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PETITIONER: RALLIS INDIA LTD.

       Vs.

RESPONDENT: THE STATE OF TAMIL NADU

DATE OF JUDGMENT:       10/11/1998

BENCH: S.P.BHARUCHA, V.N.KHARE

ACT:

HEADNOTE:

JUDGMENT:  JUDGMENT V.N.KHARE.J. These   civil   appeals  are  directed  against  the judgment of the High Court of Judicature at Madras passed in Tax Case (Appeal) Nos.  871-872 of 1983 dated 28.7.1992  and Tax  Case  (Appeal)  Nos.1100-1101  of  1992 dated 21.9.1992 wherein the High Court has held that the goods in  question, namely,   Gelatin  would  fall  within  the  description  of chemical as described in Entry 138 of the First Schedule  to the  Tamil  Nadu  General  Sales Tax Act 1959 (for short the Act). The  appellant  herein  is  incorporated  under  the Companies  Act  and  under  Memorandum  dated  1.9.1983  has succeeded to the business of the  erstwhile  M/s.    Protein products of India Limited which was approved by the order of the Madras  High  Court dated 29.1.1986.  The erstwhile M/s. Protein Products of India Ltd.  was assessed  towards  sales tax for  the  years  1977-78  and 1978-79.  Subsequently the said orders of assessment were revised under Section  16  of the Act by the Deputy Commercial Tax Officer on finding that the  sales  of product Gelatin have been wrongly assessed at 4% multi point as against Ability at 8% in  terms  of  Entry 138 of the  First  Schedule  to  the  Act.    M/s.   Protein Products of India Ltd.  filed appeals before  the  Appellate Assistant  Commissioner,  Coimbatore under Section 31 of the Act.  The Appellate Assistant Commissioner held that Gelatin was made from Ossein which was the raw material  and  Ossein is a direct derivative of bone composed of animal proteinoid matter which was a natural mixture of biological obtained as a  dried  extract and thus Gelatin would not fall within the meaning of chemicals under Entry 138.  Consequently, revised assessment orders  were  set  aside  and  the  appeals  were allowed.    Subsequently,  the  Joint  Commissioner,  Madras exercising suo moto revisional power to revise the appellate orders issued notices to M/s.   Protein  Products  of  India Ltd.   After  hearing,  the  Joint Commissioner, Madras held that Gelatin falls within the  description  of  a  chemical. Consequently,  the  appellate  orders were set aside and the assessment orders for the 1977-78 and 1978-79 were  restored as proposed by order dated 21.7.1983.

