Decided on December 27,2012

Supa Biotech Pvt. Ltd. Respondents


- (1.) These two revisions raise the same questions, but in respect of two different assessment years and, accordingly, we have considered these matters together and dispose of the same by this common judgment. The respondent-assessee is a manufacturer of biodynamic preparation (B.D. preparation) 502-507. While selling the said product in packets, a representation is made by the assessee to the effect that the preparation is a mixture of certain medicines found in the Himalaya and certain organic constituents, which act as catalyst in the compost heap and use of the same in the heap becomes strong manure (fertilizer) within 60-70 days. In the packet, the use is indicated as for manufacturing compost and liquid fertilizer, the biodynamic preparation 502-507 is a starter. The method of user, indicated on the packet, suggests that one set of preparation is sufficient for 1 to 1 1/2 tone of compost. The question was, whether this product will or will not be treated as fertilizer? The word "fertilizer" has not been defined in the Uttarakhand Value Added Tax Act. The ordinary grammatical meaning of fertilizer is "a chemical or natural substance added to soil to increase its fertility". In the packet, a representation has been made that the product helps in converting a compost heap into fertilizer. Under the circumstances, the Department proceeded on the basis that the product was not a fertilizer. While doing so, it did not make any endeavour to ascertain, whether in addition to working as a catalyst in the compost heap, can it be treated or used as fertilizer although the method of use, as propagated by the assessee, was user of a small quantity for making a large quantity of compost. The assessee held out that it is fertilizer also. This was substantiated by the assessee by producing the orders placed on the assessee by its customers including Government and its various Departments. Ignoring those, merely because, the representation that the product is a catalyst, the Department proceeded on the basis that the product is not a fertilizer. The matter ultimately reached the Tribunal at the instance of the assessee, inasmuch as, the first appellate authority, although set aside the order of the assessing officer, remitted back the matter for a fresh inquiry. Before the Tribunal, it was contended by the assessee that the product in question is known to the world as a fertilizer as even the Government purchases the product in question as fertilizer. On the basis of the ratio that in the event there is a confusion as to the use of a particular product, the use known in the market generally should be deemed to be the use of the product, the Tribunal held in favour of the assessee. Being aggrieved thereby, the present revision applications have been filed. It is true that the assessee has brought on record many a documents suggesting that the product in question was purchased by the purchasers proceeding on the basis that it is a fertilizer, but, at the same time, the assessee itself, while selling, does not hold out so in the packets of the product meant for sale. It holds out that the product will help in manufacturing strong manure (fertilizer) within a very short period. It holds out that it will convert compost heap into manure (fertilizer). It does not say that it is a natural substance, which, if added to soil, will increase the fertility of the soil. That being the situation, merely because some purchasers of the assessee, including the Government, have purchased the product in question proceeding on the basis that the same is fertilizer, we think the Tribunal should not have concluded the matter, instead should have maintained the order of the first appellate authority.
(2.) We, accordingly, allow the revisions, set aside the order of the Tribunal and uphold the order of the first appellate authority. It is made clear that acting on the basis of the order of the first appellate authority, the assessing officer shall make appropriate inquiry through an appropriate agency, whether the product in question, if added to soil, will or can increase fertility of the soil?;

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