Sooppy Haji Vs. State of Kerala - Court Judgment

Excerpt:
- state financial corporation act, 1951[c.a. no. 63/1951. sections 29 & 31: [k.s. radhakrishnan, thottathil b. radhakrishnan & m.n. krishnan, jj] recovery of loan amount held, once industrial concern commits default in repayment of the loan or advance made by the financial corporation and under a liability, the right of the corporation to invoke section 29 of the act accrues and it is open to the corporation to realise the entire loan advanced to the industrial concern not only from the properties of the industrial concern but also from the properties pledged or mortgaged b y the sureties for the loan advanced by the corporation. section 29 is a complete code by itself. liability of principal-debtor and surety is always joint and co-extensive. [n. narasimhaiah v karnataka state financial corporation, air 2004 kar 46 dissented from]. - mohammed rafiq, learned government advocate submits that the commodity in question is lime product/white washing material and, therefore, falls under entry 74 of first schedule to kgst act and taxable only at 10%. both the learned counsel have relied on a few decisions of this court as well as apex court. such purpose is not to be defeated nor those who may be entitled for it are to be deprived by interpreting the notification which may give it some meaning other than what is clearly and plainly flowing from it and lastly, the exemption notification is not be construed liberally, but to be construed to effectuate the object of the notification. portlandite), it is used in mortar and plaster to increase the rate of hardening as well as to improve adhesion. when a particular item is specifically mentioned under a specific entry, the mere fact that the article can be used for another purpose as well, would not mean that the specific entry can be ignored and that the tax can be levied on the basis of a general enry. when the legislature has clearly included a particular commodity under an enry and prescribed the rate of tax, the court is entitled to assume that the legislative intent was to levy tax at the rate as prescribed under the specific entry and not under any other provision. the principle of 'generalia specialibus non-derogant' is clearly attracted in such a situation. collector of central excise 2003(152)elt22(sc) .in the said decision, the court has observed, that, the primary object of classifying products in fiscal statute, like central excise act being for raising revenue, the settled rule of interpretation is that the various headings or sub-headings in the tariff should be understood not in strict scientific and technical sense, but in their popular sense, i. however what is covered by the notification is admittedly like and dehydrated lime which are one and the same and difference being that in the latter item, moisture is not present.orderh.l. dattu, c.j.1. the question for consideration is, whether 'deluxe janatha cem' sold by the assessee is a lime product classifiable as an item falling under entry 74 of first schedule to the kerala general sales tax act, 1963, as claimed by the revenue or under entry 28 of schedule ii of notification sro 1728/93 dated 4-11-1993, issued by the state government in exercise of its powers under section 10 of the kgst act, which speaks of lime and dehydrated lime as claimed by the assessee.2. the revision petitioner is a dealer registered under kerala general sales tax act, 1963, hereinafter for the sake of brevity referred to as act, 1963 and a dealer in hardware, paints and white washing material. the dispute relates to rate of tax in respect of 'deluxe janatha cem' sold by the assessee.3. the assessing authority and the tribunal have taken the view that the deluxe janatha cem sold by the assessee fell outside the scope of entry 28 of schedule ii of the notification and, therefore, taxable at the rate of 10% treating the same as an item falling under entry 74 of first schedule to the act, though the claim of the assessee that the rate is only 2.5% by virtue of entry 28 of schedule ii to notification sro 1728/93.4. the relevant entries with reference to which the question of law raised to be decided, at the material point of time, were as follows:-----------------------------------------------------------------------------sl. no. description of goods point of levy rate of tax-----------------------------------------------------------------------------74 lime, lime products and other at the point of first 10%white washing materials not sale in the state by aelsewhere mentioned in this dealer who is liable toschedule tax under section 5-----------------------------------------------------------------------------5. the state government in exercise of its powers under section 10 of kgst act and in supersession of the notification mentioned in the schedule i has issued notification sro no. 1728/93 dated 4-11-1993, reducing the rate of tax payable under the act, on the sale or purchase, as the case may be, of goods specified in column (2) of schedule ii from the rate specified in column (3) to the rate specified in column (4). the relevant entry for the purpose of this case is as under;------------------------------------------------------------------------------sl. no. description of goods existing rate of tax reduced rate of tax(percentage) (percentage)------------------------------------------------------------------------------28 lime and dehydrated lime 10% 2.5%------------------------------------------------------------------------------6. dr. mohammed kutty, learned senior counsel contends for taxing the commodity in question at the lower rate under entry no. 28 of schedule ii of the notification and not at the higher rate under entry no. 74 of first schedule to kgst act as has been done by, the assessing authority. per contra, sri. mohammed rafiq, learned government advocate submits that the commodity in question is lime product/white washing material and, therefore, falls under entry 74 of first schedule to kgst act and taxable only at 10%. both the learned counsel have relied on a few decisions of this court as well as apex court. reference to the contentions canvassed and the decisions relied on, we will discuss, while considering the submissions made by the learned counsel.7. the first principles that are to be kept in view while interpreting exemption notification are, that, the meaning of the words given in the exemption notification is to be gathered from the relevant entries/commodities in the notification. the exemption notification