TMI Blog2017 (10) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... el of the bicycle - With passage of time Hydraulic Brake System came into existence and the Brake Fluid was introduced. The Brake Fluid perform the same job which was being performed by the mechanical system and it transfers the force on the brake pads fixed on the brake drums (Brake Shoe). It is not at all lubricating either the brake or any part which is under the braking system. Today we have pressure brake also which exclusively work on air pressure and if the logic canvassed by the State Government is considered then the State Government will charge Sales Tax on air also as lubricants because air is again being used in braking system in some of the modern age braking system. Reliance placed in the case of Commissioner, Trade Tax, U. P., Lucknow Vs. H. C. S. Comnet System Ltd. [2014 (1) TMI 1648 - ALLAHABAD HIGH COURT], where the Allahabad High Court was dealing with an issue relating to VSAT and the issue before the Court was whether VSAT (Very Small Aperture Terminals) and Satellite Receiver can be treated as one entry or the two item separately - The High Court has held that The functioning of “VSAT” and “Satellite receiver” is different, their actual use is different, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State of Madhya Pradesh, the Madhya Pradesh Commercial Tax Act, 1994 came into force w.e.f. 01/04/1995 and the petitioner Company is registered as a dealer under the provisions of Act of 1994. The Act of 1994 does not provide any specific entry in respect of levy of sales tax on Brake Fluid , however, it provides for an entry i.e. Entry No.9 in Part-III of Schedule-II which reads as under:- Entry No. Description of Goods Rate of Tax 9. Lubricants 15% 05- The Company, as the Brake Fluid does not fall under the description of the goods i.e. Lubricant, was paying Commercial Tax under the residuary entry being Entry No.1 of Part-VII of Schedule-II which reads as under:- Entry No. Description of Goods Rate of Tax 1. All other goods not included in Schedule-I or any other part of this Schedule 15% 06- In respect of Assessment Year 1991-92, the Sales Tax Department accepted the payment of tax by treating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Lubricant. The petitioner has also raised a ground in respect of composition of Lubricant as well as of Brake Fluid and the stand of the petitioner is that Brake Fluid, by no stretch of imagination, can be treated as Lubricant. 12- The respondents have filed a reply and the respondents have stated that Brake Fluid has to be treated as Lubricant and tax has rightly been charged by treating Brake Fluid as Lubricant as mentioned in the Entry No.9 Part-II of Schedule-II. The respondents have stated that functions of the Lubricant and Brake Oil are almost identical. The Lubricant reduces the friction, wear and tear in different parts of the machine and the Brake Oil also reduces friction in brakes and therefore, the Brake Oil can not be treated as a separate entry and it has to be treated as a Lubricant for all purposes. 13- The respondents have also placed reliance upon an order passed by Commissioner, Commercial Tax dated 21/06/1994 in respect of M/s. Brakes India Ltd. The respondents have stated that earlier also in past they have considered the factum of distinction between Lubricant and Brake Fluid and Commissioner has rightly passed the order in exercise of power conferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d should not contain a trace of Lub. Oil because it affects the Rubber parts in the Brake system. iv) Brake Fluid is based on Solvent like Glycol equilibrium refluxing boiling point. 19- It is pertinent to note that under the Bombay Sales Tax Act, 1959, lubricants have been classified under Entry 8 whereas Brake Fluid is classified under the residuary entry and not under the Entry No.8 relating to lubricants. The position under Central Excise Tariff Act, 1985 also requires consideration and the same reads as under:- UNDER CENTRAL EXCISE TARIFF ACT 1985: lubricating oil falls under Section V, Chapter 27 of the First Schedule to the Central Excise Tariff Act which deals with Mineral fuels, mineral oils and products of their distillation; bituminous substances, mineral waxes and is defined as follows: (h) lubricating oil means any oil, which is ordinarily used, for lubrication, excluding any hydrocarbon oil, which has its flash point below 93.3 C; And is assessed as Tariff Item: 2710 19 80 - - - Lubricating oil Whereas on the other hand brake Fluids falls under Section VI, Chapter 38 of the First Schedule to the Central Excise Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c brake or clutch system. 5 As per https://en.oxforddictionaries.com / definition/us/ brake_ fluid : Fluid used in a hydraulic brake system. 