Holding

Ultramarine blue is a pigment and therefore taxable under Item 110 of the First Schedule of the Tamil Nadu General Sales Tax Act, 1959.

Summary

The assessees, T.V.L. Nilsin Industries, challenged the classification of ultramarine blue for sales tax purposes, arguing it should be taxed as a chemical under Item 138 of the Tamil Nadu General Sales Tax Act, 1959. The Sales Tax authorities classified it as a pigment under Item 110, making it taxable. The Madras High Court upheld the authorities’ view. On appeal, the Supreme Court examined dictionary definitions, technical literature, and prior judgments, concluding that ultramarine blue is a pigment used as a colourant and whitening agent. Consequently, it falls within Item 110 of the First Schedule and is liable to sales tax. The Court dismissed the appeal.

Issues considered

Whether ultramarine blue is a pigment falling under Item 110 of the First Schedule of the Tamil Nadu General Sales Tax Act, 1959 or a chemical falling under Item 138
Whether the classification under Item 110 makes ultramarine blue liable to sales tax

Legislation cited

Tamil Nadu General Sales Tax Act, 1959s. Item 110, s. Item 138

Subjects

sales taxtax classificationpigmentultramarine blueTamil Nadu General Sales Tax ActItem 110Item 138taxabilitytariff classification

Judgment

A T.V.L. NILSIN INDUSTRIES ETC.
v.
STATE OF TAMIL NADU

JULY 28, 1997

B (S.P. BHARUCHA AND V.N. KHARE, JJ.)

Sales Tax,

Tamil Nadu General Sales Tax Act, 1959-Item 110/138 of First
C Schedule-Ultramarine blue-Used in whitening clothes-Pigment-Assessed
under Item 11()-/{igh Court upheld the stand of Sales Tax authorities-Held,
ultramarine blue or "nee/" is pigment-On appeal, liable to sales tax under
Item 110, as rightly held by the High Court.

The sales tax authorities considered ultramarine blue as a pigment
D falling under Item 110 of the First Schedule to the Tamil Nadu General
Sales Tax Act, 1959. The appellant assessess disputing the stand taken by
Sales Tax authority, contended that it was chemical falling under item 138
of the Schedule.

The High Court justified the stand of the Sales Tax authorities.
E Hence the present appeal.

Dismissing the appeals, this Court

HELD : Ultramarine blue or neel is a pigment, having regard to its
use as a whitener or colouring matter. The High Court has rightly come
F to the conclusion that ultramarine blue was a pigment and therefore liable
to sales tax under Item 110. [123-C-D]

M/s Ni/sin Company v. Collector of Central Excise, 1984 ECR 928,
approved.
G
N. Ganu Bhai v. Commissioner of Sales Tax, Madhya Pradesh, 36
S.T.C. 421 and Union of India & Ors. v. C.M.C. India, Ahmedabad, 1979
ELT 298, held inapplicable. ·

Asstt. Commercial Tax Office1; Jodhpur v. Rajasthan Chemical Cor·
H poration, 65 S.T.C. 356, disapproved.
116
T.V.L. NILSININDUSlRIESv. STATE[S.P. BHARUCHA,J.] 117

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4282 of A
1991 Etc.

From the Judgment and Order dated 16.4.91 of the Madras High
Court in T.C. No. 249 of 1989.

R.P. Bhatt, Ms. S. Hazarika, Ms. H. Wahi and R.N. Keshwani for B
the Appellants.

V. Krishnamoorthy and T. Harish Kumar for the Respondent.

The Judgment of the Court was delivered by c
S.P. BHARUCHA, J. These appeals, filed by assessees, challenge the
correctness of the judgment and order of a Division Bench of the High
Court at Madras. The question raised in these appeals is whether
ultramarine blue is a pigment, so that it falls under Item 110 of the First
Schedule to the Tamil Nadu General Sales Tax Act, 1959, as contended by D
the Sales Tax authorities, or a chemical, so that it falls under Item 138
thereof, as contended by the assessees. The High Court referred to
decisions of other High Courts and came to the conclusion that the stand
of the Sales Tax authorities was justified.
E
Item 110 reads thus :

Point of Rate of
SI. No. Description of the goods
levy Tax%
110. Paints, colours, dry distempers, At the 10
varnishes and blacks cellulose point of F
lacquers, polish including metal first sale in
polishing bars (but not boot polish), the state.
pigments, indigo, enamels, cement
based waterpaints, oilbound
distemper, water pigments finishes
G
for leather, plastic emulsion paints,
turpentine oil, bale oil, white oil and
thinners.