has to be interpreted as to give it true import and meaning, not to make it purposeless and nugatory. notification by which exemption or other benefits are provided by the government in exercise of its statutory powers normally have come purpose and policy decision behind it. such purpose is not to be defeated nor those who may be entitled for it are to be deprived by interpreting the notification which may give it some meaning other than what is clearly and plainly flowing from it and lastly, the exemption notification is not be construed liberally, but to be construed to effectuate the object of the notification.8. we will first consider whether 'deluxe janatha cem' sold by the assessee falls within the description of lime and dehydrated lime given in entry 18 of schedule ii of the notification. there are two expressions in this entry which require consideration; one is 'lime' and other is 'dehydrated lime'. courts have observed time and again that the cardinal rule of interpretation which has always to be borne in mind while interpreting entries in sales tax legislations and it is that the words used in the entries must be construed not in any technical sense nor from the scientific point of view but as understood in common parlance. we must give the words used by the legislature their popular sense meaning 'that sense which people conversant with the subject matter with which the statute is dealing would attribute to it. the words 'lime' and 'dehydrated lime' must, therefore, be interpreted according to ordinary parlance and must be given a meaning which the people conversant with this commodity would ascribe to it. in these revision proceedings, it is the case of the assessee that 'deluxe janatha cem' is a dehydrated lime, i.e. a product with a lime base. therefore, we need to understand what is lime, and dehydrated lime, for which commodity alone the state government by issuing the notification has reduced the rate of tax payable under the act.9. lime is a product derived by backing sea-shell or lime stone in country kilns. calcium oxide (cao), commonly known as burnt lime, lime or quicklime is widely used chemical compound. it is a white, caustic and alkaline crystalline solid. as a commercial product, lime often also contains magnesium oxide, silicon oxide and smaller amounts of aluminium oxide and iron oxide. calcium oxide is usually made by the thermal decomposition of materials, such as limestone, that contain calcium carbonate (caco3; mineral name: calcite) in a lime kiln. this is accomplished by heating the material to above 825 c, a process called calcination or lime-burning, to liberate a molecule of carbon dioxide (co2); leaving cao. this process is reversible, since once the quicklime product has cooled, it immediately begins to absorb carbon dioxide from the air, until, after enough time, it is completely converted back to calcium carbonate.as hydrated or slaked lime, ca(oh)2 (mineral name: portlandite), it is used in mortar and plaster to increase the rate of hardening as well as to improve adhesion. hydrated lime is very simple to make as lime is a basic anhydride and reacts vigorously with water. the hydrate can be reconverted to calcium oxide by removing the water in the reversible equation. if the hydrated lime is heated to redness, the cao will be regenerated to reverse the reaction.10. in encyclopedia britannica, 15th edn, micropaedia, vol. ii, p. 451, the following discussion is to be under the caption 'calcium oxide'. calcium oxide, commonly known as lime or quick lime, the monoxide of calcium derived from calcium carbonate.... by purging all of its carbon dioxide content.... it is a white or grayish white solid with specific gravity ranging from 3.25 to 3.38 and a melting point of 2,580 c. it is produced in large quantities by roasting lime stone, chalk or oyster shells under controlled conditions. lime is one of the oldest products of chemical reaction known to man. it has been used extensively as a building material and a fertilizer....in the earlier edition (1972) of encyclopedia britannica, vol. 14, p. 34, the topic is found under the caption 'lime'.in common usage the term 'lime' includes the various chemical or physical forms of quick lime, hydrated lime and hydraulic lime.... commercially quick lime is commonly produced by burning carefully graded limestone in rotary kilns, similar to those used in portland cement manufacture, and in large stationary vertical kilns....hydraulic lime is a type of cementitious lime that will set and harden under water in a manner similar to portland cement. it is obtained by calcining an impure limestone containing large quantifies of silica and alumina so that sufficient calcium silicates and aluminates are formed to give the lime its characteristic hydraulic properties. hydraulic limes are widely used in europe for mortars in masonry construction; use in the us, however is limited....uses.... a large new market exists in me use of lime as a soil stabilizing agent in the construction of base course for modern highways, air port runways and building foundations.in mcgraw hill encyclopedia of science and technology, p. 581, vol. 7, the following discussion is to be found under the heading 'lime (industry)':a general term for the various products of calcined lime stone, for example, quick lime and hydrated lime principal used of lime are in mortar, stucco and plaster for the building industry.hydraulic lime is made from a lime stone containing silica and alumina which, when the stone is calcined at temperature just short of fusion form unhydrated calcium aluminium silicates, allowing the material to set under water....11. the literature on the subject and dictionary meaning of the words lime, hydrated lime and dehydrated lime, which we have noticed, it is obvious that 'lime' in its popular sense cannot include lime products and white washing materials. it connotes a white, caustic and alkaline crystalline solid obtained after removing calcium carbonate in a lime kiln. it would, therefore, be seen that lime products and other white washing materials made out of raw material 'lime' cannot be regarded as 'lime' because, even if they contain lime as raw material, they represent manufactured or finished products of lime. they also do not come within the meaning of the expression 'dehydrated lime'. the word 'dehydrated lime' has a recognized meaning. hydrated lime is very simple to make. the process appears to be lime (calcium oxide) when it is mixed with water, calcium oxide produces heat energy by the formation of the