- (1.) M. C. AGARWAL, J. These two revision petitions have been preferred by the dealer against the order dated July 4, 1997 and May 13, 1998 on the dealer's appeals for assessment years 1989-90 and 1988-89, respectively.
(2.) I have heard Sri Bharat Ji Agrawal, learned counsel for the revisionist and Sri S. D. Singh, learned counsel for the respondent. The revisionist is a manufacturer of camphor and isobornyl powder, turpentine oil, camphor oil and other things and the dispute in these revision petitions is about the nature of - (i) Capinone (ii) Sandalica (iii) Isobornyl acetate (iv) Terpineol (v) Astrolide (vi) Thymol According to the Revenue these were taxable as scents and perfumes under entry 60 of a notification dated September 7, 1981. The contention of the dealer revisionist on the other hand was that they are chemicals. The rate of tax on these two categories of goods is 12 per cent and 8 per cent respectively. Entry No. 60 is in respect of "scents and perfumes, excluding agarbattis and dhoop battis". The Tribunal mentioned the characteristic of these things as under " 1. Capinone Chemical classification : Acetyl longifolers Appearance : Light pale yellow to yellow viscous liquid rich, sweet and woody, with a fragrance of vetivert and sandalwood oil. Applications : - In the preparation of blends of vetivert and sandal-wood oils. - In the preparation of cosmetics and toiletries such as colognes and toilet waters.- Sprays and deodorants.- Soaps, detergents, bath salts and shampoos.- Cosmetic preparations such as face creams, talcum powders and skin lotions.- Male toilet products such as after shave lotions and creams. - Perfumes substrates in paper, fibres and fabric products. " " 2. Sandalica : Clear colourless viscous liquid Colour/ : Sweet and pleasant odour of sandalwood appearances Odour Applications : (i) Excellent material for perfumery blends used in soaps, detergents and wide variety of cosmetics to impart sandalwood character. (ii) Can be utilised in place of expensive sandalwood oil in the preparation of perfume extract colognes and toilet water (iii) In perfumery blends for - (a) Male toilet products such as shave lotions and creams (b) Agarbattis, tobacco. (iv) Masking agent. " " 3. Isobornyl acetate : Chemical : Mixture of bicyclic monoterpene esters, classification mainly Isobornyl acetate. Appearance : Colourless liquid. Odour : Characteristic pine needle and camphoraceous. Applications : (1) Extensively used in all types of pine needle blends for soaps, perfumes, deodorants and sprays. (2) In detergents, used as a masking agent for the prevention of unpleasant odours. (3) In the manufacture of disinfectant formulations. " " 4. Terpineol : (PG) Chemical : Mixture of tertiary terpene alcohols. classification Appearance : Colourless, viscous liquid. Odour : Sweet, pleasant, lilac character. Applications : (1) Excellent perfumery ingredient for soaps, toilet preparations and sprays. (2) In the production of chemicals like terpinyl acetate, used as an intermediate. (3) In the preparation of acacia, carnation, violet and lavender types of odours. (4) Suitable ingredient for industrial perfumes used as deodorants and for making unpleasant odours of solvents, processing materials and finished products. " " 5. Astrolide : Chemical : Isochroman classification Odour : A clean and powerful musk odour-long lasting and excellent fragrance quality. Occurrence : Not found in nature. Colour and : Colourless, moderately viscous liquid. appearance Applications : Fragrance and perfumery preparations of non-acidic character. Toiletries and cosmetics in alkaline media. - Soaps. - Shampoos. - Bath preparations, etc. - Incense sticks. " " 6. Thymol : Appearance : Colourless, translucent crystals or lumps. Odour : Pungent, aromatic reminiscent of thyme. Taste : Pungent, aromatic and spicy herbal. Applications : Thymol possesses powerful disinfectant and antibacterial proper ties like carbolic acid, but it has more pleasant odour and so finds wide applications in flavours, pharmaceutical and antiseptic preparations. Flavours : Thymol imparts spicy herbal flavour to products such as confectioneries - chewing gums. Disinfectants : Thymol is employed in many of the disinfectant preparations intended for use upon mucous cavities such as : - Washes and gargles - Tooth paste and tooth powder. Pharmaceu- Thymol because of its powerful antibacterial, ticals anthelmintic and antiseptic properties finds use in the preparation of pharmaceutical and medicinal products such as : Liniments - Pain balms and rubs Inhalants : - Cough syrups, drops and lozenzes. - Gastro-intestinal preparations for fermentive gastritis, enteritis and similar cases. - Vermifuge preparations for use against tap worm and probably all forms of intestinal parasites, specially the hook worm. "
(3.) THE aforesaid characteristic of the commodities, as mentioned in the Tribunal's order, are not disputed and the question is whether the Tribunal has rightly placed them in the category of scents and perfumes. Entry No. 21 in the aforesaid notification deals with "chemicals of all kinds including fuel gases" and entry No. 5 deals with "all kinds of cosmetics and toilet preparations for beautification or care of the face, skin, hair nails, eyes or brows, but not including soaps, safety razor blades, hair combs, tooth pastes, tooth powders and other dentifrices, tooth brushes and Kum kum". In A. Boake Roberts and Co. (India) Ltd. now Bush Boake Allen (India) Ltd. v. Board of Revenue [1978] 42 STC 270, the honourable Madras High Court had to consider a similar question as to whether synthetic essential oils mentioned as musk and jasmine essences were taxable as scents and perfumes under the Madras General Sales Tax Act. THE honourable Madras High Court held that the essential oils which emanated different fragrance, most of which were of a pungent nature were not utilised for purpose of beautify the body by direct application to the body but were utilised for the purpose of making toilet requisites such as soaps, powders or cosmetics and therefore were not scents and perfumes. In Commissioner of Sales Tax, U. P. v. S. N. Brothers [1973] 31 STC 302 (SC), the question was whether syrup essences used for adding flavour to items of food could be taxed under the category "scents and perfumes". It was held that the classification of goods has to be construed in the sense in which they are popularly understood by those who deal in them and who purchase and use them and that syrup essences were edible goods and therefore, could not fall under the category scents and perfumes. In Mettur Sandalwood Oil Co. v. State Madras [1965] 16 STC 9 the honourable Madras High Court had to deal with the question whether sandalwood oil was taxable as a perfume or as vegetable of 10 THE court observed that a perfume must be one which is ready for use because of its odoriferous and high volatile character, after the admixture of proper solvents, fixative and odoriferous substances. Sandalwood oil sold as a base for preparing perfumes and other articles is not therefore a perfume or scent. THE court also observed that sandalwood oil as sold in the market does not vaporise readily to serve the purpose of a common perfume. It has to be rubbed hard on the hand or some other part of the body so that the temperature can be raised by friction and better vaporisation takes place. THErefore, it has to be used in mixture with other substances like oil or alcohol or soap so that the resultant product can emit the peculiar perfume characteristic of sandal. In G. Radhakrishna Murthi and Co. v. Commercial Tax Officer [1999] 113 STC 161 (SC); 1998 UPTC 906 the question was whether agarbattis could be taxed as perfumes. The honourable Supreme Court answered the question in the negative. In that case scents and perfumes were placed in entry 36 along with cosmetics and toilet preparations, face powder and talcum powder, etc. , and it was held that in this context agarbattis cannot be treated as scents and perfumes. The honourable Supreme Court has referred to the case of Commissioner of Sales Tax v. Gordhandas Tokersey [1983] 52 STC 381 (Bom) in which it was held that sandalwood oil and sandalwood could not be treated as perfumes which refers to such preparations as are commonly known in the market for use on the body as perfume.;