Specific tax entry prevails for yeast classification as a chemical, with ambiguity resolved in favour of the assessee.

Yeast was held to fall within the U.P. trade tax entry for chemicals because it has a definite chemical composition, molecular structure, and the capacity to produce a chemical effect, even though it is also a living organism or fungus. The Court applied the rule that, where two views are reasonably possible, the interpretation favourable to the assessee should be adopted, and that a specific entry prevails over a residuary entry. Prior revenue classification and contemporaneous executive understanding were treated as supporting factors. The classification as a chemical was upheld and the residuary category rejected.

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Issues: Whether yeast was classifiable as a chemical under the relevant U.P. trade tax entry and could not be treated as an unclassified or residuary item.

Analysis: The relevant notification entry covered chemicals of all kinds, and the Court examined the composition, properties, use, and prior administrative treatment of yeast. It held that yeast has a definite chemical composition and molecular structure, is capable of producing a chemical effect, and may answer the description of a chemical notwithstanding that it is also a living organism or fungus. The Court further held that, where two views are possible, the interpretation favouring the assessee should be adopted, and that a specific entry must be preferred over a residuary entry. The earlier acceptance of the classification by the revenue and the contemporaneous executive understanding were treated as relevant supporting factors.

Conclusion: Yeast was held to fall within the entry for chemicals and not within the residuary category, so the challenge to the tax classification succeeded.

Final Conclusion: The impugned judgment was set aside and the appeals were allowed, with the classification of yeast as a chemical upheld.

Ratio Decidendi: In fiscal classification, where the item reasonably fits a specific entry and also has chemical characteristics, the specific entry must prevail over the residuary entry, and ambiguity must be resolved in favour of the assessee.

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