Chemicals and the law: India

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Steam is not a chemical

From the archives of The Times of India 2010

Steam not a chemical, rules Bombay HC

Shibu Thomas | TNN

Mumbai: Ask any schoolkid and she will tell you that steam is H ² O. Bombay High Court was however recently approached to decide on a 21-year-old issue: whether steam was a chemical or not. At stake was tax to the tune of crores; if it was designated as a chemical it would attract a mere 4% sales tax. But a division bench of Justice V C Daga and Justice K K Tated last week ruled that steam was not a chemical for tax purposes, which meant 10% sales tax would have to be paid.

The judges said for sales tax purposes the usage of the product in common parlance had to be considered. ‘‘In common sense, the steam is treated as byproduct of water and for preparation of the steam the process is just to boil water,’’ said the judges. ‘‘Therefore, the common man always treats steam as part and parcel of water. It is a fact that in taxing statute the words which are not of technical expressions or words of art but are words of every day use, must be understood and given a meaning, not in their technical or scientific sense, but in a sense as understood in common parlance.’’

The court was hearing a case filed by M/s Gopalanand Rasayan, a company manufacturing sulphuric acid and other chemicals. During the manufacturing process, steam is generated which is sold as a byproduct. Tax authorities directed the company to pay 10% as sales tax for the assessment years 1988 to 1991. The dispute went to different forums and finally the matter was referred to HC.

The petitioner’s counsel, advocate P C Joshi, cited the definition of steam in the Chambers Dictionary: ‘‘A substance obtained by chemical means or used in chemical operations’’. Advocate Joshi claimed steam was a chemical according to the science of chemistry and chemical technology and also furnished a document from an expert working with department of chemical technology, University of Mumbai.