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of <h1>High Court affirms industrial stearine fatty acid as 'acid' for tax, broad interpretation applied</h1> The Kerala High Court upheld the classification of industrial stearine fatty acid as an 'acid' under entry 65 of the Kerala General Sales Tax Act, 1963. ... - Issues: Interpretation of entry 65 of the First Schedule to the Kerala General Sales Tax Act, 1963 regarding the classification of industrial stearine fatty acid as an 'acid' for tax purposes.Analysis:The Tax Revision Case (T.R.C.) before the Kerala High Court raised the issue of whether industrial stearine fatty acid falls under entry 65 of the First Schedule to the Kerala General Sales Tax Act, 1963, which pertains to 'all acids.' The assessing authority initially treated the item as unclassified but later re-assessed it under entry 65, leading to a tax levy at a different rate.The revision-petitioner argued that industrial stearine fatty acid should not be considered an 'acid' as it does not possess the typical corrosive or dangerous properties associated with acids. The Sales Tax Appellate Tribunal, however, held that the term 'acid' encompasses various categories, including organic acids like free fatty acid (FFA), and that industrial stearine fatty acid commercially and chemically qualifies as an acid. The Tribunal emphasized that the entry 'all acids' covers every item meeting the definition of an acid, whether organic, inorganic, or commercial.The Court acknowledged the petitioner's argument that the product's name might not always align with its common understanding, but emphasized that the Tribunal's factual finding established industrial stearine fatty acid as a chemical and commercial acid. Since the Tribunal's determination remained unchallenged in the revision petition, the Court upheld the classification of industrial stearine fatty acid as an acid under entry 65 of the Act. Consequently, the Court dismissed the T.R.C., affirming the tax treatment of industrial stearine fatty acid as per the statutory provision.In conclusion, the judgment clarifies the interpretation of the term 'acid' within the context of the sales tax legislation, underscoring that the commercial and chemical characteristics of a product determine its classification under the relevant entry. The decision highlights the importance of factual findings by the appellate authority in determining the tax liability of goods falling within the ambit of statutory provisions.
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