hydrate, since lime (calcium oxide) is a basic anhydride and reacts vigorously with water. the hydrate can be reconverted to calcium oxide by removing the water in the reversible equation, i.e. if the, hydrated lime is heated to redness, the calcium oxide will be generated to reverse the reaction. the chemical dictionaries and the books on organic and inorganic chemistry will also give the same meaning. therefore, according to common parlance, the word 'dehydrated lime' means the lime (calcium oxide) without mixing it with water or a lime in powdered form without water contents.12. now, let us notice entry 74 of first schedule to kgst act. the entry speaks of lime, lime products and other white washing materials. in the entry, apart from lime, there is specific inclusion of lime products and white washing materials. the word 'product' means a thing produced. a product obtained after being processed through mechanical process cannot be the same as its raw material. the expression 'lime products', therefore, means, anything produced or obtained from lime whether such derivation was by a simple physical process or by a chemical reaction would not make any difference to the end product. there is yet another expression in the entry, namely, 'white washing materials'. the meaning; of this entry could only be materials/articles which are specifically used for white washing purposes. the user test has got a very limited application. it is neither a safeguard for interpretation nor it is conclusive. in cases where resort to the user test is to be taken, it has to be limited to decide as to under what category or entry a particular item or product would generally fall and once it is so decided, the same will apply to all sales under the act; no matter by whom it is made or to whom it is made. in other words, the user of the goods thereafter will have no relevance. it can't be used to levy tax on different dealers at different rates depending upon the use to which the goods are put or the purpose to which they are purchased. dr. mohammed kutty, learned senior counsel would submit, that, the assessing authority while concluding the assessments, has kept in view only the nature of the business of the dealer and the commodity to which it is put to use, and accordingly has rejected the claim of the assessee to grant the benefit of the notification which provides for reduced rate of tax on lime and dehydrated lime. it is true that the assessing authority while refusing to grant benefit of the notification to the assessee, in his assessment order, apart from others, has stated, that the assessee is not a dealer in pesticides, but a dealer in hardware items and therefore, 'janatha cem' cannot be treated as lime powder, exigible to reduced rate of tax. the assessing authority has further stated that the use of the commodity 'janatha gem' is for white washing purpose and therefore comes under the category of white mashing material, which is taxable at 10%. the assessing authority, in our considered opinion, has proceeded to determine the nature of the goods by the test of use to which they are capable of being put and the dealer who effects the sale of that goods. the apex court in mukesh kumar aggarwal and co. v. state of madhya pradesh (1988) 68 stc 324, has observed that the 'user test' is logical; but is again inconclusive. 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.13. having given our anxious consideration to the findings and conclusions reached by the assessing authority, we are unable to persuade our self to accept the reasoning of the assessing authority, though it is accepted by the appellate tribunal. certain goods may be put to different uses by different persons. that cannot entitle the revenue to apply different rates of tax to the sales of the very same product by different dealers depending on the use to which they will be put by the purchasers. secondly, the seller of the goods is also not a determinative of the nature of goods. take for example, a dealer in iron and steel, may also effect sales of lime products and merely because it is sold by a dealer engaged in the business of selling iron and steel, the sale of lime products effected by him in the course of business activity cannot be brought under the entry 'iron and steel'. therefore, we say the findings and conclusions reached by the assessing authority and affirmed by the tribunal in contrary to the settled legal position of interpretation of taxing statutes.14. now, we refer to the decisions on which reliance was placed by learned counsel for the parties. the first decision on which reliance was placed by the learned counsel, dr. mohammed kutty is, the decision of full bench of this court in the case of kevi hardwares v. state of kerala : 2003(2)klt776 . the question of law that came up for consideration before the full bench of this court was, whether the assessing authority was justified in levying tax on the sale of 'dolomite' under entry 42 instead of entry 50 in the first schedule of kgst act. the full bench of this court while answering the said question has stated:under the act, the taxable event is the sale or purchase of goods. the levy of sales tax is normally not dependent on the 'use' of the goods. it is not unknown that an item can be used for different purposes. when a particular item is specifically mentioned under a specific entry, the mere fact that the article can be used for another purpose as well, would not mean that the specific entry can be ignored and that the tax can be levied on the basis of a general enry. when the legislature has clearly included a particular commodity under an enry and prescribed the rate of tax, the court is entitled to assume that the legislative intent was to levy tax at the rate as prescribed under the specific entry and not under any other provision. the principle of 'generalia specialibus non-derogant' is clearly attracted in such a situation. it is an accepted norm for interpretation of a statute that the special over-rides the general. it promotes justice. it avoids uncertainty. what is the position in the present case.15. we cannot and in fact we shall not dispute the settled legal position of law enunciated by the full bench of this court. at the same time, we are afraid, that, the observation made by the full bench of this court in the case of kevi hardware's case would anyway assist the petitioner's learned counsel to substantiate his contention. in our considered view, having seen the factual matrix and the question of law that came up for consideration