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M/s.  Protein  Products  of  India  Ltd.    and  the appellant filed appeals before the High Court of  Judicature at Madras against the orders dated 21.7.1983.  passed by the Joint Commissioner.    When  the  matters  were taken up for hearing the appellant brought to  the  notice  of  the  High Court  the  judgment  of the sales Tax appellate Tribunal in Tax Appeal No.642/85 and Tax Appeal No.    1/86  decided  on 30.3.1987  in  order  to show that the tribunal after having gone into the fact, as a fact finding  body,  has  concluded that  Gelatin  cannot  be  treated  as  a  chemical and that Gelatin cannot produce  any  chemical  effect  or  resulting chemical  change  when used and further Gelatin was not also an intermediary product.  Further  it  was  brought  to  the notice  of  the  Court  that  the  Revenue  has not appealed against the said judgment of the tribunal and it has  become final between  the  parties.    The  High  Court  relying on certain decisions, without any kind of  additional  material or  without  examining  or  adverting to the findings of the tribunal held that Gelatin falls within the description of a chemical falling under Entry 138 of the  First  Schedule  of the Act.    It is in this way the appellant has come to this Court by filing special leave petitions. The  learned  counsel  appearing  for  the appellant urged that  the  appellate  tribunal  being  the  last  fact finding  body,  after  having  considered  all  the relevant materials on record found that Gelatin is  not  a  chemical, the  High  court  without adverting to the said judgment and without any kind of additional material has erroneously held that Gelatin is a chemical falling under Entry  138  of  the First Schedule  of  the  Act.    It is not disputed that the appellate tribunal as a fact finding body had gone into  the facts  and  has  concluded that Gelatin does not fall within the description of a chemical and that judgment became final between the parties.  It  is  also  not  disputed  that  the materials in regard to nature and composition of Gelatin and the  process  undertaken to manufacture it were filed in the form of expert opinions from Scientists before the tribunal. One of  the  expert  opinions  was  from  Dr.     A. Gannasekaran,   Professor   of  Chemistry,  which  reads  as follows:            "Gelatin is a protein obtained from  collagen            which  originates  from animal Kingdom mainly from            skin and bones with suitable pressure.   Molecular            weight  may  vary  and  does  not exist in a fixed            proportion.  It is mainly  used  in  confectionery            products.  It has no specific chemical formula and            hence   it  does  not  come  in  the  category  of            chemicals as defined in the chemical dictionary." The  second  opinion  paced  on record was from Thiru G.O.K. Ummer,  Joint  Director  of  Industries  and  Commerce (Chemicals) and the said opinion was as follows:            "With reference to your letter cited, I am  to            inform  that  as per Hacki’s Chemical dictionary, a            chemical is defined as compound  of  substances  of            definite molecular  composition.   Generally, it is            restricted to a single  Molecular  species  with  a            definite molecular structure.  Gelatin is a protein            obtained  from Collagen by billing skin, ligaments,            tender bones etc.  with water under pressure.    It            is not  of  definite  molecular  composition.   The            molecular weights of Gelatin are reported to  range            from  low values of 10,000 or 25,000 to high values            reaching 25,000.    Based  on  the  definition   of            chemical  given  in  dictionary,  I  am to say that            Gelatin does not come under ’Chemical’ as  commonly

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          defined". The third opinion filed was from Dr.  N.Gopalakrishnan Research and Development Officer  in  Hindustan  Photo  Films, which reads as follows:            "Gelatin is a natural colloid of high molecular            weight.   It  is  a water-soluble protein regulating            from collagen (qv).   The  parent  fibrous  protein,            collagen,   is   abundant   in  the  animal  kingdom            comprising the major protein of those proteins found            in  hides,  skins,  sinews,  bones  and   connective            tissue.   It  is  a  natural  polymer  in  use  as a            protective colloid,  emulsifier  and  a  vehicle  of            sorts  in  photo  emulsions and is a natural product            very much in use in the  Food  Industry  (gelly  and            all).  it is the generic of chemicals". From  the  aforesaid  opinions and other materials which were on record the tribunal concluded as follows :            "The  perusal  of  the  above  said three letters            which were issued by very  eminent  authorities  would            disclose  that  gelatine is got out of animal kingdom,            that it is natural polymer  in  use  as  a  protective            colloid  emulsifier  and  vehicle  of  sorts  in Photo            emulsions and is a natural product very much in use in            the Food Industry (Gelly and all)  and  that  gelatine            has  no  chemical  formula  and  does  not come in the            generic of chemicals". In the present case what we find is  that  no  additional material  was  adduced  before  the  High  Court for showing that Gelatine material was adduced before the High Court  for  showing that Gelatin  is  a chemical.  The High Court did not examine the finding of the tribunal holding that Gelatin is  not  a  chemical which was  based  upon  the materials on record.  The findings of fact arrived at by the tribunal being the last fact finding  body has  to  be given due weight unless it is found by the High Court that  such  a  finding  is  either  based  upon  no  evidence  or irrelevant evidence  or incorrect principles.  Admittedly, in the present case, no additional material was adduced by the  Revenue. As  such,  the  finding  recorded  by the High Court that Gelatin comes under the description of chemical  is  not  sustainable  in law.  We  accordingly set aside the judgments under appeals.  The appeals are allowed.  No cost.