Rallis
India Ltd. Vs. The State of Tamil Nadu
[1998] INSC 522 (10
November 1998)
S.P.Bharucha,
V.N.Khare V.N.Khare.J.
ACT:
HEAD NOTE:
These
civil appeals are directed against the judgment of the High Court of Judicature
at Madras passed in Tax Case (Appeal) Nos. 871-872 of 1983 dated 28.7.1992 and
Tax Case (Appeal) Nos.1100-1101 of 1992 dated 21.9.1992 wherein the High Court
has held that the goods in question, namely, Gelatin would fall within the
description of chemical as described in Entry 138 of the First Schedule to the
Tamil Nadu General Sales Tax Act 1959 (for short the Act).
The
appellant herein is incorporated under the Companies Act and under Memorandum
dated 1.9.1983 has succeeded to the business of the erstwhile M/s. Protein
products of India Limited which was approved by the order of the Madras High
Court dated 29.1.1986. The erstwhile M/s. Protein Products of India Ltd. was
assessed towards sales tax for the years 1977-78 and 1978-79. Subsequently the
said orders of assessment were revised under Section 16 of the Act by the
Deputy Commercial Tax Officer on finding that the sales of product Gelatin have
been wrongly assessed at 4% multi point as against Ability at 8% in terms of
Entry 138 of the First Schedule to the Act. M/s. Protein Products of India Ltd.
filed appeals before the Appellate Assistant Commissioner, Coimbatore under Section 31 of the Act. The
Appellate Assistant Commissioner held that Gelatin was made from Ossein which
was the raw material and Ossein is a direct derivative of bone composed of
animal proteinoid matter which was a natural mixture of biological obtained as
a dried extract and thus Gelatin would not fall within the meaning of chemicals
under Entry 138. Consequently, revised assessment orders were set aside and the
appeals were allowed. Subsequently, the Joint Commissioner, Madras exercising suo moto revisional
power to revise the appellate orders issued notices to M/s. Protein Products of
India Ltd. After hearing, the Joint Commissioner, Madras held that Gelatin falls within the
description of a chemical.
Consequently,
the appellate orders were set aside and the assessment orders for the 1977-78
and 1978-79 were restored as proposed by order dated 21.7.1983.
M/s.
Protein Products of India Ltd. and the appellant filed appeals before the High
Court of Judicature at Madras against the orders dated 21.7.1983.
passed by the Joint Commissioner. When the matters were taken up for hearing
the appellant brought to the notice of the High Court the judgment of the sales
Tax appellate Tribunal in Tax Appeal No.642/85 and Tax Appeal No. 1/86 decided
on 30.3.1987 in order to show that the tribunal after having gone into the
fact, as a fact finding body, has concluded that Gelatin cannot be treated as a
chemical and that Gelatin cannot produce any chemical effect or resulting
chemical change when used and further Gelatin was not also an intermediary
product. Further it was brought to the notice of the Court that the Revenue has
not appealed against the said judgment of the tribunal and it has become final
between the parties. The High Court relying on certain decisions, without any
kind of additional material or without examining or adverting to the findings
of the tribunal held that Gelatin falls within the description of a chemical
falling under Entry 138 of the First Schedule of the Act. It is in this way the
appellant has come to this Court by filing special leave petitions.
The
learned counsel appearing for the appellant urged that the appellate tribunal
being the last fact finding body, after having considered all the relevant
materials on record found that Gelatin is not a chemical, the High court
without adverting to the said judgment and without any kind of additional
material has erroneously held that Gelatin is a chemical falling under Entry
138 of the First Schedule of the Act. It is not disputed that the appellate
tribunal as a fact finding body had gone into the facts and has concluded that
Gelatin does not fall within the description of a chemical and that judgment
became final between the parties. It is also not disputed that the materials in
regard to nature and composition of Gelatin and the process undertaken to
manufacture it were filed in the form of expert opinions from Scientists before
the tribunal.
One of
the expert opinions was from Dr. A. Gannasekaran, Professor of Chemistry, which
reads as follows:
"Gelatin
is a protein obtained from collagen which originates from animal Kingdom mainly
from skin and bones with suitable pressure. Molecular weight may vary and does
not exist in a fixed proportion. It is mainly used in confectionery products.
It has no specific chemical formula and hence it does not come in the category
of chemicals as defined in the chemical dictionary." The second opinion
paced on record was from Thiru G.O.K. Ummer, Joint Director of Industries and
Commerce (Chemicals) and the said opinion was as follows:
"With
reference to your letter cited, I am to inform that as per Hacki's Chemical
dictionary, a chemical is defined as compound of substances of definite
molecular composition. Generally, it is restricted to a single Molecular
species with a definite molecular structure. Gelatin is a protein obtained from
Collagen by billing skin, ligaments, tender bones etc. with water under
pressure. It is not of definite molecular composition. The molecular weights of
Gelatin are reported to range from low values of 10,000 or 25,000 to high
values reaching 25,000. Based on the definition of chemical given in
dictionary, I am to say that Gelatin does not come under 'Chemical' as commonly
defined".
The
third opinion filed was from Dr. N.Gopalakrishnan Research and Development
Officer in Hindustan Photo Films, which reads as follows:
"Gelatin
is a natural colloid of high molecular weight. It is a water-soluble protein
regulating from collagen (qv). The parent fibrous protein, collagen, is
abundant in the animal kingdom comprising the major protein of those proteins
found in hides, skins, sinews, bones and connective tissue. It is a natural
polymer in use as a protective colloid, emulsifier and a vehicle of sorts in
photo emulsions and is a natural product very much in use in the Food Industry
(gelly and all). it is the generic of chemicals".
From
the aforesaid opinions and other materials which were on record the tribunal concluded
as follows :
"The
perusal of the above said three letters which were issued by very eminent
authorities would disclose that gelatine is got out of animal kingdom, that it
is natural polymer in use as a protective colloid emulsifier and vehicle of sorts
in Photo emulsions and is a natural product very much in use in the Food
Industry (Gelly and all) and that gelatine has no chemical formula and does not
come in the generic of chemicals".
In the
present case what we find is that no additional material was adduced before the
High Court for showing that Gelatine material was adduced before the High Court
for showing that Gelatin is a chemical. The High Court did not examine the
finding of the tribunal holding that Gelatin is not a chemical which was based
upon the materials on record. The findings of fact arrived at by the tribunal
being the last fact finding body has to be given due weight unless it is found
by the High Court that such a finding is either based upon no evidence or
irrelevant evidence or incorrect principles. Admittedly, in the present case,
no additional material was adduced by the Revenue.
As
such, the finding recorded by the High Court that Gelatin comes under the
description of chemical is not sustainable in law. We accordingly set aside the
judgments under appeals. The appeals are allowed. No cost.
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