before the full bench of this court, the same is nowhere nearer to the question of law that has come up for consideration before the full bench of this court, the same is nowhere nearer to the question of law that has come up for consideration before this court in these revision petitions.16. the other decision on which learned senior counsel has placed reliance is on the decision of the apex court in the case of kerala agglomerated marbles ltd. v. collector of central excise : 2003(152)elt22(sc) . in the said decision, the court has observed, that, the primary object of classifying products in fiscal statute, like central excise act being for raising revenue, the settled rule of interpretation is that the various headings or sub-headings in the tariff should be understood not in strict scientific and technical sense, but in their popular sense, i.e. the meaning assigned to them by those trading in and using the product.17. can we again dispute the aforesaid legal position? our answer is simple, 'no'. in fact we have reiterated the above said legal principles in our earlier part of our judgment. but, at the same time, we are afraid the decision on which reliance is placed by the learned senior counsel would help him in anyway to substantiate his contention.18. the learned senior counsel has also brought to our notice the observation made by this court in the case of southern veneers and wood works ltd. v. state of kerala (1997) 5 ktr 437 (ker), wherein it is stated, that, what is relevant is the article which is subject to levy of tax. there is no difficulty in identifying the article. it is attempted to be understood in terms of its use which is not permissible. in a taxing statute, what is taxable is the article referred to in the entry and it cannot be understood in the context of its use.19. again, in our view, we cannot have dispute with the legal principles enunciated by this court. the view expressed by this court is based on the first principle of interpretation of taxing statute and, therefore, we fully concur with the view expressed by this court in the aforesaid decision.20. now, we may refer to the decisions on which reliance was placed by learned counsel for the revenue. he invites our attention to the observations made by this court in the case of joseph v. state of kerala 2007 (2) klt 308. in the said decision, the question of law that was before the court was whether the bleaching powder is assessable as 'chemical' under entry 29 of the first schedule to kgst act or whether it falls under 'lime and dehydrated lime' taxable at the reduced rate of 2.5% under entry 28 of schedule ii of notification, sro no. 1728/1993. the court while answering the aforesaid question of law has observed as under:it is obvious from the above that bleaching powder is not lime or dehydrated lime as claimed by the petitioner. on the other hand, it a chemical compound constituting of calcium, chlorine and oxygen. the other name of bleaching powder, namely, chloride of lime obviously indicates that lime is a major constituent of the product. however what is covered by the notification is admittedly like and dehydrated lime which are one and the same and difference being that in the latter item, moisture is not present. by no means, the product bleaching powder can be identified as lime pure and simple. in the course of manufacturing, it obviously undergoes a change involving loss of identity of lime and what emerges is a new product with different odour and characteristics. in fact, the chlorine content is what gives it the capacity to act as a disinfecting agent. in this view of the matter, we are in complete agreement with the finding of the tribunal that bleaching powder cannot be treated as lime or dehydrated lime within the meaning of the notification above referred, entitling the petitioner for concessional rate of tax on its sale.21. in the aforesaid decision, the facts would demonstrate what was considered by the court was, whether bleaching powder is a chemical or lime/dehydrated lime. the issue before us is substantially different. therefore, the case law on which reliance is placed by the learned counsel for revenue would not assist us in deciding the issue before us.22. to sum it up, entry 74 of first schedule to kgst act enumerates goods which are taxable at 10% at the first sale point by a dealer liable to pay tax under section 5 of the act. the goods enumerated are, lime, lime products and other white washing material. the assessee in the instant case is a dealer in hardware, paints and white washing material. in the course of his business activity, effects sale of janatha cem, which is a powdered from lime without moisture content. it is used for varied purpose. if not for the notification issued by the state government, in exercise of its powers under section 10 of the act, in public interest, the commodity in question would have been certainly and obviously taxed under entry 74 of first schedule to the act at the rate of 10% either as lime product or white washing material. the state government, by issuing sro no. 1728/93, apart from granting total exemption from payment of tax to the goods mentioned in various schedules, has also provided the reduced rate of tax for the goods mentioned in schedule ii of the notification. the entry 28 of schedule ii of the notification speaks of lime and dehydrated lime. as we have already discussed, the dehydrated lime is nothing but lime powder without water contents.23. the assessee in the present case effects purchase of 'janatha cem' and effects the sale of the said commodity within the state. the commodity dealt with by the assessee under the brand name 'janatha cem' is lime powder packed in gunny bags, mainly and primarily used for coating surfaces, walls and structures. the janatha cem or snow cem which is the normal usage in the trade circle, is a product having major ingredient of lime. alternatively, janatha cem is a product with a lime base. therefore, it requires to be treated as dehydrated lime and the benefit of the notification requires to be extended to the assessee and requires to be taxed at the lesser rate of tax at 2.5% and not at the higher rate of 10% under entry 74 of first schedule to kgst act. we, therefore, allow these revision petitions, set aside the orders passed by the assessing authority and the appellate tribunal and hold that 'janatha cem' is a lime powder or dehydrated lime and is entitled for the reduced rate of tax as envisaged in sro no. 1728/93. there will be no order as to costs.ordered accordingly.

