TMI Blog1963 (5) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... lead and of 4 to 6 per cent. of phosphorus. In compliance with these contracts the opposite party sold to the railways ingots containing 0.1 per cent. of lead, 0.4 per cent. of phosphorus, 6 to 8 per cent. of tin and at least 90.9 per cent. of copper. The question arose before the assessing authorities whether the turnover of sale of these ingots was exempt from payment of sales tax under Notification no. ST. 3085/X-902(16)-49 dated 3rd August, 1949, which reads as follows: ". . . . . . . .the Governor is hereby pleased to order that. . . . . . . .the provision of section 3 of the Act shall not apply to the sales of copper, tin, nickel and zinc or any alloy containing any of these metals only." A copy of the notification was sent by the State Government to the Commissioner, Sales Tax, with the remark that small impurities up to 1 per cent. in metals or alloys thereof stated above should be ignored for the purposes of granting exemption. It was contended on behalf of the assessee that lead and phosphorus contained in the ingots were only impurities and that since their percentage did not exceed one they should be ignored for the purposes of granting exemption and the exemption sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without jurisdiction or on both the grounds. It may be that in this case he challenged the claim to exemption on the first ground only, but it cannot be disputed that the other ground is another aspect of the question that has been referred to this Court. When the Judge (Revisions) held that the assessee is entitled to the exemption under the direction he necessarily decided that the direction has legal force entitling the assessee to claim the exemption. Therefore, the order passed by him impliedly contained the decision that the direction has legal force. I am, therefore, of the opinion that the direction must be ignored, not being a part of the notification, and that the assessee cannot claim the exemption under it. It has not claimed the exemption under the notification itself. Admittedly the ingots contained lead and phosphorus and cannot be said to be alloys of only the four metals mentioned in the notification. Even if the direction were to be placed on the same footing as the notification I do not think that the claim to exemption is justified at all because lead and phosphorus added to copper and tin cannot be said to be impurities within the meaning of the direction. " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uses the word impurities and not other ingredients or other metals; it comes into application only when there are impurities and not when there are other ingredients or metals. Whether a substance is an impurity or not depends upon its nature and not upon its quantity. Impurity is a qualitative and not quantitative description. If an alloy of 99% copper and 1% of lead is required for a certain purpose and is prepared out of copper and lead mixed in these proportions, it cannot be said that the resulting article is copper with lead as an impurity merely because it is of 1%. If in an alloy required to contain 50% copper and 50% lead neither can be said to be an impurity, lead required to be of 1% in any alloy of copper and lead cannot be said to be an impurity simply because it is of such a small proportion. Therefore, lead and phosphorus in the alloy which was required to contain them cannot be said to be impurities. If an alloy was required to consist of 25% of copper, 25% of tin, 25% of lead and 25% of phosphorus nobody would have dreamt of calling it an alloy of copper and tin with lead and phosphorus as impurities. The alloy in the instant case cannot be said to contain lead and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of a contract of work and not sale; so it may be said that a question whether the assessee sold the articles or performed a contract of work does arise out of the order passed by him but it is not a question referred to this Court by him. My answer to the question, therefore, would be in the affirmative. ASTHANA, J.-I have had the advantage of hearing the opinion just delivered by My Lord the Chief Justice but I find myself in respectful disagreement with his conclusion. The facts of the case have been sufficiently stated in the order of My Lord the Chief Justice and it is not necessary for me to repeat the same in this judgment. The answer to the question which has been referred for opinion at the instance of the Commissioner, Sales Tax, U.P., turns on the scope and the extent of Notification No. S.T. 3085/X 908(16)-49 dated 3rd August, 1949, and a note by way of information sent to the Commissioner, Sales Tax, which has been appended below that notification. The notification in question says that the provisions of section 3 of the Act shall not apply to the sales of copper, tin, nickel and zinc or any alloy containing any of these metals only. Then it appears that while forw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to have been ignored as the exemption clause in the notification did not warrant that fact to be taken into consideration. What was mentioned in the grounds was that phosphor bronze was taxable in view of the admixture of lead and phosphorus which could not be treated as impurities. It was in this light that the Judge (Revisions) considered the case and after recording a finding that the percentage of lead admixed was 0.1% and that of phosphorus admixed 0.4%, the total of lead and phosphorus which was admixed in the alloy in question was 0.5% much below the limit of 1% and he held that the alloy