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PETITIONER: M/S.  UNION CARBIDE INDIA LTD.

       Vs.

RESPONDENT: STATE OF ANDHRA PRADESH

DATE OF JUDGMENT20/03/1995

BENCH: VERMA, JAGDISH SARAN (J) BENCH: VERMA, JAGDISH SARAN (J) BHARUCHA S.P. (J) PARIPOORNAN, K.S.(J)

CITATION:  1995 SCC  Supl.  (2) 267 JT 1995 (3)   218  1995 SCALE  (2)355

ACT:

HEADNOTE:

JUDGMENT: J.S. VERMA, J.: 1.These  appeals by special leave are against  the  judgment dated 5.2.1976 in Tax Revision Case Nos. 18 and 19 of  1975, by  the  High  Court of Andhra Pradesh.   The  two  question answered  by the High Court relate to the  assessment  years 1968-69 and 1969-70 which are: (1)  Whether   dry  cell  batteries  manufactured   by   the assessees are exigible to tax under Entry No. 3 or Entry No. 38 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957? (2)  Whether  the arc carbons manufactured by  the  assesses are exigible to tax under Entry No. 4 or Entry No. 38 of the First Schedule to the Andhra Pradesh General Sales Tax  Act, 1957? The Tribunal held that the "dry cell batteries" are  taxable under Entry No. 38 except only those which are specified for use in transistors, which alone are taxable under Entry  No. 3; and the "arc carbons" are taxable under Entry No. 4.  The revisions  filed by the assessee have been dismissed by  the High  Court.   Hence these appeals by  special  leave.   The connected matters are similar and are disposed of in 221 terms of this judgment. 2.   The relevant entries with reference to which the  above questions are to be decided, "3. Wireless reception              At the point    12 paise instruments and apparatus,          of first sale   in the radios,and radio hones,             in the state    rupee electrical valves, accum- ulators, amplifiers and loud-speakers and spare parts and accessories thereof.(b). 4.Cinematographic equipment           -do-          12 paise

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including cameras, projectors                       in the and sound recording and                             rupee reproducing equipment lenses, film and parts and accessories required for use therewith. 38.All electrical goods,              -do-           8 paise instruments, apparatus and                           in the appliances including fans                            rupee and lighting bulbs electrical earthenware and procelain and all other accessories.  " The  assessee contends for taxing of these articles  at  the lower  rate  under Entry No. 38 and not at the  higher  rate under Entry Nos. 3 or 4. 3.   We  shall first consider the question relating to  "arc carbons".   The only argument on behalf of the  assessee  is that  the carbon is used up and, therefore, it cannot be  an accessory of the equipment specified in Entry No. 4. On this basis,  the  assessee  claims that arc carbon  used  in  the equipment  is taxable under Entry No. 38 at a  lesser  rate. The High Court following its earlier decision held that  arc carbons  manufactured by the assessee were assessable  under Entry  No. 4 and not Entry No. 38.  That view of the  Andhra Pradesh  High  Court  has been approved  by  this  Court  in Annapurna  Carbon  Industries  Co.  vs.   State  of   Andhra Pradesh,  [1976]  37 S.T.C. 378, and it was  held  that  arc carbons fell within Entry No. 4 of the First Schedule to the Act.  It was held by this Court that:               "........  The meaning of this entry can  only               be  satisfactorily determined in the light  of               language of     the entry itself considered in               the context in which it occurs.               The entry No. 4 occurs in a schedule in  which               descriptions  of  goods to be  taxed  indicate               that   the   expression  "required   for   use               therewith" has been employed for equipment  or               accessories  connected with the main  purpose.               For  instance, in entry No. 5, the expression               222               occurs at the end as follows:               "Photographic and other cameras and enlargers,               lenses, films and plates, paper and cloth  and               other  parts and accessories required for  use               therewith.  "               Apparently,   the  deciding  factor   is   the               predominant or ordinary purpose or use.  It is               not enough to show that the article can be put               to  other  uses also.  It is  its  general  or               predominant user which seems to determine  the               category in which an article will fall.               .........Again  entry  No.  3  for   "wireless               reception instruments and apparatus"  includes               "electrical  valves, accumulators,  amplifiers               and   loud-speakers   and  spare   parts   and               accessories   thereof’.   The   words   "Parts               thereof" are used in several entries, such  as               entry   No.  6  for  clocks,  timepieces   and               watches,  entry  No. 10  for  dictaphones  and               other similar apparatus for    recording sound               and  entry  No.  11  for  sound   transmitting               equipment   such  as  telephones   and   loud-               speakers.               Our   object  in  indicating  the  nature   of               entries, amidst which entry No, 4 occurs is to               show that some precision has been attempted in