Item 138 covers dyes and chemicals not otherwise specified in the
Schedule. H
118 SUPREME COURT REPORTS [1997] SUPP. 3 S.C.R.

A Our attention was invited by learned counsel for the assessees to the
judgments of the Madhya Pradesh, Rajasthan and Gujarat High Courts and.
we now refer to them seriatim.

In N. Ganu Bhai v. Commissioner of Sales Tax, Madhya Pradesh, 36
B S.T.C. 421, the dispute was whether ultramarine blue, or "nee!", was taxable
under Entry 25 of Part II of Schedule II of the Madhya Pradesh General
Sales Tax Act, 1958, or under the residuary entry in Part VI of Schedule
II of that Act. The former entry at the relevant time covered dyes and the
Sales Tax authorities contended that ultramarine blue was a dye and should
be taxed as such. The High Court referred to the Concise Oxford
C Dictionary which stated that ultramarine blue was a pigment made from
lapis lazuli .. It referred to Chambers's Encyclopaedia which stated that blue
pigments in common use by artists consisted of native and artificial
ultramarine, cobalt, indigo and prussian blue. It then referred to the
dictionary meaning of 'dye'. It found :
D
11
13. Ultramarine blue is (a) pigment got either from "lapis lazuli"
or artificially by mixing clay, carbonate of soda, sulphur and resin,
(b) that when obtained from lapis lazuli or cobalt, it can be
permanent and can be used by artists for painting skies and
E distances in landscapes, (c) when obtained artificially is not per-
manent, (d) also the base for a powder used by laundresses.

14. Treating nee! as a dye arises out of the failure to distinguish
"dye" in its true meaning from a pigment and from the "blue, a
powder used by laundresses". This powder cannot be used to
F impregnate tissues when the material is in a raw state to yield more
permanent results. It is not capable of being fixed to the fabric as
when it is used on the fabric it is fugitive, not fast to light, nor
resistant to action of water and is not capable of diluting acids or
alkalies. It is not seriously disputed that nee! is used after the
G clothes are washed, usually at the first rinsing, and that with each
rinsing it gets washed away. It cannot resist or withstand the use
of detergents or even washing-soda which is alkaline in nature.
Finally, it is neither a direct dye nor a mordant."

H The High Court concluded that ultramarine blue was not a dye.
T.V.L. NILSIN INDUS1RIES v. STAIB [S.P. BHARUCHA, J.) 119

N. Ganu Bhai's case considers whether ultramarine blue, or "nee!", A
' . is a dye. In so doing it finds that ultramarine blue or "nee!" is a pigment.
The case, far from supporting the assessees, is against them.

In Assistant Commercial Taxes Officer, Jodhpur v. Rajasthan
Chemical Corporation, 65 S.T.C. 356, the question was whether ultramarine B
blue or "nee!" was included in the term 'pigment'. The Board of Revenue
for Rajasthan, from whose order a reference was made to the High Court,
had posed the question whether ultramarine blue or "nee!" in common
parlance was covered by the expression "pigment". The Board had not gone
into the question but had relied upon on an earlier decision where the
Board had held that ultramarine blue could not be considered to be a C
pigment. (No details of the material that was before the Board on the
earlier occasion are set out in the High Court's judgment). The High Court
said that the word "pigment" in the relevant entry had been used along with
dyes, paints, varnishes and dry colours. The dictionary meaning of the word
"pigment" was "any substance used for colouring: that which gives colour D
to animal and vegetable tissues". Pigment brown, pigment caramine,
pigment chrome yellow etc. were used to convey colouring, by particular
colours. Ultramarine blue or 'nee!' was not a colour. In common parlance,
ultramarine blue or 'nee!' was understood as a substance which was uSed
to whiten clothes. It was not understood as a colour. It was a whitening .E
.
,
•
agent for laundry purposes, used by washermen or by house-holders.
Ultramarine blue was not a colour as it was used to whiten clothes.
Ultramarine blue was not a pigment.

