TMI Blog2005 (11) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... t of India, Ministry of Agriculture which leaves no scope of doubt that allethrin which is used in the product sold by the petitioners is insecticide . Insecticides Rules, 1971 provides for the manner of labeling. Labelling/packing of the products of the petitioner is as per the aforequoted rule 19(4) of the Rules. D-Trans allethrin and pallethrin are used in manufacturing the goods which have been described as household insecticides on their products as per the statutory requirement under the Insecticides Act. In the absence of any specific entry relating to mosquito repellent/mosquito destroyer and at the same time there being an entry mentioning insecticides , it can reasonably be said that an ordinary person will ordinarily understand the product of the petitioners falling under category of the insecticides . These facts coupled with the principles enunciated in the decisions referred to above leave us in no doubt that the products sold by the petitioners are basically in the categories of insecticides particularly in the absence of any indication in the notification in question. We are, however, unable to persuade ourselves to hold that merely because the petitioners have at v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tifications in question the goods manufactured and marketed by them, namely Mosquito mat/coil or refill , fall under the goods covered by entry pesticides and insecticides and, therefore cannot be subjected to tax as an unclassified item under section 3-A(1)(c) of the Act. 4. The dispute is with respect to articles sold on or before September 1, 2001 and relates to the assessment years 1998-1999, 1999-2000, 2000-2001, 2001-2002 (up to August 31, 2001). 5. In order to appreciate the controversy, it may be useful to first reproduce section 3-A of the Act and it is as follows: 3-A. Rates of tax. (1) Except as provided in section 3-D, the tax payable by a dealer under this Act shall be levied, (a) on the turnover in respect of 'declared goods', at the point of sale to the consumer at the maximum rate for the time being specified in section 15 of the Central Sales Tax Act, 1956 or where the State Government, by notification, declares any other single point or a lesser rate, at such other point or at such lesser rate; (b) on the turnover in respect of goods, other than the goods referred to in clause (a), at such point and at such rate, not exceeding fifty per cent, as the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low shall be liable to tax at the point of sale specified in column 3 of said List at the rate specified against each in column 4 thereof. List M stands for sale by the manufacturer in Uttar Pradesh I stands for sale by the importer in Uttar Pradesh 1-62... 63. Pesticides and insecticides M or I 5% 64-70.... (iii) English translation of Kar Avam Nibandhan Anubhag-2, Government Notification No. KA.NI-2-1011X1-9(231)/94-U.P. Act-15-48-Order-2000, dated 15th January, 2000. In exercise of the powers under clause (e) of sub-section (1) of section 3-A of the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No. XV of 1948) read with section 21 of the Uttar Pradesh General Clauses Act, 1904 (U.P. Act No. 1 of 1904) and in supersession of all previous notifications issued in this behalf, the Governor is pleased to declare that with effect from 17th January, 2000, the turnover in respect of the goods mentioned in column 2 of the List below shall be liable to tax at the point of sale specified in column 3 of said List at the rate specified against each in column 4 thereof. List M stands for sale by the Manufacturer in Uttar Pradesh I stands for sale by the Importer in Uttar Pradesh 1-60 61. Pestic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in category II (highly toxic) shall bear the word 'poison' printed in red and the statement 'keep out of reach of children', shall also appear on the label at suitable place outside the triangle; (iii) insecticides in category III (moderately toxic) shall bear the word 'danger' and the statement 'keep out of reach of children' shall also appear on the label at suitable place outside the triangle; (iv) insecticides in category IV (slightly toxic) shall bear the word 'caution'. 7. The labelling/packing of the products in question is as per the afore-quoted rule 19(4) of Rules relating to insecticides. (v) D-Trans 'allethrin' and 'pallethrin' are used in manufacturing the goods which have been described as household 'insecticides' on their products as per the statutory requirement under the Insecticides Act. (vi) Learned single Judge in the case of Trade Tax Revision No. 334 of 1996 connected with Trade Tax Revision No. 338 of 1996, Commissioner of Trade Tax, U.P. v. Priya Distributor, Ghaziabad vide judgment and order dated February 20, 2003 following the decision of the Orissa High Court in the case of Sonic Electroc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 he has mentioned the purchase and sale of 'mosquito repellent mats/coils, etc.'