in question was exempt from sales tax. Even in his application under section 11 of the Act made before the Judge (Revisions) no ground was raised that the abovesaid remarks which accompanied the copy of the notification forwarded for information to the Commissioner, Sales Tax, was not binding and ought not to have been taken into consideration while granting exemption. In these circumstances, in my judgment, this Court would not be justified in refusing to take into consideration the abovesaid remarks in finding whether the alloy of phosphor bronze ingots was exempt under the notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the argument made on behalf of the Commissioner, Sales Tax, that on the facts of the case as the railway authorities wanted an alloy of tin, copper, phosphorus and lead in certain proportions, such an alloy not being an alloy of tin and copper-the exempted metals-but an alloy of all those four metals, namely, tin, copper, phosphorus and lead, phosphorus and lead cannot be said to be impurities as they were deliberately required in that composition and the phosphor bronze ingots in question would fall outside the exemption. That the element of phosphorus and lead, having been deliberately introduced in the admixture of tin and copper, would cease to be an impurity for the purpose of granting exemption, only because those metals were introduced by the assessee at the instance of the purchaser, involves an approach to the whole question depending on the intention of the seller or the purchaser which, to my mind, is wholly irrelevant for the purposes of judging whether the alloy of copper and tin mixed with phosphorus and lead to the extent of 0.5% was to be treated as an alloy of tin and copper only within the meaning of the said notification. In my opinion, for the purposes of appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished in the U. P. Gazette. A copy of it was forwarded to the Commissioner of Sales Tax with the remark that small impurities up to 1% in metals or alloys thereof should be ignored for the purpose of granting exemption. The remark (hereinbelow called the rider) was never published in the Gazette. The assessee sold phosphor bronze ingots to the railways. The components of the ingots were copper, tin, lead and phosphorus, as agreed to between the parties. The assessee claimed that the sale was exempt from tax in view of the rider; the department said that, as lead and phosphorus, though below 1% in the ingots, are not impurities in phosphor bronze, the sale is subject to tax. This dispute between them is the reason for the reference to the Court. The Chief Justice and Asthana, J., have differed in their answer to three questions: (1) Whether the rider has the force of law? (2) Whether the first question is referred to the Court? (3) Whether the sale of phosphor bronze ingots is taxable? On the first question the Chief Justice has taken the view that the rider has not got the force of law. On the second question his opinion is that the first question is necessarily implied i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... percentage. The men of trade and industry therefore speak of metals as commercially pure. They overlook the inseparable foreign substances in a metal as low impurities and still call it a pure metal. (Encyclopaedia of Chemical Technology, 1949 Edn., Vol. IV, page 432). If the notification is to be construed in the commercial sense, as I think it should be, then in spite of the presence of the unavoidable concomitant foreign substances in them in negligible quantities copper, tin, zinc and nickel shall be deemed to be commercially pure metals, and no tax shall be leviable on their sales. Similarly an alloy prepared from a solution of two or more of those metals, which themselves are commercially pure in the sense already described, shall be regarded to be commercially pure, and no tax shall be levied on the sale of it. In may now be observed that broadly speaking the rider is really expository of the notification. It makes explicit what is, as shown above, necessarily implicit in the notification. It should, however, not be understood that I am engrafting it on the notification. Far from it, however, I do emphasise that the notification, independently of it, is intended to provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for some specific purpose. (Ibid, Vol. IV, page 435). If their presence is explained by the first reason, they are overlooked as low impurities (Ibid, page 435). Phosphorus and lead are not found in copper and tin for the first reason; phosphorus is present in them for the second reason and lead for the third reason (Ibid, Vol. IV, pages 435, 443 and 444). Lead is deliberately added to copper and tin to improve the machining properties. In phosphor bronze it is added to secure a more conformable bearing alloy. (Ibid, Vol. XIV, page 149). Phosphorus is fluxed with copper and tin to produce a hard strong metal which is required for valves, bushes of bearings, etc. (Encyclopaedia Brittanica, 1959 Edn., Vol. IV, page 240). When a substance is added deliberately to achieve a specific purpose, it is hardly legitimate to call it an impurity. My answer, therefore, is that the sale of phosphor bronze ingots does not fall within the ambit of the notification as interpreted by me or of the rider. To sum up, my answers are: Question (1)-No, subject to what I have already explained. Question (2)-Yes. Question (3)-Yes. The case came on for final hearing before Desai, C.J., and Asth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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