We have some difficulty with the reasoning of Rajasthan Chemical F
Corpration's decision. According to the High Court itself, ultramarine blue
is used to whiten clothes. We do not, therefore, follow why it is not a colour
or colouring material or why it is not a pigment.

In Union of India & Ors. v. C.M.C. India, Ahmedabad, 1979 E.L.T.
298, considerable evidence had been led by the assessee and little by the G
Sales Tax authorities. The Gujarat High Court noted the evidence of the
assessee's witness that the terms used in the relevant tariff entry were
technical terms, that is terms used by technologists. This, the High Court
said, supported the assessee's case that "ultramarine blue is not known as
a pigment in common parlance and that it is known only as ultramarine H
120 SUPREME COURT REPORTS (1997] SUPP. 3 S.C.R.

A blue". The evidence showed that "only those persons who were conversant
with properties of ultramarine blue may call it as a pigment in scientific
term, but so far as business community is concerned, it is known only as
ultramarine blue ........ Now, it is found from his evidnece and other evidence
on record that ultramarine blue is used mainly for the purpose of heighten-
B ing the whiteness of things to which it is applied. Under these circumstan-
ces, even though according to the chemical tests, it can be said to be a
pigment, it is not known as such and in the business community or by
persons who are dealing with it.. .. He further admits that in the market,
the substance in question is known as ultramarine blue ........" The evidence
established, the High Court said, that the product manufactured by the
C assessees was known only as ultramarine blue by consumers and the
commercial community. The Excise authorities had not been able to con-
trovert by evidence the case of the assessees that the particular product
was known only as ultramarine blue not only to the manufacturers and
traders but even to the common people. In the absence of any evidence on
D the point, the High Court said, it would be hazardous to interpret the term
"pigment" in the entry as suggested by the Excise authorities.

It seems to us that the focus in the case before the Gujarat High
Court was mis-directed. That the assessee' s_ product was ultramarine blue
was not in dispute. What was in dispute was whether ultramarine blue was
E known as a pigment or whether it was considered to fall under some other
broad or generic discription.

The Madras High Court in the judgment under appeal referred in
extenso to the judgment of a learned single Judge of the Calcutta High
F Court in Mis. Nilsin Company v. Collector of Central Excise, 1984 ECR 928.
The issue before the Calcutta High Court was whether ultramarine blue
was a pigment for the purposes of assessment under item 14(1)(5) of the
Excise tariff.

The learned Judge said :
G
· "(13). The respondents in paragraph 17 of the affidavit-in-opposi-
tion have averred that in paints, like emulsion paints or water
paints, pigment finishes for leather, printing ink, textile printing,
Ultramarine Blue is compounded in larger proportion. They have
H also set out in paragraph 18 of their affidavit-in-opposition the
T.V.L. NILSIN INDUSTRIES v. STATE [S.P. BHARUCHA, J.] 121

definition of the expression pigment given in various dictionaries. A
In the book Modern Surface Coating by Paul Nylen and Edward
Sunderland, at page 349, the said book has described 'pigment' as
the 'internationally accepted term for the powdered material in-
tended to be dispersed in liquid or solid binders for the production
of paints, printing inks, plastic materials, rubbers, vitrine enamels.' B
In the said book Ultramarine Blue has been classified as a synthetic
and inorganic pigment. The respondents have also relied upon
., Webster's 3rd International Dictionary, 1968, page 1714 which
describes 'pigment', inter alia as a natural or synthetic inorganic or
organic substance that imparts a colour including black or white C
io other materials especially, a powder or easily powdered sub-
stance mixed with a liquid in which it is relatively soluble and used
in making paints, enamels and other coating materials, inks, plastic,
rubber and also for imparting opacity and other desirable proper-
ties as well as colour.
D
(14) After the hearing was concluded, the learned Advocate for
the petitioner placed before me the Condensed Chemical Diction-
ary. 10th Edn. revised by Gessner G. Hawley, published by Van
Nostrant Reinhold Co. Incidentally, the respondents in paragraph E
17 of their affidavit-in-opposition had relied upon the 1953 edition
of Van Nostrand's Chemical Dictionary for the definition of
'pigment' as a colouring substance. The said Condensed Chemical
Dictionary claims to contain three distinct types of information,
namely, (i) technical descriptions (ii) extended definition, and (iii)
descriptions or indentifications of wide range of trade mark F
products. The said Dictionary, in my view, does not support-the
claim laid by the petitioner. Thus at page 1068 of the said Diction-
ary the properties of Ultramarine Blue have been, inter alia,
described as "Inorganic pigment; blue powder; good alkali and heat
resistance .... " The said Dictionary mentions the following uses of G
Ultramarine Blue : "Colorant for machinery and toy enamels; white
baking enamels : printing inks, rubber products, soaps anc.! laundry
blues, cosmetics, textile printing." "Note : Used in very low per-
centage lo intensify whiteness of white enamels rubber compounds,
laundered clothing etc. by offsetting yellowish undertones; gives a H
122 SUPREME COURT REPORTS [1997) SUPP. 3 S.C.R.