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             making  the entries.  When it was intended  to               confine  the entry to particular  gadgets  and               "parts thereof" the entry said so.  Of course,               even   where   an  entry  relates   to   parts               manufactured for use for a particular kind  of               instrument   or  gadget  only,  the   article,                             manufactured   to  serve  as  a  part   of   a               particular  kind of apparatus would not  cease               to be covered by the intended   entry   simply               because  a purchaser makes some other  use  of               it.   We  have to find the  intention  of  the               framers of the schedule in making the entry in               each case. The best guide to their  intentions               is the language actually employed by them.               We find that the term "accessories" is used in               the schedule to describe goods which may  have               been  manufactured  for  use  as  an  aid   or               addition.    A   sense  in  which   the   word               "accessory"  is  used is  given  in  Webster’s               Third New International Dictionary as follows:               "an object or device that is not essential  in               itself   but   that  adds   to   the   beauty,               convenience,  or  effectiveness  of  something               else".   Other  meanings  given  there  are  :               "Supplementary  or secondary to  something  of               greater or primary importance";  "additional";               "any of several mechanical devices that assist               in operating or controlling to tone  resources               of   an   organ".    "Accessories"   are   not               necessarily  confined to  particular  machines               for  which  they may serve as aids,  The  same               item may be an accessory of more than one kind               of instrument.               It  will be noticed that the entry we have  to               interpret   includes   "parts"  as   well   as               "accessories"  which are required for  use  in               projectors or other cinematographic equipment.               We  think that The Andhra Pradesh  High  Court               correctly  held that the main use of  the  are               carbons under consideration was duly proved to               be  that of production of powerful light  used               in  projectors   in cinemas.  The   fact  that               they  can  also  be  used  for   searchlights,               signaling,  stage lighting, or where  powerful               lighting for photography or other purposes may               be  required,  could  not  detract  from   the               classification   to  which  the  carbon   arcs               belong.  That is determined by their  ordinary               or  commonly known purpose or user.  This,  as               already  observed by us, is evident  from  the               fact  that  they  are  known  as  "cinema  are               carbons"  in  the Market.  This  finding   was               enough,  in our opinion to justify  the   view               taken  by the Andhra Pradesh High  Court  that               the  goods under consideration are covered  by               the relevant entry No. 4. "                                         (emphasis supplied)                                          (at pages 380-81) 223 4.   A plea on behalf of the assessee for reconsideration of the  decision of this Court in Annapurna  Carbon  Industries Co.  (supra)  was made.  We find no ground  to  accept  that submission.  We may add that the decision has held the field for  all these years and we do not find any reason to  doubt the  correctness of that decision.  It must,  therefore,  be