. The registration under the Act as well as under the Central Act were granted to the petitioner for trading of the aforesaid commodities. The registration numbers of the petitioner under the Act and the Central Act are UPTT No. GC-0060571 dated August 6, 1998 and CST No. GC-5035410 dated August 6, 1998. A true copy of the registration application certificate dated April 2, 1998 'form 14' under the Central Act and registration certificate dated January 2, 1999 'form B' under the Central Act are being annexed to this counter-affidavit and marked as annexure Nos. CA-5 and CA-6 respectively. (b) Under rule 41(1) of the U.P. Trade Tax Rules, 1948 (hereinafter refers to as 'the Rules') the petitioner regularly filed monthly returns in 'form 4' wherein he had clearly mentioned the commodities sold by him as 'mosquito repellent mats/coils, etc.'. The petitioner always accepted the aforesaid commodities traded by him as repellents and not as insecticides or pesticides. True copies of monthly returns in form 4 all along with its annexure I for the months of March, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, 2001 and invoice No. 332 dated March 23, 2001 are being annexed to this counter-affidavit as exemplars in which the petitioner has mentioned the commodities in question as 'repellent' and not an insecticide or pesticide and the same are collectively marked as annexure No. CA-16. (f) The customers of the petitioners are not dealing in insecticides or pesticides, but they are dealing/trading general merchandise goods like soap, shampoo, paper candle and cosmetics, etc., which facts are evident from the certificate obtained from assessing authorities of two dealers buying the petitioner's goods in question. True copies of certificates dated September 15, 2005 and September 16, 2005 issued by the Assistant Commissioner, Sector-6, Trade Tax, Ghaziabad and Assistant Commissioner, Sector-4, Trade Tax, Ghaziabad in respect of dealers of their jurisdiction, i.e., M/s. Agrawal Traders and M/s. Kusum Distributors respectively are collectively marked as annexure No. 17. (g) The petitioner has not disclosed in the writ petition the composition of its product. The answering respondents/assessing authority has collected the paper packing of the repellent sold by the petitioner unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mat would come within entry No. 129 of Schedule II, Part A of the Gujarat Sales Tax Act, 1969. The said entry gave the description of goods as mosquito repellents . It was sought to be argued on behalf the appellant that Jet mat was an insecticide and not a repellent, whereas on behalf of the Revenue it was sought to be argued that the product was nothing but a mosquito repellent and a repellant does not cease to be so merely because by its action mosquitoes are also killed. It is in this context that the Supreme Court observed: .......In view of the specific entry 129 dealing with mosquito repellents it is difficult to accept the contention of the learned counsel for the appellant that the product in question will not come within the ambit of entry 129 since one of its constituents 'd-Allethrin 4 per cent' happens to be an insecticide. The product Jet mat which is the trade name containing 'd-Allethrin 4 per cent' and is commercially known as mosquito repellent mat' in our considered opinion is a mosquito repellent notwithstanding the fact that it not only repels the mosquitoes but also is capable of killing the mosquitoes. It is difficult to hold that it is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drug licence. 12.. In Commissioner of Central Excise, Calcutta v. Pt. D.P. Sharma Chemical Works (2003) 5 SCC 288, the question that arose for consideration before the Supreme Court was whether Himtaj oil was Ayurvedic medicament or not classifiable or a perfumed hair oil . The court negatived the argument that the product could not be considered to be a drug because it was not prescribed by a medical practitioner and was one which could be used for long period. It was held that the test was to find out what persons using the product understood it to be and on the basis of the evidence produced by the manufacturer that common man understood the product as a medicine, it was held that the product was a medicament. 