Holding

Alloys that contain any metal other than copper, tin, nickel or zinc, even in minute quantities, are excluded from the reduced‑rate exemption under entry 2(a); therefore phosphorous bronze is taxable at the normal rate.

Summary

Saru Smelting (P) Ltd. appealed against the Commissioner of Sales Tax, Lucknow, contending that its phosphorous bronze, made of copper, tin and a small amount of phosphorous, fell within entry 2(a) of Notification No. ST‑II‑333/X‑1012‑1971 and was therefore liable to a reduced sales‑tax rate of 1%. The respondent argued that the presence of phosphorous, however minimal, meant the alloy did not consist solely of the metals listed (copper, tin, nickel, zinc) and should be taxed as an unclassified commodity at 3.5%. The Supreme Court examined the wording of the entry, emphasizing the material significance of the word “only”, and relied on the earlier decision in Commissioner of Sales Tax v. Hindustan Metal Works (1964) 15 STC 97. It held that any alloy containing a metal not named in the entry, even in trace quantities, is excluded from the reduced‑rate exemption. Consequently, phosphorous bronze was held taxable at the normal rate, and the appeal was dismissed.

Issues considered

Whether phosphorous bronze, containing copper, tin and phosphorous, qualifies for the reduced 1% sales‑tax rate under entry 2(a) of Notification No. ST‑II‑333/X‑1012‑1971.
Interpretation of the word “only” in the statutory entry and its effect on the inclusion of alloys with trace amounts of other metals.

Legislation cited

U.P. Sales Tax Act, 1948s. 3A(2) second proviso

Subjects

sales taxreduced rate exemptionalloy classificationphosphorous bronzestatutory interpretationU.P. Sales Tax Actnotification

Judgment

SARU SMELTING (P) LTD. A
v.

COMMISSIONER OF SALES TAX, LUCKNOW

MAY 13,1993
r B
[KULDIP SINGH AND YOGESHWAR DAYAL, JJ.]

U.P. Sales Tax Act, 1948-Section 3A (2) Second Proviso- Notification
under-Whether phosphorous bronze exigi~le to a lower rate oftax-Held, 'only'
specified metals or their alloys being exigible at the lower rate, it cannotfall within
the entry if even very small quantity of it contains and unspecified metal, in this
case phosphorous. c
By Notification N~. ST-II-333/X-1012-1971 dated 15 November 1971,
entry 2(a) copper, tin, nickel, zinc or any other aUoy containing any of these
metals only were made exigible at a reduced rate of sales tax of 1 % •
D
The Judge (Revisions) Sales Tax, U.P., Lucknow held that phosphorous
bronze falls within this notification. The Single Judge of the Allahabad High
Court took a contrary view and held that it was taxable as an unclassified
commodity at 3.5 % •

Before this court it was contended that phosphorous bronze is made of E
tin and copper only; that a small quantity of phosphorous is used to deoxidise
the metal and that it is not an essential substance of the phosphorous bronze.
It was, however, admitted that without the use of phosphorous, phosphorous
bronze cannot be produced, and a certain quantity remains in the phospho-
rous bronze.
F
Dismissing the appeal, this Court,

HELD: (1) The emphasis in the entry is that it must contain, even if an
alloy, "only" copper, tin, nickel or zinc.
G
The expression "only" is very material for understanding the meaning
of the entry. Since the alloy in dispute contains phosphorous, may be in a very
small quantity, it cannot fall within entry 2(a) of the notification. (721-G)

Commissioner of Sales Tax v. Hindustan Metal Works (1964) 15 STC 97, H
719
720 SUPREME COURT REPORTS [1993) 3 S.C.R.

..
A referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 266 (NT) of 1980.

From the Judgment and Order dt 14.12.1979 of the Allahabad High Court
in Sales Tax Rev. No. 214 of 1979.
B

l;Iarish N. Salve, P.P. Singh and Ms. Meenakshi Grover for the Appellant.
...
R.C. Verma and Ms S. Mukherjee for R.B. Misra for the Respondent.

c The Judgment of the Court was delivered by

YOGESHWAR D~ VAL, J. This appeal is directed against the judgment
of the Single Judge of the Allahabad High Court passed in Sales Tax Revision No.
214 of 1979 dated 14th December, 1979. By the impugned judgment the High
D Court set aside the order of the Judge (Revisions). Sales Tax, U.P. Lucknow
holding that the Phosphorous Bronze which the assessee/appellant herein have
been manufacturing, fell within the ambit of Notification No. ST-II-333/X-1012-
1971 dated the 15th November, 1971 issued in exercise of the powers under the
second proviso to sub-section (2) of section 3-A of the U.P. Sales Tax Act, 1948
(U.P. Act No.XV of 1948), and took the view that the relevant entry at serial No.
E 2(a) of the said Notification did not cover the goods prepared by the appellant
herein and was thus liable to be taxed as an unclassified conunodity at the rate of
3.5%. The relevant entry reads as under :-

SL No. Description of goods Rate of tax
1. ..... .
F 2 (a) Copper, tin, nickel or zinc· 1 per cent.m
or any other alloy containing any of
these metals only.
(b)

G ·• The contention on behalf of the appellant is that Phosphorous Bronze
manufactured and marketed by them fs covered under the aforesaid entry.
According to the appellant the said Phosphorous Bronze is made of tin and copper
only. It is further contended on behalfof the appellant that the small quantity of ~·
Phosphorous is used to deoxidise the.metal and as such the Phosphorous is not an

H
SARU SMELTING v. TI-IE COMMISSIONER OF SFLES TAX LUCKNOW [DAYAL,J] 721

essential substance of Phosphorous Bronze. .It is, however, admitted case of the A·
parties that without the use of Phosphorous the Phosphorous Bronze cannot be
produced and certain quantity of Phosphorous still remains in the Phosphorous
Bronze.

The contention of the respondent is that Phosphorous Bronze is an alloy
-- containing not only the metals mentioned in the aforesaid entry but Phosphorous
also and as such it is not covered under the aforesaid entry. The words "other alloy
containing any of these metals only" mean that the alloy made of these metals i.e.
B

copper, tin, nickel orzinc only and that alone is covered under the said entry. It was
submitted that if any other metal or substance is included in such an alloy, the same
would not be covered under the aforesaid entry.
c
A similar question arose in the case of Commissioner of Sales Tax, U.P. v.
Hindustan Metal Works, Hat/iras reported in (1964) 15 Sales Tax Cases 97
wherein it was held as under:-

"The Notification exempts tax on sale of alloys prepared from the D
solution of two or more of the metals enumerated therein. On
account of the word "only" the sale of an alloy prepared from tbe
solution of two or more of those metals and some other substance
or substances would not be exempt from tax. The assesse sold an
alloy called phosphorous bronze which was prepared from the
solution of copper, tin, phosphorous and lead. Phosphorous and lead E
are not mentioned in the notification. They are deliberate! y added by
the assessee as per agreement between the parties. The sale is,
therefore, prime facie liable to be taxed."

We were referred to various· dictionary meanings of the words ;Phosphorous F
Bronze 'which have been noticed by the learned Judge dealing with case in the
High Court. We are really concerned with the interpretation of the entry. The
emphasis in the entry is-either it should be pure copper, tin, nickel or zinc and if
·it is an alloy containing two or more metals, it must be an alloy containing these
metals only. The expression "only" is very material for understanding the
meaning of the entry. Since the alloy in dispute contains Phosphorous, may be in · G
a very small quantity, it cannot fall within entry 2(a) of the aforesaid Notification.
The appeal consequently fails and is dismissed with costs.

U.R. \ Appeal dismissed.