Judgment:
ORDER

H.L. Dattu, C.J.

1. The question for consideration is, whether 'Deluxe Janatha Cem' sold by the assessee is a lime product classifiable as an item falling under Entry 74 of First Schedule to the Kerala General Sales Tax Act, 1963, as claimed by the Revenue or under Entry 28 of Schedule II of Notification SRO 1728/93 dated 4-11-1993, issued by the State Government in exercise of its powers under Section 10 of the KGST Act, which speaks of lime and dehydrated lime as claimed by the assessee.

2. The revision petitioner is a dealer registered under Kerala General Sales Tax Act, 1963, hereinafter for the sake of brevity referred to as Act, 1963 and a dealer in hardware, paints and white washing material. The dispute relates to rate of tax in respect of 'Deluxe Janatha Cem' sold by the assessee.

3. the assessing authority and the tribunal have taken the view that the Deluxe Janatha Cem sold by the assessee fell outside the scope of Entry 28 of Schedule II of the notification and, therefore, taxable at the rate of 10% treating the same as an item falling under Entry 74 of First Schedule to the Act, though the claim of the assessee that the rate is only 2.5% by virtue of Entry 28 of Schedule II to notification SRO 1728/93.

4. The relevant entries with reference to which the question of law raised to be decided, at the material point of time, were as follows:

-----------------------------------------------------------------------------Sl. No. Description of Goods Point of Levy Rate of Tax-----------------------------------------------------------------------------74 Lime, lime products and other At the point of first 10%white washing materials not sale in the State by aelsewhere mentioned in this dealer who is liable toSchedule tax under Section 5-----------------------------------------------------------------------------

5. The State Government in exercise of its powers under Section 10 of KGST Act and in supersession of the notification mentioned in the Schedule I has issued notification SRO No. 1728/93 dated 4-11-1993, reducing the rate of tax payable under the Act, on the sale or purchase, as the case may be, of goods specified in column (2) of Schedule II from the rate specified in column (3) to the rate specified in column (4). The relevant entry for the purpose of this case is as under;

------------------------------------------------------------------------------Sl. No. Description of Goods Existing rate of tax Reduced rate of tax(percentage) (percentage)------------------------------------------------------------------------------28 Lime and dehydrated lime 10% 2.5%------------------------------------------------------------------------------

6. Dr. Mohammed Kutty, learned Senior Counsel contends for taxing the commodity in question at the lower rate under Entry No. 28 of Schedule II of the notification and not at the higher rate under Entry No. 74 of First Schedule to KGST Act as has been done by, the assessing authority. Per contra, Sri. Mohammed Rafiq, learned Government Advocate submits that the commodity in question is lime product/white washing material and, therefore, falls under Entry 74 of First Schedule to KGST Act and taxable only at 10%. Both the learned Counsel have relied on a few decisions of this Court as well as Apex Court. Reference to the contentions canvassed and the decisions relied on, we will discuss, while considering the submissions made by the learned counsel.

7. The first principles that are to be kept in view while interpreting exemption notification are, that, the meaning of the words given in the exemption notification is to be gathered from the relevant entries/commodities in the notification. The exemption notification has to be interpreted as to give it true import and meaning, not to make it purposeless and nugatory. Notification by which exemption or other benefits are provided by the Government in exercise of its statutory powers normally have come purpose and policy decision behind it. Such purpose is not to be defeated nor those who may be entitled for it are to be deprived by interpreting the notification which may give it some meaning other than what is clearly and plainly flowing from it and lastly, the exemption notification is not be construed liberally, but to be construed to effectuate the object of the notification.

8. We will first consider whether 'Deluxe Janatha Cem' sold by the assessee falls within the description of lime and dehydrated lime given in Entry 18 of Schedule II of the notification. There are two expressions in this entry which require consideration; one is 'lime' and other is 'dehydrated lime'. Courts have observed time and again that the cardinal rule of interpretation which has always to be borne in mind while interpreting entries in sales tax legislations and it is that the words used in the entries must be construed not in any technical sense nor from the scientific point of view but as understood in common parlance. We must give the words used by the Legislature their popular sense meaning 'that sense which people conversant with the subject matter with which the statute is dealing would attribute to it. The words 'lime' and 'dehydrated lime' must, therefore, be interpreted according to ordinary parlance and must be given a meaning which the people conversant with this commodity would ascribe to it. In these revision proceedings, it is the case of the assessee that 'Deluxe Janatha Cem' is a dehydrated lime, i.e. a product with a lime base. Therefore, we need to understand what is lime, and dehydrated lime, for which commodity alone the State Government by issuing the notification has reduced the rate of tax payable under the Act.

