Commodity classification for textile dyes: acromine colours fall under dyes and chemicals, not higher-rate pigments, by functional use.

Acromine colours used in textile printing were treated as dyes and chemicals rather than as pigments or colours under the schedule entry for paints and allied materials. The controlling classification test was the commodity's true commercial and functional character, and the contextual meaning principle was applied to read the competing entries in light of their ordinary use. Because the materials were used for soaking and printing cloth, they did not fall within the higher-rate entry for painting-related pigments. The commodity was therefore placed under the lower-rate dyes and chemicals entry, with the applicable rate being 8 per cent up to 30 June 1982 and thereafter the lower multi-point rate in force.

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Issues: Whether acromine colours used in printing textiles were classifiable under Entry 110 of the First Schedule as pigments and colours taxable at 10 per cent, or under Entry 138 of the First Schedule as dyes and chemicals taxable at 8 per cent till 30 June 1982 and thereafter at the applicable lower multi-point rate.

Analysis: The controlling question was the true commercial identity of the commodity and the scope of the competing schedule entries. Entry 110 covered paints, colours, pigments and allied materials ordinarily associated with painting, finishing and similar uses, whereas the record showed that acromine colours were used as dyes for printing textiles. Applying the contextual meaning principle that a word is understood by the company it keeps, the commodity could not be brought within Entry 110 merely because it was described as a colour. The later clarification of the Special Commissioner also supported the view that dyes and colour bases used for soaking or printing on cloth belonged to the lower-rate entry and not to the higher-rate entry for paints and pigments.

Conclusion: Acromine colours were not taxable under Entry 110 as pigments or colours for painting purposes, but fell under Entry 138 as dyes and chemicals, with the applicable rate being 8 per cent up to 30 June 1982 and thereafter the lower multi-point rate in force.

Final Conclusion: The revision petitions succeeded and the tax levy was required to be recalculated on the correct entry-wise classification of the commodity.

Ratio Decidendi: For sales tax classification, a commodity must be placed in the entry that answers its real commercial and functional character, and a higher-rate entry for paints or pigments cannot be applied to textile dyes merely because they are colours.

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