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held  that the decision of the High Court that  arc  carbons are  taxable under Entry No. 4 of the First Schedule to  the Act does not call for any interference. 5.   We  now consider the question relating to  dry  battery cells.  The matters involving this question are of two broad categories.   One  category relates to the period  prior  to certain  amendments made in the Act in 1976 while the  other category of matters relates to the period subsequent to that amendment.  For the period prior to the 1976 amendment,  the dry  cell batteries only of Union Carbide India  Ltd.  which bore  on  it  the mark "for transistors"  were  held  to  be taxable under Entry No. 3 at a higher rate while the  multi- purpose  dry cell batteries of all the assessees  which  did not bear any such mark were held to be taxable at the lesser rate under Entry No. 38.  Accordingly, for the period  prior to  1976, the only aggrieved assessee is the  Union  Carbide India Ltd. in respect of its batteries bearing the mark "for transistors"  which were assessed at the higher  rate  under Entry  No. 3 while the State is aggrieved by  assessment  of the  remaining  dry cell batteries of  all  assessees  under Entry  No. 38. For this reason, there are cross  appeals  by the  Union Carbide India Ltd, and the State relating to  the period prior to 1976 amendment. 6.   For the post-1976 period, the High Court has held  that all dry cell batteries, after the amendments in the Act, are taxable  only  under Entry No. 38.  Accordingly,  the  State alone has preferred the appeals in this behalf for the post- 1976 period. 7.   All  the  appeals are considered  together  since  they involve  for decision the common question of  taxability  of dry  cell batteries.  The contention of the learned  counsel appearing  for the assessee is that the dry  cell  batteries are  taxable only under Entry No. 38 for the entire  period. On  the  other hand, the contention on behalf of  the  State Government is that all such batteries are taxable throughout only  under  Entry No. 3. In the alternative, it  was  urged that  after the 1976 amendment effective from 1.9.1976,  the dry  cell  batteries are taxable under Entry No. 137  as  it then  stood  but not under Entry No. 38.  It  was  submitted that Entry No. 3 is attracted because dry cell batteries are "accessories" of wireless reception instruments etc. even if not  "accumulators";  and that it is  not  "accessories"  of "electrical  goods" due to which Entry No. 38  is  excluded. In  short, the contention on behalf of the State is  that  a "dry  cell battery" is either an "accumulator"  or  "storage battery" or an "accessory" of wireless reception instruments etc.  to fall under Entry No. 3 throughout or Entry No.  137 w.e.f. 1.9.1976 but not an "accessory" of "electrical goods" to  fall  under Entry No. 38.  The  question  for  decision, therefore, is whether the view taken that dry cell batteries fall within Entry No.38 is incorrect on the grounds urged by the State.  Only in respect of Union Carbide India Ltd,. for the pre-1976 period, the question also is : Whether the  dry cell   batteries  marked  "for  transistors"  were   wrongly assessed to be taxable under Entry No, 3 instead of Entry 224 No.38? 8.  At this stage, the relevant entries as they stood  after the amendment made in 1976 and 1985 may also be quoted: With effect from 1.9.1976:- "3. Wireless reception           At the point    12 paise instruments and apparatus,       of first sale   in the radios and radio                 in the state    rupee gramophones, electrical valves, accumulators,

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amplifiers and loudspeakers and spare parts and accessories thereof. (1003) 38.  All kinds of electrical         -do-         8 paise goods, instruments, apparatus                     in the and appliances that is to say -                   rupee (i)  Wires,      holders, plugs,          switches, electrical    earthenware and porcelain ware; (ii) Casings,   cappings, reapers, bends,  junction boxes,       meter-boxes, switch   boxes,    meter- boards and switch  boards other those made of wood; (iii)     Electrical fans,   lighting   bulbs, torches,      fluorescent tubes and their fittings, like chokes and  starters and   other   parts   and accessories thereof, (iv) Electrical grinders, mixers, blenders, hair driers, shavers, washing machines cooking ranges,  boilers, ovens,geysers,     gener- ators,  transformers  and parts   and   accessories thereof, (v)  Electronic  systems, instruments    apparatus, appliances including electronic cash register- ing    indexing     card- punching,  franking   and addressing      machines, computers  of analog  and digital  varieties,   one record             units, oscilloscopes  and  other electronic equipment  and material  and  parts  and accessories      thereof; (1038)  225 137. Electrical storage        At the point        12 paise batteries and parts            of first            in the thereof   of including         sale in the         rupee containers, covers and plates (1137)   state With effect from 1.7.1985:-- 152. Dry batteries or cells    At the point     *(10) paise *(and parts and accessories    of first         in the thereof).                      sale in the      rupee *Rate  of tax on item 152 reduced from 11 paise to 10  paise and   the  bracked  words  added  by  G.O.Ms.No.630,   Rev., dt.30.5.1986  w.e.f.  1.6.1986 and later by Act 19  of  1986 w.e.f. 1.8.1986 The  subsequent  amendments  show that with  Entry  No.  152 specifically  providing for "dry batteries or  cells"  while Entry No. 3 remained the same, since then "dry batteries  or cells" cannot come under Entry No. 3 in view of the specific Entry  No.  152.   The  question is  whether  prior  to  the