A 'blue' rather than a 'yellow' white". According to the same Diction-
ary, the expression "Colorant" means any substance that imparts
colour to another material or mixture". Colourants are either dyes
or pigments" (vide page 267 of the book). I may also refer to the
definition of 'pigment' given at page 817 of the said Condensed
B Chemical Dictionary :-

"Any substance, usually in the form of a dry powder, that
imparts colour in another substance or mixture, Most pigments are
insoluble in inorganic solvents and water .... To qualify as a pigment,
a material must have positive colorant value."
c
The definition given in the said book excludes certain substances
including whiting. Mr. Bhattacharyya is not correct in contending
that Ultramarine Blue is whiting because, according to the said
dictionary, whting is entirely a distinct product consisting of finely
D ground, naturally occurring calcium carbonate derived from chalk,
limestone, etc. and used as filter, putty, etc. One of the properties
of Ultramarine Blue is that it is a whitener, i.e. a white pigment or
colorant used in the paper and textile industries (vi de Condensed
Chemical Dictionary, page 1096). Therefore, I conclude that the
condensed Chemical Dictionary, 10th Edn. relied upo:n ·by the
E petitioners shows that Ultramarine Blue is a pigment having
various uses one of which is whitening or brightening textiles and
.clothes.

(15) For the foregoing reasons, I conclude that there is overwhelm-
F ing evidence that Ultramarine Blue is a pigment. Ultramarine Blue
does not constitute a separate product as contended by the
petitioner. People conversant with and dealing with the said
product understand Ultramarine Blue as a pigment, i.e. as a
colorant. It is used for imparting colour to various substances.
Thus, not only from the stand-point of its physical constituents but
G also from the stand-point of its various uses and of popular under-
standing Ultramarine Blue is a pigment. In this connection, it is
also necessary to note the comprehensive manner in which the
entry No. 14 gave description of the goods which were subject to
the rate of duty specified in the said item. Item No. 14(1)(5) was
H broadly in the form of a residuary clause for inclusion of pigments,
T.V.L. NILSIN INDUSTRIES v. STATE [S.P. BHARUCHA, J.] 123

colours, paints and enamels not otherwise specified. Thus, pig- A
rnents, colours, paints and enamels which have not been mentioned
in any other sub items would be covered by Item 14(1)(5) of the
First Schedule to the Central Excises and Salt Act, 1944. Accord-
ingly, I hold that the petitioner is not entitled to challenge the
validity of the excise duties imposed upon the product Ultramarine B
Blue manufactured by the petitioner. No question also arises of
commanding the respondents to refund excise duties recovered
from the petitioner under Item No. 14(1)(5) of the First Schedule
to the Central Excises & Salt Act, 1944".

The Madras High Court in the judgment under appeal rightly relied C
strongly on the Calcutta High Court decision to come to the conclusion
that ultramarine blue was a pigment and, therefore, liable to sales tax under
Item 110.

Neither the assessees nor the. Sales Tax authorities placed any
evidence before the Tamil Nadu Sales Tax Appellate Tribnal or before the D
High Court. They preferred to rely upon the decisions of the High Courts
aforementioned. We are in no doubt that ultramarine blue or 'neel' is a
pigment, having regard to the dictionaries and literature mentioned in the
decisions which we have discussed above and that, having regard to its use
as a whitener or colouring matter, it is popularly understood to be a E
pigment.

Accordingly, the appeals are dismissed with no order as to costs.

S.V.K. Appeals dismissed.