9. Lime is a product derived by backing sea-shell or lime stone in country kilns. Calcium oxide (CaO), commonly known as burnt lime, lime or quicklime is widely used chemical compound. It is a white, caustic and alkaline crystalline solid. As a commercial product, lime often also contains magnesium oxide, silicon oxide and smaller amounts of aluminium oxide and iron oxide. Calcium oxide is usually made by the thermal decomposition of materials, such as limestone, that contain calcium carbonate (CaCO3; mineral name: calcite) in a lime kiln. This is accomplished by heating the material to above 825 C, a process called calcination or lime-burning, to liberate a molecule of carbon dioxide (CO2); leaving CaO. This process is reversible, since once the quicklime product has cooled, it immediately begins to absorb carbon dioxide from the air, until, after enough time, it is completely converted back to calcium carbonate.

As hydrated or slaked lime, Ca(OH)2 (mineral name: portlandite), it is used in mortar and plaster to increase the rate of hardening as well as to improve adhesion. Hydrated lime is very simple to make as lime is a basic anhydride and reacts vigorously with water. The hydrate can be reconverted to calcium oxide by removing the water in the reversible equation. If the hydrated lime is heated to redness, the CaO will be regenerated to reverse the reaction.

10. In Encyclopedia Britannica, 15th Edn, Micropaedia, Vol. II, p. 451, the following discussion is to be under the caption 'Calcium Oxide'. Calcium Oxide, commonly known as lime or quick lime, the monoxide of calcium derived from calcium carbonate.... By purging all of its carbon dioxide content.... It is a white or grayish white solid with specific gravity ranging from 3.25 to 3.38 and a melting point of 2,580 C. It is produced in large quantities by roasting lime stone, chalk or oyster shells under controlled conditions. Lime is one of the oldest products of chemical reaction known to man. It has been used extensively as a building material and a fertilizer....

In the earlier edition (1972) of Encyclopedia Britannica, vol. 14, p. 34, the topic is found under the caption 'Lime'.

In common usage the term 'lime' includes the various chemical or physical forms of quick lime, hydrated lime and hydraulic lime.... Commercially quick lime is commonly produced by burning carefully graded limestone in rotary kilns, similar to those used in portland cement manufacture, and in large stationary vertical kilns....

Hydraulic lime is a type of cementitious lime that will set and harden under water in a manner similar to portland cement. It is obtained by calcining an impure limestone containing large quantifies of silica and alumina so that sufficient calcium silicates and aluminates are formed to give the lime its characteristic hydraulic properties. Hydraulic limes are widely used in Europe for mortars in masonry construction; use in the US, however is limited....

Uses.... a large new market exists in me use of lime as a soil stabilizing agent in the construction of base course for modern highways, air port runways and building foundations.

In McGraw Hill Encyclopedia of Science and Technology, p. 581, Vol. 7, the following discussion is to be found under the heading 'Lime (industry)':

A general term for the various products of calcined lime stone, for example, quick lime and hydrated lime principal used of lime are in mortar, stucco and plaster for the building industry.

Hydraulic lime is made from a lime stone containing silica and alumina which, when the stone is calcined at temperature just short of fusion form unhydrated calcium aluminium silicates, allowing the material to set under water....

11. The literature on the subject and dictionary meaning of the words lime, hydrated lime and dehydrated lime, which we have noticed, it is obvious that 'lime' in its popular sense cannot include lime products and white washing materials. It connotes a white, caustic and alkaline crystalline solid obtained after removing calcium carbonate in a lime kiln. It would, therefore, be seen that lime products and other white washing materials made out of raw material 'lime' cannot be regarded as 'lime' because, even if they contain lime as raw material, they represent manufactured or finished products of lime. They also do not come within the meaning of the expression 'dehydrated lime'. The word 'dehydrated lime' has a recognized meaning. Hydrated lime is very simple to make. The process appears to be lime (calcium oxide) when it is mixed with Water, calcium oxide produces heat energy by the formation of the hydrate, since lime (calcium oxide) is a basic anhydride and reacts vigorously with water. The hydrate can be reconverted to calcium oxide by removing the water in the reversible equation, i.e. if the, hydrated lime is heated to redness, the calcium oxide will be generated to reverse the reaction. The chemical dictionaries and the books on organic and inorganic chemistry will also give the same meaning. Therefore, according to common parlance, the word 'dehydrated lime' means the lime (calcium oxide) without mixing it with water or a lime in powdered form without water contents.

