Andhra HC (Pre-Telangana)
Om Refrigeration And Electricals vs State Of Andhra Pradesh on 4 September, 1996
Equivalent citations: [1997]107STC234(AP)
Author: Syed Shah Mohammed Quadri
Bench: B.S. Raikote, S.S. Mohammed Quadri
ORDER Syed Shah Mohammed Quadri, J.
1. The petitioner is an assessee under the Andhra Pradesh General Sales Tax Act, 1957 (for short "the Act"). The disputed turnover for the assessment year 1985-86, which pertains to sale of refrigeration gas and coir filters, Rs. 5,12,260.45, was assessed as relating to sale of general goods at the rate of 5 per cent by the Commercial Tax Officer on October 14, 1986. The Deputy Commissioner (CT), Punjagutta Division, in exercise of the power under section 20(2) of the Act, revised the order of assessment after notice to the petitioner-assessee and assessed the same at the rate of 13 per cent taking the view that it is taxable under entry No. 2 of the First Schedule to the Act. The plea of the assessee that the turnover elates to gas which falls under entry No. 118 was not accepted by the revisional authority. The order of revision dated July 8, 1988 was assailed before the Sales Tax Appellate Tribunal by the petitioner-assessee. The Tribunal upheld the order of the Deputy Commissioner that the disputed turnover was taxable under item No. 2 to the First Schedule at the rate of 13 per cent; however, it also held that where the goods in question were sold for purposes other than for use in refrigeration and air-conditioning equipment or water coolers or room coolers the same should, be treated as falling under item No. 118 of the First Schedule. The Tribunal disposed of the appeal on December 4, 1989. It is this order of the Tribunal that is questioned in this tax revision case.
2. Mr. Ravi, the learned counsel for the petitioner, strenuously contends that the petitioner deals in gases under the brand names Aegron 11, Aegron 12 and Aegron 22 and as the gases squarely fall within item No. 118 of the First Schedule, the Tribunal ought to have held that the turnover is taxable under that entry alone. The learned counsel argues that merely because one of the uses to which those gases can be put to it in the compressors for refrigeration purposes, they cannot be treated as refrigeration material. The learned counsel further contends that the same goods cannot be taxed under different entries have regard to the use to which the purchaser may put.
3. The learned Special Government Pleader for Taxes on the other hand contends that the gases are used for refrigeration and therefore they have been rightly held to be taxable under entry No. 2 of the First Schedule. He, however, supports the order of the Tribunal on other grounds.
4. The short question that arises for our consideration is : whether the turnover relating to sale of Aegron 11, Aegron 12 and Aegron 22 is taxable under entry No. 2 or entry No. 118 of the First Schedule to the Act ?
5. The petitioner deals in products called Aegron 11, the chemical name of which is (Trichloromonofluoromethane) CFCI3; Aegron 12, the chemical name of which is (Dichlorodifluoromethane) CCI2F2; and Aegron 22, the chemical name of which is "Monochlorodifluoromethane" CHCIF2. These products are gases. In the brochure said to have been issued by the Aegis Chemical Industries Ltd. the properties of these gases are noted as follows :
Uses - the gases can be put to are used noted as follows :
Aegron : 11.
Used in industrial and commercial air-conditioning and refrigerating systems employing centrifugal type compressors department stores, buildings and theatres employ air-conditioning systems with Aegron 11.
It is used as a flushing agent and for oil, grease and acidic residue, especially in refrigeration units. Used in production of superior polyurethane foam and when mixed with Aegron 12 gives Aerosol preparations.
Aegron 12 :
Used in industrial, commercial and household units employing reciprocating type compressors and fractional household systems using rotary type compressors. It has low temperature application in systems employing centrifugal type compressors, Aegron 12 is the most widely known refrigerant of all.
Used in production of rigid polyurethane foam, P.V.C. foam and Aerosol preparations.
Aegron 12 is also used in plate contact freezer for freezing of marine products, Aegron 12 is the most widely known refrigerant of all.
