Commercial meaning of bullion controls tax treatment of waste hypo water sale, not recoverable silver content.

Waste hypo water was not treated as bullion merely because silver could later be extracted from it. The Bombay High Court held that, in ordinary commercial understanding, bullion means the precious metal itself, and a substance sold for recovery of another material remains a sale of that substance. Because the contract showed the buyers took the hypo water by quantity and paid a rate per gallon, the bargain was for the liquid itself, not for the recoverable silver. The sale therefore fell outside entry 23 of Schedule B to the Bombay Sales Tax Act, 1953 and was taxable under the residuary entry, with the question answered in favour of the Revenue.

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Issues: Whether the sale of waste hypo water was covered by entry 23 of Schedule B to the Bombay Sales Tax Act, 1953 as a sale of bullion, or was a sale of hypo water taxable under the residuary entry.

Analysis: The Tribunal had found that there was a sale, and that finding was not in dispute. The only question was the true nature of the subject-matter sold. The Court held that merely because silver could be extracted from the hypo water, the sale could not be treated as a sale of bullion. In ordinary commercial understanding, bullion denotes precious metal itself, and a substance sold for extraction of another material remains a sale of that substance. The contract terms showed that the purchasers took away the hypo water by quantity and paid at a rate per gallon, indicating that the bargain was for the liquid itself and not for the silver recoverable from it.

Conclusion: The sale was not a sale of bullion under entry 23 of Schedule B, and the Tribunal was wrong in so holding. The question was answered in favour of the Revenue.

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