12. Now, let us notice Entry 74 of First Schedule to KGST Act. The entry speaks of lime, lime products and other white washing materials. In the entry, apart from lime, there is specific inclusion of lime products and white washing materials. The word 'product' means a thing produced. A product obtained after being processed through mechanical process cannot be the same as its raw material. The expression 'lime products', therefore, means, anything produced or obtained from lime whether such derivation was by a simple physical process or by a chemical reaction would not make any difference to the end product. There is yet another expression in the entry, namely, 'white washing materials'. The meaning; of this entry could only be materials/articles which are specifically used for white washing purposes. The user test has got a very limited application. It is neither a safeguard for interpretation nor it is conclusive. In cases where resort to the user test is to be taken, it has to be limited to decide as to under what category or entry a particular item or product would generally fall and once it is so decided, the same will apply to all sales under the Act; no matter by whom it is made or to whom it is made. In other words, the user of the goods thereafter will have no relevance. It can't be used to levy tax on different dealers at different rates depending upon the use to which the goods are put or the purpose to which they are purchased. Dr. Mohammed Kutty, learned senior counsel would submit, that, the assessing authority while concluding the assessments, has kept in view only the nature of the business of the dealer and the commodity to which it is put to use, and accordingly has rejected the claim of the assessee to grant the benefit of the notification which provides for reduced rate of tax on lime and dehydrated lime. It is true that the assessing authority while refusing to grant benefit of the notification to the assessee, in his assessment order, apart from others, has stated, that the assessee is not a dealer in pesticides, but a dealer in hardware items and therefore, 'Janatha Cem' cannot be treated as lime powder, exigible to reduced rate of tax. The assessing authority has further stated that the use of the commodity 'Janatha Gem' is for white washing purpose and therefore comes under the category of white mashing material, which is taxable at 10%. The assessing authority, in our considered opinion, has proceeded to determine the nature of the goods by the test of use to which they are capable of being put and the dealer who effects the sale of that goods. The Apex Court in Mukesh Kumar Aggarwal and Co. v. State of Madhya Pradesh (1988) 68 STC 324, has observed that the 'user test' is logical; but is again inconclusive. 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.

13. Having given our anxious consideration to the findings and conclusions reached by the assessing authority, we are unable to persuade our self to accept the reasoning of the assessing authority, though it is accepted by the Appellate Tribunal. Certain goods may be put to different uses by different persons. That cannot entitle the revenue to apply different rates of tax to the sales of the very same product by different dealers depending on the use to which they will be put by the purchasers. Secondly, the seller of the goods is also not a determinative of the nature of goods. Take for example, a dealer in Iron and Steel, may also effect sales of lime products and merely because it is sold by a dealer engaged in the business of selling iron and steel, the sale of lime products effected by him in the course of business activity cannot be brought under the Entry 'Iron and Steel'. Therefore, we say the findings and conclusions reached by the assessing authority and affirmed by the Tribunal in contrary to the settled legal position of interpretation of taxing statutes.

14. Now, we refer to the decisions on which reliance was placed by learned counsel for the parties. The first decision on which reliance was placed by the learned counsel, Dr. Mohammed Kutty is, the decision of Full Bench of this Court in the case of Kevi Hardwares v. State of Kerala : 2003(2)KLT776 . The question of law that came up for consideration before the Full Bench of this Court was, whether the assessing authority was justified in levying tax on the sale of 'Dolomite' under Entry 42 instead of Entry 50 in the First Schedule of KGST Act. The Full Bench of this Court while answering the said question has stated:

Under the Act, the taxable event is the sale or purchase of goods. The levy of sales tax is normally not dependent on the 'use' of the goods. It is not unknown that an item can be used for different purposes. When a particular item is specifically mentioned under a specific Entry, the mere fact that the article can be used for another purpose as well, would not mean that the specific Entry can be ignored and that the tax can be levied on the basis of a general Enry. When the Legislature has clearly included a particular commodity under an Enry and prescribed the rate of tax, the court is entitled to assume that the legislative intent was to levy tax at the rate as prescribed under the specific Entry and not under any other provision. The principle of 'generalia specialibus non-derogant' is clearly attracted in such a situation. It is an accepted norm for interpretation of a statute that the special over-rides the general. It promotes justice. It avoids uncertainty. What is the position in the present case.

15. We cannot and in fact we shall not dispute the settled legal position of law enunciated by the Full Bench of this Court. At the same time, we are afraid, that, the observation made by the Full Bench of this Court in the case of Kevi Hardware's case would anyway assist the petitioner's learned Counsel to substantiate his contention. In our considered view, having seen the factual matrix and the question of law that came up for consideration before the Full Bench of this Court, the same is nowhere nearer to the question of law that has come up for consideration before the Full Bench of this Court, the same is nowhere nearer to the question of law that has come up for consideration before this Court in these revision petitions.