6 As per http://www.definitions.net/definition/brake%20fluid: Brake fluid is a type of hydraulic fluid used in hydraulic brake and hydraulic clutch applications in automobiles, motorcycles, light trucks, and some bicycles. It is used to transfer force into pressure, and to amplify braking force. It works because liquids are not appreciably compressible - in their natural state the component molecules do not have internal voids and the molecules pack together well, so bulk forces are directly transferred to trying to compress the fluid's chemical bonds. Most brake fluids used today are glycol-ether based, but mineral oil. 7 As per http://www.ldoceonline.com/Technology-topic/brakefluid : from Longman dictionary of contemporary English : Liquid used in certain kinds of brakes so that the different parts move smoothly. 8 As per http://www.oxfordlearnersdictionaries.com/ definition/ english/brake-fluid: Liquid used in brakes to make the different parts move smoothly. 9 As per http: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brake fluid must meet the specifications defined by the vehicle manufacturer. Furthermore, the prescribed intervals for changing the brake fluid must be observed. The viscosity of the brake fluid is also very important. It is viscosity which safeguards the function of various brake systems. In modern control systems such as ABS or ESP , very low viscosity is a prerequisite for absolutely reliable control processes in fractions of seconds. The hydraulic units in these systems have numerous small bores and channels, some of which are smaller than the diameter of a human hair. Selecting a brake fluid with the wrong viscosity can have fatal consequences for the function of modern brake systems. Definition of Lubricating Oil in various online Dictionaries: 1 As per https://www.merriam-webster.com/dictionary/ lubricating %20oi l: An oil (as a petroleum distillate or a fatty oil) used as a lubricant. 2 As per https://en.wikipedia.org/wiki/Lubricant : A lubricant is a substance, usually organic, introduced to reduce friction between surfaces in mutual contact, which ultimately reduces the heat generated when the surfaces move. It may also have the fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, drying, varnishing, evaporation and cooling. The evolved product is completely different from the original glass sheet. What was once a glass piece in its basic character has no longer remained so. It has been reduced to a mere medium. That is clear if regard is had to the fundamental function and qualities of a glass mirror. The power to reflect an image is a power derived not from the glass piece but principally from the silvering and other processes applied to the glass medium. If any part of the coating is scratched and removed, that particular area of the glass mirror will cease to be glass mirror. That simple test demonstrates the major importance attributable to the chemical deposit and coating which constitute a material component of a glass mirror. It is not mandatory that a mirror employed for the purpose of reflecting an image should have a glass base. Copper mirrors have been known from the dawn of history. In the modern age, acrylic sheets are sometimes used instead of glass for manufacturing mirrors. It is apparent, therefore, that a glass mirror cannot be regarded as a glass. For the same reason, it cannot be classified as 'glass ware', for 'glass ware ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 identified 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. It was observed by this Court in Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan Ors. [1980] (3) S.C.R. 1109. Which was a case under the Sales Tax law: 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 wellsettled it is that the words or expression 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... growth and economic development, and the substantial changes in the composition and pattern of India's external trade called for the need to modernise and rationalise the nomenclature of India's Tariff in line with contemporary conditions. The glass mirrors were still not specifically mentioned under the Customs Tariff Act, 1975. They are now being brought in as such by the Customs Tariff Bill, 1985. It is pointed out that glass mirrors have been classified by the Indian Standards Institution as glass and glass ware in the glossary of terms prepared by it in respect of that classification. That, to our mind, furnishes a piece of evidence only as to the manner in which the product has been treated 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) S.C.R. 586, 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 9 STJ 292(SC) was dealing with an issue relating to classification of Chillers under Chapter Heading No.84.18 of the first Schedule of the Central Excise Tariff Act, 1985, and was held that chillers would not be classifiable under Chapter Heading No.84.15, meaning thereby, they cannot be a refrigerator even by testing it from commercial parlance test. 26- The Division Bench of Madhya Pradesh High Court in the case of Perfetti Van Melle India Pvt. Ltd. Vs. Asst. Commissioner of Commercial Tax Others reported in (2011) 19 STJ 560 (MP) has decided an issued relating to payment of Commercial Tax in respect of chewing gum and bubble gum. The issue was that whether the chewing gum and the bubble gum were covered under the entry 'lozenges'. The High Court has arrived at a conclusion that chewing gum and bubble gum do not fall under the meaning of 'lozenges'. 