13. The aforesaid decisions of the Supreme Court in the case of Shree Baidyanath (1996) 9 SCC 402 and D.P. Sharma (2003) 5 SCC 288 were considered by the Supreme Court in the subsequent decision in the case of Dabur India Ltd. v. Commissioner of Central Excise, Jamshedpur (2005) 4 SCC 9 wherein the Supreme Court held: From the abovementioned authorities, it is clear that in classifying a product the scientific and technical meaning is not to be resorted to. The product mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1978] 42 STC 433 (SC); (1983) 13 ELT 1607 (SC). It is generally by its functional character that a product is so identified. In Commissioner of Sales Tax, U.P. v. Macneill Barry Ltd. [1986] 61 STC 76 (SC); (1985) 2 Scale 1093; (1986) 23 ELT 5 (SC) this Court expressed the view that ammonia paper and ferro paper, used for obtaining prints and sketches of site plans could not be described as paper as that word was used in common parlance. On the same basis the Orissa High Court held in State of Orissa v. Gestetner Duplicators (P.) Ltd. [1974] 33 STC 333 that stencil paper could not be classified as paper for the purposes of the Orissa Sales Tax Act. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reated for the purpose of the specifications laid down by the Indian Standards Institution. It was a test employed by this Court in Union of India v. Delhi Cloth General Mills [1963] Supp. 1 SCR 586; [1997] 1 ELT J199 (SC) but was regarded as supportive material only of the expert opinion furnished by way of evidence in that case. The considerations to which we have adverted should, in our opinion, have greatly weighed in deciding the question raised in this appeal. So also in Union Carbide Co. Ltd. v. Assistant Collector of Central Excise [1978] 2 ELT 180 (Cal), the description set forth in the publications of the Indian Standards Institution was regarded as a piece of evidence only. There were other more tangible considerations which weighed with the court in reaching its conclusions. We are firmly of the view that glass mirrors cannot be classified as 'other glass and glassware' set forth in tariff item No. 23A(4), and must therefore, fall under the residuary tariff item No. 68. 16. The Supreme Court in Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Akola [1961] 12 STC 286 observed as follows: Thus under the Act all articles mentioned in the Schedule were exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular entry. It is not for the court to determine for itself under article 136 of the Constitution under which item a particular article falls. It is best left to the authorities entrusted with the subject. But where the very basis of the reason for including the article under a residuary head in order to charge higher duty is foreign to a proper determination of this kind, this Court will be loath to say that it will not interfere. 18.. In Deputy Commissioner (Law), Board of Revenue (Taxes) v. M.R.F. Ltd. [2001] 121 STC 274 (SC); 2000 UPTC 754, the Supreme Court observed: It is the contention of the Revenue that compounded rubber is not a finished rubber product and that the word 'finished' must be understood as the last or concluding product in a chain. We are of the view that due weight must be given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject-matter of the statute or statutory instrument understand it. It is hazardous to interpret a word in accordance with its definition in another statute or statutory instrument and more so when such statute or statutory instrument is not dealing with any cognate subject . 5.. When the word to be construed is used in a taxing statute or a notification issued thereunder it should be understood in its commercial sense 21. In Goel Industries (Pvt.) Ltd. v. Commissioner of Sales Tax, U.P., Lucknow [1971] 28 STC 729; 1971 UPTC 697, the Allahabad High Court observed as follows: The short question involved in this case is as to whether ice and water are the same thing. It is true that ice is manufactured from water without addition of any chemical or substance. The chemical composition of ice and that of water is the same, but even then ice cannot be regarded as water. It is a matter of common experience that while water is generally available free, ice is always sold in the market. It is now well-settled that unless it is defined in the Act or the Rules, a term in the Sales Tax Act must be interpreted in a sense in which it is understood generally and in the commercial world and not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 6 of the Orissa Sales Tax Act and since the appellate authority has come to the conclusion that the goods manufactured by the assessee are 'insecticide', the said item is entitled to exemption in question 24. In Transelektra Domestic Products Pvt. Ltd. v. Commercial Tax Officer, Porur