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specific  provision  being  made in Entry No.  152  for  dry batteries  or cells, Entry No. 3 had to be preferred  or  it was  Entry  No.  137  w.e.f  1.9.1976  which  included  "dry batteries  or cells".  To come under Entry No. 137 which  is the  alternative  argument advanced on behalf of  the  State Government,  dry  batteries or cells must  fall  within  the meaning of "storage battery" and for attracting Entry No.  3 it  must  fall  within  the  expressions  "accumulators"  or "accessories  thereof",  We shall presently  show  that  dry batteries   or   cells  arc  not  "storage   batteries"   or "accumulators".   The  real  question  therefore  would   be whether  they  can  be  called  "accessories"  of   wireless reception instruments etc." to fall within Entry No. 3. This is because the expression is "accessories thereof". 9.   In   Hamlyn   All-Colour   Science   Encyclopedia   the "accumulators" are described as: "The  accumulator does not make electricity in the way  that the  dry battery does.  Electricity has to be put in  before any can be taken out.  The same amount of electricity can be obtained from an accumulator as was put into it." On  the other hand dry batteries are called a  primary  cell which  is different from an accumulator, secondary  cell  or storage battery. 10.   In   Chambers  Science  and   Technology   Dictionary, "accumulator" is defined as:               "Voltaic   cell  which  can  be  charged   and               discharged.   On  charge,  when  an   electric               current is passed through it into the positive               and out of the negative terminals   (according               to  the  conventional  direction  of  flow  of               current), electrical energy is converted  into                             chemical               226               energy.  The process is reversed on discharge,               the  chemical  energy,  less  losses  both  in               potential  and current, being  converted  into               useful    electrical   energy,    Accumulators               therefore  form  a useful portable  supply  of               electric power, but have the disadvantages  of               being   heavy  and  of  being  at   best   70%               efficient.  More often known as battery,  also               called   reversible  cell,   secondary   cell,               storage battery" and  storage  battery  is mentioned to be  the  same  as  an accumulator. 11.Primary  cells and primary batteries or dry batteries  or cells  are  understood  in common parlance  as  well  as  in technology  to  be different from  accumulators  or  storage cells. 12.  In The New Encyclopedia Britannica, Vol.1, at page  963 , it is stated that,               "There  are two major type of  voltaic  cells:               primary  batteries and secondary, or  storage,               batteries.  (The  latter  are  sometimes  also               called   accumulators.)  Primary   cells   are               constructed  in  such  a  way  that  only  one               continuous  or intermittent discharge  can  be               obtained.   Secondary  devices, on  the  other               hand,  are  constructed so that  they  can  be               discharged and then recharged to approximately               their original state.  The charging process is               the   reverse   of  the   discharge   process;               therefore,  the electrode reactions  in  these               batteries must be reversible.               "Primary batteries" are defined as

