Interpreting "chemicals" with noscitur a sociis, lime used as an intermediary construction ingredient was classified as a taxable chemical.

The expression "chemicals" in entry 9 of Schedule II, Part A to the Gujarat Sales Tax Act, 1969 was construed by applying noscitur a sociis with the associated term "dyes". The term was held to cover intermediary chemical products used in the manufacture of other finished goods, not end-products. On the Tribunal's factual finding, merta lime, sojat lime and gotan lime were used as ingredients in mortar and whitewash for construction and not as final building materials. They were therefore classified as chemicals under entry 9 and excluded from the residuary entry 13 of Schedule III.

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Issues: Whether merta lime, sojat lime and gotan lime are covered by entry 9 of Schedule II, Part A to the Gujarat Sales Tax Act, 1969 as "chemicals", or fall under the residuary entry 13 of Schedule III.

Analysis: Entry 9, which covers "dyes and chemicals", was construed in the light of the earlier interpretation placed on an identical entry in pari materia legislation. Applying the principle of noscitur a sociis, the term "chemicals" was held to denote intermediary chemical products used in the manufacture of other finished products, and not end-products. The factual finding accepted by the Tribunal was that the three varieties of lime were used as ingredients in mortar and whitewash in building construction, and were not directly used as final building materials. Lime was thus treated as a chemical used as an intermediary agent in producing finished products.

Conclusion: The three varieties of lime fall within entry 9 of Schedule II, Part A as chemicals and do not attract the residuary entry 13 of Schedule III. The question was answered against the revenue and in favour of the assessee.

Ratio Decidendi: Where a tariff or sales tax entry uses the expression "dyes and chemicals", the term "chemicals" takes colour from the associated word "dyes" and covers intermediary chemical products used to produce finished goods.

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