Assessment Circle, Madras [1993] 90 STC 436, the Madras High Court considered whether mosquito mats marketed under brand name Good Knight could be treated as insecticides and consequently fall under item No. 66 of the Schedule to the Act. It is in this context that High Court observed: 5. On going through the decision of the Tribunal, I am in entire agreement with the line of reasoning adopted therein. Even that apart, the entry No. 66 of the First Schedule to the Act while describing the various commodities as falling within it refers to insecticides generally and not with or of any particular percentage of combination or composition. As a matter of fact, the concluding portion of the entry 'and combinations thereof' without prescribing any particular percentage is an indicator that what was envisaged therein is that the product may be an insecticide simpliciter or a combi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licence issued under the Insecticides Act and it will fatally affect the nervous system of mosquitoes, we are of the opinion that it can be classified as an insecticide till it was specifically classified from April 1, 1991 onwards. Government specifically classified mosquito repellent mat as coming under entry 123B from April 1, 1991 under item 85 from April 1, 1992 making it a single point rate. 27. A learned single Judge of this Court in the case of Commissioner, Trade Tax v. Priya Distributor (Trade Tax Revision No. 334 of 1996 connected with Trade Tax Revision No. 338 of 1996) (Commissioner of Trade Tax, U.P. v. Priya Distributor, Ghaziabad) considered whether the Trade Tax Tribunal was justified in holding that mosquito mats fall under the category of insecticides . The court placed reliance upon the decision of the Madras High Court and Orissa High Court in the case of Transelektra Domestic Products [1993] 90 STC 436 and Sonic Electrochem [1994] 92 STC 117 respectively and held that the Tribunal was justified in holding that mosquito mats fall under category insecticides and liable to tax accordingly. 28. Special Leave Petitions No. 13187 of 2003 and 17018 of 2003 against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oning insecticides , it can reasonably be said that an ordinary person will ordinarily understand the product of the petitioners falling under category of the insecticides . 33. These facts coupled with the principles enunciated in the decisions referred to above leave us in no doubt that the products sold by the petitioners are basically in the categories of insecticides particularly in the absence of any indication in the notification in question. 34. It has, however, been urged by Sri Kesarwani, learned counsel for the Revenue that the petitioner applied for registration under section 8A of the Act form 14 wherein in column 7 it has been mentioned that the commodity traded is mosquito repellent mats/coils, etc. . Similarly under section 7 of the Central Sales Tax Act, 1956, the petitioner applied for registration in form-A wherein in column 16 it has been mentioned that the purchase and sales of mosquito repellent mats/coils, etc. . 35. We are, however, unable to persuade ourselves to hold that merely because the petitioners have at various stages contended that the product is described or commonly traded as mosquito repellent it should not fall in the category of insecticides . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04) 36 STJ 67 and Hindu Super Store [2006] 145 STC 223; (2004) 36 STJ 76 do not lay down the correct law and therefore it would be in the interest of all concerned that this matter is decided by this Court, particularly when there is already decision of this Court in the matter of Priya Distributor (T.T.R. Nos. 334 and 338 of 1996 decided on February 20, 2003) holding to the contrary. 40. Taking into consideration the overall facts and circumstances, we consider it appropriate to decide the issue and matter finally at this stage and reject the objection raised by the learned counsel for the respondents, that the petitioners seeks to challenge, at this stage, show cause notice issued under section 21(2) of the Act. 41. In view of the above discussion, all the above writ petitions are liable to succeed. In Writ Petition No. 1214 of 2005 the order dated March 9, 2005 passed by the Additional Commissioner, Trade Tax (annexure 14 to the writ petition) and the consequent notices dated July 21, 2005 (annexure 23 to the petition), in writ petition No. 584 of 2005 the order dated March 18/19, 2005 passed by the Additional Commissioner, Trade Tax (annexure 15 to the petition) and the notices ..... X X X X Extracts X X X X X X X X Extracts X X X X
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