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             "Several   varieties  of  primary  cells   are               available.  These include dry, wet, and  solid               electrolyte.   Dry cells are not actually  dry               but  contain  an aqueous electrolyte  that  is               unspillable  or  immobilized.  Many  of  these               cells  are  sealed to prevent seepage  of  the               electrolyte  or  reaction  products.    Common               examples of such primary batteries arc  acidic               dry  cells (e.g. carbon-zinc cells),  used  in               flashlights, toys, and certain  transistorized               portable radios; alkaline dry cells,  employed               in cameras, tape records, and electric razors,               and mercury cells, utilized in aids and photo-               graphic flash guns." and "Secondary batteries" are defined as               "Such  batteries consist of an  assemblage  of               several  identical  voltaic  cells.   Of   the               various types of storage batteries  available,               the  lead-acid type is the most  widely  used.                             It   serves  as  the  power  source  for   the               electrical  systems  of many  kinds  of  motor               vehicles, particularly automobiles and trucks.               It   is   also   commonly  used   to   provide               electricity   for   emergency   lighting   and               communication circuits.......... 13.For this reason, dry batteries or cells cannot be treated as "storage batteries" for the purpose of Entry No. 137 or " accumulators" for the purpose of Entry No. 3. 14.The  expression  "accessories  thereof" in  Entry  No.  3 indicates that Entry No. 3 can be attracted only if the  dry batteries or cells can be treated as accessories of the wire reception instruments etc. specified in Entry No. 3 or  else they  would fall under Entry No. 38 as "’other  accessories" of  "all electrical goods" being the residuary  entry.   The dry  cells or batteries marked for use in transistors as  is the  case of some such batteries manufactured by  the  Union Carbide India Ltd. alone during the pre1976 period, may fall under  Entry  No.  3 as held by the  High  Court.   However, multi-purpose   batteries,   not  specified   for   use   in transistors alone cannot be treated as "accessories thereof" of wireless reception instruments etc. for the purpose 227 of Entry No. 3. 15.In  Annapurna  Carbon  Industries  Co.  significance   is attached  to use of the word "thereof" and it was  indicated that  the  deciding factor is the  predominant  or  ordinary purpose  or  use  and  it is not enough  to  show  that  the articles can be put to other uses also.  It was held therein that the general or predominant user seems to determine the category in which an article will fall.      On a comparison made between the    different  entries  in  which  the  term "accessories" is used in the Schedule to describe goods,  it was  shown that the word was construed taking  into  account the fact whether the goods have been manufactured for use as an aid or addition to any of the specified articles in  that entry  or  not.  It was also pointed out that  when  it  was intended  to  confine the entry to  particular  gadgets  and particulars thereof, the entry said so; and, therefore,  the expresssion  "accessories thereof ’must mean the general  or predominant user of the article only as an accessory of  one of  the specified items mentioned in that entry Applying  &a test,  it cannot  be held that dry batteries or cells  which were  not  marked "for transistors" and  were  multi-purpose cells were manufactured for predominant  use as   accessories of  the  wireless reception instruments etc. to  fall  under

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Entry  No.  3 SD that they could not be  treated  as  "other accessories"  of "all electrical goods’ for the  purpose  of attracting Easy No. 38. 16.  At  this  stage  it  is  also  useful  to  refer  to  a clarification  made  by the Board of Revenue by  a  circular dated 7-1.1977 which reads as follows:      "B.P.Rt.No.29/1977 Board of Revenue                            (C.T.)                     Hyderabad D7-1-1977 Shri A. Krishnaswamy   , I.A.S., Commissioner of Commercial Taxes. Sub - Andhra Pradesh General Sales Tax Act, 1957       Rate of tax on dry battery cells       Clarification issued. Ref.- Representation  dated 27.9.1976       from M/s Indo National Limited,       Nellore- The  trade has requested the Board to clarify be rue of  tax applicable to dry battery cells. battery cells. The Board has examined the issue and is of the view that dry battery cells would be of two types :               1 .   Those labelled for a special use such as               transistor  batteries.  The rate of tax  would               depend  on the rate leviable on the goods  for               which they are labelled as being an accessory.               In  the  case of  transistor  batteries,  they               would  be subjected to tax as  accessories  of               radious               2.    Those that are not labelled for  special               use,  such  dry  cells  would  be  liable  1st               Schedule  to the Andhra Pradesh General  Sales               Tax  Act 1957, i.e. ‘Electrical Goods’  liable               to  tax at 8% at the point of 1st sale in  the               State.                                      Sdt T.Jesudenam                                  Asstt.  Commissioner (CT)"               228               (at  page 120 from paperbook of  C.A.Nos.4537-               39/1986) The above circular is of significance to indicate the manner in which these entries were understood and construed even by the Department which is in accord with the construction made of the entries by the High Court. 17.For  the above reasons, we do not find any  infirmity  in the view taken by the High Court on any of the two questions which  it has decided.  There is no ground to  interfere  in any of these appeals. 18.Consequently,  all  the  appeals and  the  special  leave petition are dismissed.  No costs. 230