TMI Blog2010 (7) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... ustained. The impugned orders are set aside. The tax levied initially at the rate of 5% alone would survive. Any levy of tax over and above 5% is hereby set aside. - T.C.(R)NO.547 OF 2006, T.C.(R)NO.1796 OF 2006, T.C.(R)NO.1797 OF 2006, T.C.(R)NO.1823 OF 2006, T.C.(R)NO.1828 OF 2006, T.C.(R)NO.1842 OF 2006, T.C.(R)NO.1858 OF 2006, T.C.(R)NO.1862 OF 2006, T.C.(R)NO.1864 OF 2006, T.C.(R)NO.1874 OF 2006, T.C.(R)NO. - - - Dated:- 16-7-2010 - F. M. Ibrahim Kalifulla And M. M. Sundresh,JJ. For the Petitioner : Mr.V.Sundareswaran, Mr.S.Ramanathan For the Respondents : Mr. Haja Naziruddin Special Government Pleader ORDER (Order of the Court was made by F. M. Ibrahim Kalifulla,J.) In all these Reviews the common question that arise for consideration is as to whether dyes used for leather finishing falls under entry 49 of Part C or entry 16(iii) of Part E. If it falls under entry 49 of Part C then the rate of tax to be applied is 5% while if it falls under entry 16(iii) of Part E, the rate of tax would be 12%. 2. We refer to the case particulars concerned in T.C.(R)No.547/2006. By order of assessment dated 28.2.1995 for the assessment year 1993-94 the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsels for the petitioners by referring to the entries found in Serial No.49 of Part C as well as Serial No.16(iii) of Part E contended that the method adopted by the lower authorities, namely, the `user theory' was not proper and therefore the orders are liable to be set aside. (ii) According to the learned counsel for the petitioners, when admittedly what was sold by the assessee in the market were dyes and not pigments , merely because the dyes sold to parties dealing with leather that by itself would not cover such sale under entry 16(iii) of Part E and therefore, the conclusion of the lower authorities is liable to be set aside. (iii) According to the learned counsel, when dyes have been specifically classified as a separate entry in Part C in Serial Number 49, there was no justification to bring it under entry 16(iii) of Part E and thereby enhance the rate of tax on the sole ground that such dyes were sold to the parties dealing with leather finishing. 6. (i) On the other hand, the learned Special Government Pleader would contend that when leather finishes is a specific item as entry 16(iii) of Part E, described along with pigments including wate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the nature of the products manufactured by the assessee in that case held that a detailed examination had to be made by the assessing authority in order to find out whether those items would fall within the definition of drugs and medicines. The socalled drugs manufactured by the assessee in that case were zinc oxide adhesive plaster, balladona Plaster, capsicum plaster, surgical wound dressing, crepe bandages. It was in the abovestated background the Hon'ble Supreme Court held that the case called for a remand in order to make a detailed examination about the nature of products to find out whether such products would fall within the definition of drugs and medicines . 8. In the case on hand, it will have to be stated that there is no dispute about the product manufactured by the assessee, namely, dyes . The only other question to be determined is whether such dyes which were supplied to parties dealing with finishing of leather products would attract levy of 12% tax under the heading pigments including water pigments and leather finishes . Therefore, we hold that there is no need for remittal of the matter back to the assessing authority as we are convinced tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old by the assessees were only dyes and not pigments . One other relevant fact to be noted is the very same dyes when sold to other parties, the rate of tax applied was 5% as specified under Sl.No.49 of Part C and when the dyes were sold to the merchants dealing with finishing of leather, the tax was levied at the rate of 12% as prescribed under entry 16(iii) of Part E. therefore, the only reason which weighed with the lower authorities for applying entry 16(iii) of Part E was that the said entry specifically bear the expression leather finishes . In fact we are at a loss to understand as to what is meant by leather finishes . In spite of our best efforts we were not highlighted as to whether there is any specific product called leather finishes available in the market. Apparently, since the expression leather finishes has been used along with the expression pigments including water pigments , the authorities seem to have taken the view that even dyes when used in the process of leather finishing works, the same should be treated as pigments and thereby to be taxed under the said entry. The reasoning in the assessing authority's order in paragraph 5 only state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied in an alkali-soluble state and oxidized; and sulfur, when used in a sodiun sulfide bath followed by oxidation. Homophone : die.(OE deagian deag dye, color) Pigment 1.Any of a class of finely powered, insoluble coloring matters suitable for making paints, enamels, oil colors, etc. 2 Any substance that imparts color to animal or vegetable tissues, as chlorophyll. 3.Any substance used for coloring. From any of these meanings set out in the reputed dictionaries we are able to see that dyes can be authoritatively brought under the expression pigment . 14. In the course of the submissions of the learned counsel, it was only stated that both dyes and pigments are colourants though they are two different products by themselves. While describing dyes it is stated dyes are dissolved in whatever solvent used. In respect of pigments it is stated that they are insoluble. In fact, dyes are used as colouring material even in a pigment. It is also not in dispute that a pigment being a colouring agent is fugitive while a dye when applied gets absorbed in the material in which it is applied and exhibits its colour in the process of such dissolution. In fact, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in, nothing is to be implied. One can only look fairly at the language used. These principles have been accepted as correct both by the English Courts and the superior courts in this country. It is now well settled that if the interpretation of a fiscal enactment is in doubt, the construction most beneficial to the subject should be adopted even if it results in obtaining an advantage to the subject; the subject cannot be taxed unless he comes within the letter of the law and the argument that he falls within the spirit of the law cannot avail the department. It has been stated again by the Hon'ble Supreme Court in AIR 1966 SC 1295 (State of Punjab Vs. Jullunder Vegetable Syndicate) that in taxing statutes the language cannot be strained . In the recent decision of the Hon'ble Supreme Court reported in (2007) 2 SCC 230 (Raghunath Rai Bareja Vs. Punjab National Bank) the Hon'ble Supreme Court, as a proposition of law, has held as under in paragraph 40: 40. It may be mentioned in this connection that the first and the foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The Division Bench of the Allahabad High Court in that decision considered the case where the assessee manufactured Oxygen gas for industrial and medical purposes. The question posed for consideration in that case was whether the oxygen so prepared is a chemical liable to be taxed under section 3-A at the rate of 0-1-0 anna per rupee or it is a medicine liable to be taxed under section 3 at a reduced rate. In the said decision the Division Bench of Allahbad High Court was concerned with the product, namely, 'oxygen' which was manufactured by the assessee, one for industrial purposes and the other for medicinal purposes. Therefore, the application of user theory , in the said situation had to be necessarily made in order to find out what is the rate of tax to be applied. As against the facts involved therein, in the case on hand we are concerned with product, namely, dyes classified under entry 49 of part C and pigments classified under entry 16(iii) of part E. As between two different products, when the taxing authorities categorically admit that the product dealt with by the assessees were only dyes and not pigments , there is no scope for applying the user the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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