JUDGMENT/ORDER
C.N. Ramachandran Nair, J.
1. In all these cases the common issue raised is on the rate of tax payable on the product sold by the petitioner, viz., “polystik compound”. While T.R.C. No. 178 of 1999 arise from a revised assessment, in the other two Tax Revision Cases, the assessments involved are original. However, there is no difference so long as the issue is concerned. Though the assessing officer initially treated the item under the general goods falling under the residuary entry, not being specified in any of the other entries in the First Schedule, later the officer revised the assessment for 1994-95 under Section 19(1) of the Act and made regular assessments for the other two years, 1995-96 and 1996-97 by applying the rate of tax at 10 per cent applicable to ‘adhesives’ provided under item 3, of the First Schedule to the Kerala General Sales Tax Act, 1963. The first appellate authority allowed the appeal and the further appeal by the Department before the Tribunal was unsuccessful and accordingly this revision is filed by the State.
2. We have heard the learned Government Pleader appearing for the petitioner -State and Smt. S.K. Devi, the learned Counsel appearing for the respondents in all the cases. The Government Pleader argued that the product is nothing but an adhesive and the manufacturer as well as the respondent described the item as an “adhesive” in the returns filed and according to him the finding of the appellate authority that the item is not coming under any of the specific entries in the Schedules to the Act is not correct. His further argument is that Entry 71 is applicable to chemicals, which is not relevant in this case at all. The learned Counsel appearing for the respondents submits that the question raised in these revisions is as to whether “polystik compound” is an adhesive or whether the item comes under the residuary entry not covered under any of the other specific entries in the First Schedule.
3. We have gone through the orders of the authorities below. In order to classify the item, we have to identify the item with reference to it’s purpose and use. It is agreed between the parties that the purpose of the item, is for use as an adhesive material in fixing rainguard on rubber trees for tapping during rainy season. The rainguard is either in the form of a plastic shade or a plastic paper. The process involved is to clear the round surface of the tree, apply to it the polystik adhesive over which cloth is stitched to which is attached the rainguard either in the form of paper or shade with the help of stapler. While the counsel for the assessee contends that the main purpose of the polystik coating is to prevent leakage of water, the Government Pleader submits that water leak is prevented by the rainguard and the essential feature and purpose of the compound is it’s adhesive nature or binding capacity which binds cloth to the tree to which shade is attached with the help of stapler. It requires no special knowledge to know that without any binding material or an adhesive, cloth will not stick to the rubber trees and it is admitted that the shade is attached to the cloth with the help of stapler. Of course, a bonding material may also prevent water leakage. Therefore, the item polystik compound is essentially an adhesive going by it’s use and purpose. The other property of preventing leakage of water is only an additional feature. On going through the records, we find the assessing authority has given a clear cut finding that the manufacturer and the dealer while transporting classified this item as “adhesive” in the transport documents namely delivery note and Form 27 B. The item was shown in those documents as “polystik adhesive”. Similarly the assessees in the returns filed declared the item as “adhesive”. In the reply to the pre-assessment notice, the assessees have admitted that the polystik compound is applied to rubber trees to form a layer between the tree and rainguard which may be either plastic sheet or plastic shade. A cloth is tied around the tree to which the rainguard is clipped with the help of stapler. According to the assessee, the coating with polystik is only to prevent flow of water below the rainguard. Therefore, according to the assessee, its essential purpose is water-proofing. However, the assessee doesn’t deny it’s function as an adhesive. Item 3 of the First Schedule to the Act provides a general item as “adhesive” and therefore all adhesives are covered by the said entry.
4. The assessee has relied on the decision of the Andhra Pradesh High Court in State of A.R v. General Electronic Corporation ((2000) 118 STC 514) wherein it is held that M-Seal is not an adhesive and it is not covered by Entry 191 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957. It is specifically stated in that case that M-Seal is used a blocking agent to block the leakage of liquids and it is covered by entry “general goods”. In that case various decisions have been relied on by the Advocate General to show that M-Seal is a leak preventing material and not used as an adhesive. In this case, the leak preventing property of the polystik compound is only incidental, the essential one being adhesive. Therefore, we feel the decision has no application. Since, on facts there is no controversy that the item is used as an adhesive to fix rainguard on the standing trees, we are unable to sustain the order of the Tribunal. We set aside the impugned order of the Tribunal and restore the assessment of the item as ‘adhesive’ under item 3 of the First Schedule to the K.G.S.T. Act. The revisions are allowed as above.