Aegron 22 :
Used in industrial, commercial, low temperature refrigerating and air-conditioning equipment employing reciprocating and rotary type compressors. Widely used as a refrigeration medium. It permits more compact construction of refrigeration and air-conditioning equipment with greater refrigeration capacity, because its volumetric refrigerating capacity is approximately 60 per cent higher than that of Aegron 12 and hence it can be ideally used in packaged-type air-conditioners, room coolers, etc. Also used in 2 stage cascade system for extremely low temperature.
6. From a perusal of the brochure relating to these gases it is manifest that they are used in industrial and commercial refrigerating systems employing centrifugal type compressors and various other purposes in connection with refrigeration, cooling and air-conditioning systems. Indeed, these products are called "refrigerants". It may also be noticed that Aegron 11 is used in production of superior polyurethane foam and Aegron 12 is used in Aerosol preparations. Further, the Tribunal has noted that it was brought to its notice that major part of the gases were sold to I.D.P., H.A.L., Defence Labs, State Electricity Board, Railways, etc. We shall now turn to the relevant entries which are in question :
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"2. Refrigerators, air-conditioning At the point 13 paise in plants, water-coolers, room-coolers of first sale the rupee.
and parts and accessories thereof, in the State.
including refrigeration materials, like polystyrene foam.
................
118. Fuel gas, such as Burshane, Calgas, At the point 5 paise in Indane and Esso and other gasses of the first sale the in compressed, liquified or rupee." in the solidified form. State.
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From a perusal of entry No. 2 noted above, it is clear that it includes refrigeration materials like polystyrene foam. That the products of Aegron are known as refrigerants and are used in refrigeration, is not in dispute. Therefore, those products are "refrigeration materials" and will fall in entry No. 2.
7. The question is if the same product is used for other purposes, how should it be classified for purposes of the Act ? For this purposes, in our view, the last expression in entry No. 2, "like polystyrene foam" may give some clue. "Polystyrene" [The Concise Oxford Dictionary, Eighth Edition, 1990] is a thermo plastic polymer of styrene, usually hard and colourless or expanded with a gas to produce a light weight rigid white substance, used for insulation and in packaging. "Polystyrene foam" is used in the refrigeration; it is also used for other purposes like insulation and packing but in entry No. 2 it is referred to as "refrigeration material". From the said expression the intention of the legislature appears to be that like polystyrene foam which is also used for some other purposes but is nevertheless a refrigeration material within the meaning of entry No. 2, so also refrigeration material (refrigerant) even if it can also be used for some other purposes will nonetheless be within the scope of entry No. 2. We are, therefore, of the view that the Tribunal is right in holding that the turnover relating to the sale of Aegron products is taxable under entry No. 2 of the Act.
8. In Mukesh Kumar Aggarwal & Co. v. State of Madhya Pradesh , the question was whether the eucalyptus wood-heaps would be timber fit for building purposes and would fall under entry 32A of Part II of the Second Schedule to the Madhya Pradesh General Sales Tax Act. The Supreme Court held that the nature of goods cannot be determined by the test of the use to which they are capable of being put to and the user test, though logical, is yet inconclusive and that the particular use to which an article can be applied in the hands of a special consumer is not determinative of the nature of the goods. It is pointed out that in a taxing statute, words which are not technical expressions or words of art, but are words of every day use, must be understood and given a meaning, not in their technical or scientific sense, but in a sense as understood in common parlance, and that the particular terms used by the Legislature in the denomination of articles are to be understood according to the common commercial understanding of those terms used and not in their scientific and technical sense. In that case it was held that in its popular sense "timber" is understood as "imarathi-lakdi" and it has certain association of ideas, as to its size, stability, utility, durability, the unit or measure of quantity and of valuation and taking note of the fact that the Forest Department, at one stage, was of the opinion that the goods were not timber but fire-wood, the goods in that case were held to be not "timber".
