysore v. Gulam and Sons [1975] 36 STC 254 a Division Bench of this Court held that lime is not a heavy chemical. That was a case prior to the amendment of entry 79 of the Second Schedule. At the relevant point of time governing the said case, entry 79 referred to “heavy chemicals” only.
14. A learned single Judge of this Court also had an occasion to deal with this aspect of the matter in Yarana Feeds & Farms v. Assistant Commissioner of Commercial Taxes [1990] 77 STC 144. It was held therein that the articles could not be taxed depending upon its user in individual cases.
15. In view of the above, we are not persuaded to accept the submission of the appellant that lime should be treated as a pesticide for the purpose of taxation merely because it was used as such by the purchasers or consumers. There is a specific entry covering the “chemicals of all kinds” within which lime would be covered, because, normally, lime is considered as a chemical. Hence, these appeals are dismissed.
16. Appeals dismissed.