16. The other decision on which learned senior counsel has placed reliance is on the decision of the Apex Court in the case of Kerala Agglomerated Marbles Ltd. v. Collector of Central Excise : 2003(152)ELT22(SC) . In the said decision, the court has observed, that, the primary object of classifying products in fiscal statute, like Central Excise Act being for raising revenue, the settled rule of interpretation is that the various headings or sub-headings in the Tariff should be understood not in strict scientific and technical sense, but in their popular sense, i.e. the meaning assigned to them by those trading in and using the product.

17. Can we again dispute the aforesaid legal position? Our answer is simple, 'no'. In fact we have reiterated the above said legal principles in our earlier part of our judgment. But, at the same time, we are afraid the decision on which reliance is placed by the learned senior counsel would help him in anyway to substantiate his contention.

18. The learned senior counsel has also brought to our notice the observation made by this Court in the case of Southern Veneers and Wood works Ltd. v. State of Kerala (1997) 5 KTR 437 (Ker), wherein it is stated, that, what is relevant is the article which is subject to levy of tax. There is no difficulty in identifying the article. It is attempted to be understood in terms of its use which is not permissible. In a taxing statute, what is taxable is the article referred to in the entry and it cannot be understood in the context of its use.

19. Again, in our view, we cannot have dispute with the legal principles enunciated by this Court. The view expressed by this Court is based on the first principle of interpretation of taxing statute and, therefore, we fully concur with the view expressed by this Court in the aforesaid decision.

20. Now, we may refer to the decisions on which reliance was placed by learned counsel for the Revenue. He invites our attention to the observations made by this Court in the case of Joseph v. State of Kerala 2007 (2) KLT 308. In the said decision, the question of law that was before the court was whether the bleaching powder is assessable as 'Chemical' under Entry 29 of the First Schedule to KGST Act or whether it falls under 'lime and dehydrated lime' taxable at the reduced rate of 2.5% under Entry 28 of Schedule II of notification, SRO No. 1728/1993. The court while answering the aforesaid question of law has observed as under:

It is obvious from the above that bleaching powder is not lime or dehydrated lime as claimed by the petitioner. On the other hand, it a chemical compound constituting of Calcium, Chlorine and Oxygen. The other name of bleaching powder, namely, chloride of lime obviously indicates that lime is a major constituent of the product. However what is covered by the Notification is admittedly like and dehydrated lime which are one and the same and difference being that in the latter item, moisture is not present. By no means, the product bleaching powder can be identified as lime pure and simple. In the course of manufacturing, it obviously undergoes a change involving loss of identity of lime and what emerges is a new product with different odour and characteristics. In fact, the chlorine content is what gives it the capacity to act as a disinfecting agent. In this view of the matter, we are in complete agreement with the finding of the Tribunal that bleaching powder cannot be treated as lime or dehydrated lime within the meaning of the Notification above referred, entitling the petitioner for concessional rate of tax on its sale.

21. In the aforesaid decision, the facts would demonstrate what was considered by the court was, whether bleaching powder is a chemical or lime/dehydrated lime. The issue before us is substantially different. Therefore, the case law on which reliance is placed by the learned Counsel for revenue would not assist us in deciding the issue before us.

22. To sum it up, Entry 74 of First Schedule to KGST Act enumerates goods which are taxable at 10% at the first sale point by a dealer liable to pay tax under Section 5 of the Act. The goods enumerated are, lime, lime products and other white washing material. The assessee in the instant case is a dealer in Hardware, Paints and white washing material. In the course of his business activity, effects sale of Janatha Cem, which is a powdered from lime without moisture content. It is used for varied purpose. If not for the notification issued by the State Government, in exercise of its powers under Section 10 of the Act, in public interest, the commodity in question would have been certainly and obviously taxed under Entry 74 of First Schedule to the Act at the rate of 10% either as lime product or white washing material. The State Government, by issuing SRO No. 1728/93, apart from granting total exemption from payment of tax to the goods mentioned in various schedules, has also provided the reduced rate of tax for the goods mentioned in Schedule II of the notification. The Entry 28 of Schedule II of the notification speaks of lime and dehydrated lime. As we have already discussed, the dehydrated lime is nothing but lime powder without water contents.

23. The assessee in the present case effects purchase of 'Janatha Cem' and effects the sale of the said commodity within the State. The commodity dealt with by the assessee under the brand name 'Janatha Cem' is lime powder packed in gunny bags, mainly and primarily used for coating surfaces, walls and structures. The Janatha Cem or Snow Cem which is the normal usage in the trade circle, is a product having major ingredient of lime. Alternatively, Janatha Cem is a product with a lime base. Therefore, it requires to be treated as dehydrated lime and the benefit of the notification requires to be extended to the assessee and requires to be taxed at the lesser rate of tax at 2.5% and not at the higher rate of 10% under Entry 74 of First Schedule to KGST Act. We, therefore, allow these revision petitions, set aside the orders passed by the assessing authority and the Appellate Tribunal and hold that 'Janatha Cem' is a lime powder or dehydrated lime and is entitled for the reduced rate of tax as envisaged in SRO No. 1728/93. There will be no order as to costs.

Ordered accordingly.