9. We shall now consider the scope of entry No. 118, extracted above. A plain reading of that entry shows that fuel gas and other gases in compressed, liquified or solidified form are taxable under the said entry. The contention of the learned Special Government Pleader for Taxes that the fuel gases, such as Burshane, Calgas, Indane and Esso are used so the expression "other gases" should also be fuel gases, in our view is untenable. The words "such as Burshane, Calgas, Indane and Esso" explain the import of "fuel gas". They do not control or limit the expression "other gases" which follows after Esso. Proceeding on that interpretation of entry No. 118 that not merely fuel gases but also other gases fall under that entry, the question is whether the products in question, viz., Aegron 11, Aegron 12 and Aegron 22 would also fall under entry No. 118 which is a general entry for gases. Inasmuch as there is a specific entry relating to refrigeration material, in our view, general entry will get excluded.
10. In State of Andhra Pradesh v. T. V. Sundaram Iyengar & Sons Ltd. , one of the questions that was debated before the Division Bench of our High Court was, whether the bulbs used in motor vehicles fall under entry No. 1 or entry No. 37 as they stood at the relevant time. Justice Jeevan Reddy (as he then was) speaking for the Bench, held that in the context of motor car bulbs, entry No. 37 should be treated as a general entry and entry No. 1 as special; if so, the special entry should prevail.
11. The next aspect that has to be considered is whether the same goods can be classified under two different entries having regard to different uses to which they can be put to. We have already referred to the dicta of the Supreme Court in Mukesh Kumar Aggarwal's case , that the nature of the goods cannot be determined by the test of the use to which they are capable of being put to and that the user test is logical but not conclusive. The Tribunal, in our view, is not correct in holding that the same goods, products of Aegron can be taxed with under entry No. 2 as well as entry No. 118 according to use to which a customer of those goods may put them to.
12. In State of U.P. v. Indian Hume Pipe Co. Ltd. , the question before the Supreme Court was, what is the true connotation of the expression "sanitary fittings", and the hume pipes manufactured and sold by the assessee were "sanitary fittings". The Supreme Court held that the expression "sanitary fittings" has to be construed in the popular sense of the term as used in every day life and thus construed there could be no question of use of R.C.C. or hume pipes, which are generally laid underground and are extremely heavy, for the purpose of use in lavatories, urinals or bath-rooms and by "sanitary fittings" what is understood is that such pipes are materials whether used in lavatories, urinals, bath-rooms and public buildings. In that case the question was not whether the same goods could be taxed under different entries.
13. In Deputy Commissioner of Sales Tax v. G. S. Pai & Co. , the question arose under the Kerala General Sales Tax Act. The Supreme Court considered the meaning of the expression "sanitary fittings" in entry 26A of the First Schedule to that Act. That entire entry read "water supply and sanitary fittings". The question was whether the G.I. pipes sold by the assessee therein would fall within the description of "water supply and sanitary fittings". It was held that if it could be shown that they were meant for use in lavatories, urinals or bath-rooms, then they would fall within the meaning of that expression and that burden of so doing would be on the Revenue. But the G.I. pipes were heavy and were intended to be laid underground as mains for carrying supply of water from one place to another; they would not fall within the meaning of the expression "water supply and sanitary fittings". There also the question was not whether the same goods could be classified under two different headings; but the question was whether the goods in question did fall within the meaning of entry 26A of the Kerala General Sales Tax Act.
14. For the above reasons, we uphold the conclusion of the Tribunal that the products in question, Aegron 11, Aegron 12 and Aegron 22, fall under entry No. 2, we are unable to approve the conclusion of the Tribunal that where the use of those products is for purposes different from refrigerant, they have to be classified under entry No. 118.
15. Inasmuch as against the finding of the Tribunal that if the said goods are sold for purposes other than refrigeration, they have to be classified under entry No. 118, the Revenue has not filed any revision, we are not inclined to grant any relief to the Revenue for the assessment year in question.
16. The T.R.C. is accordingly disposed of. No costs.
17. Petition disposed of accordingly.