27- The Division Bench of this Court in the aforesaid case in paragraph No.7 to 11 has held as under:- 7. It is the settled position in law that while interpreting the entries in sales tax legislation, the words used in the entries must not be construed in any technical sense or from the scientific point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is kept in the mouth and after chewing the same is thrown out. The bubblegum while kept in the mouth by the children is also inflated as a balloon. In fact, it is used as a 'mouth freshener'. It is not made only of sugar. It contains gum base, vexes, etc., along with sugar. 10. According to wikipedia, the encyclopedia, bubblegum is a type of chewing gum especially designed for blowing bubbles. 11. The Commissioner, Sales Tax, U.P., has relied on the judgment in Nutrine Chewing Gum Products Co. Pvt. Limited, Lucknow [1985] STI 21 and observed that: 'In chewing gum, sugar is an almost insignificant . . . over it is not eatable. Its use is entirely different. Children use it just for a fun and athletes for controlling the breath. In common parlance also nobody treats it as an item of confectionery. I, therefore, hold that chewing gum is an unclassified item'. 10. The same issue had come up before the Full Bench of the M.P. Commercial Tax Appellate Board in the case of this very petitioner for another assessment period where the Full Bench of the Board, after examining the matter in detail, by order dated January 31, 2004 found that the lozenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry'. There- fore the above principle does not apply here. 18. In view of the above factual analysis, the rulings and principles propounded by the honourable Supreme Court of India in its various judgments, the Appellate Board has come to the conclusion that goods 'bubblegum' and 'chewing gum' cannot be covered in entry No. 21(ii) of part IV of the Second Schedule to the Act as these goods are quite different from those already mentioned in that entry. Therefore, they cannot be taxed at the rates prescribed for that entry goods. Consequently order dated July 5, 2001 and dated August 22, 2000 passed by the Appellate Deputy Commissioner and assessment officer, respectively, are set aside and the case is remanded to the assessment officer for passing fresh orders after verification treating these goods as residuary item, falling under entry No. 1 of Part VII of the Second Schedule to the Act unless he finds some other suitable entry for these goods. The Division Bench of This Court has taken into account the doctrine of 'Noscitur a sociis' while deciding the aforesaid controversy. 28- The apex Court in the case of State of Jharkhand and Others ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived as one in commercial parlance. Thus, the emphasis is on the commercial parlance test. To bolster the said stand, reliance has been placed on M/s Habeeb Protiens case, wherein the Division Bench of the High Court of Karnataka has drawn a distinction between sunflower oil cake and groundnut oil cake on the one hand and de-oiled sunflower cake and groundnut oil cake on the other. The aforesaid analysis made in the said judgment should not detain us long, for Mr. Patil learned senior counsel for the State has brought to our notice a recent decision of this Court in the case of Agricultural Produce Market Committee vs. Biotor Industries Limited and Anr.[13] . In the said case, the two-Judge Bench had posed five questions and the question pertinent for our purpose reads thus:- 13.4 Whether the Division Bench is justified in recording the finding on the second issue (see para 7, above at p.737 c-d) in connection with LPA NO. 195 of 2006 that the respondent concern is not liable to pay any market fee on the de-oiled cakes sold by it which are stated to be the by-product in the course of manufacturing castor oil which is not one of the items enumerated in the Schedule to the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and different identity which also get recognition from the Notification, we are obliged to hold that the High Court has correctly distinguished the authority in M/s Sterling Foods (supra) and we unhesitatingly agree with the same. 20. Though we have agreed with the said conclusion of the High Court, yet the fact remains that the assessing authority had expressed the opinion with regard to the rate of tax on the de-oiled cake while scrutinizing C Forms which is an expression of opinion on the available materials brought on record and, therefore, the first appellate authority as well as the tribunal was justified in concurring with the said order. It is worthy to note that the revenue had not challenged the order passed by the Joint Commissioner. The High Court has not expressed any opinion on this score. Considering the cumulative effect of the facts and law we have stated, we have not an iota of doubt in our mind that there should not have been reopening of assessment. However, the finding recorded by the High Court overturning the view of the tribunal that oilcake and de-oiled cake are the same product and, therefore, both are liable to reduced rate of tax despite the noti ..... 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