1991 (6) TMI 237

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....or the samvat year 2030 the Sales Tax Officer allowed set-off under rule 42 of the Gujarat Sales Tax Rules, 1970, in respect of sales tax paid by the dealer on the purchase of goods used in preparing moulds. The Assistant Commissioner of Sales Tax took up the matter in suo motu revision under section 67 of the Act. After hearing the parties he came to the conclusion that raw bentonite powder was a chemical covered by entry 9 of Schedule II, Part A of the Act. Therefore the set-off in respect of the tax paid on the purchase of raw bentonite powder could not be claimed inasmuch as it was "prohibited goods" as defined under section 2(21) of the Act. The assessee preferred revision before the Tribunal. The Tribunal confirmed the order passed by....

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............it is a very fine, pale buff of cream-coloured powder which swells when added to water, free from grit, odourless; taste slightly earthly. It is put to medical and industrial use and the gels are suitable for suspending powders in aqueous preparation and for ointment and cream bases. It is also used for preparation of industrial barrier creams and cosmetics". After referring to the aforesaid description of the article the Division Bench of this Court came to the conclusion that bentonite powder was a chemical. Be it noted that therein the case of the Revenue was that bentonite powder was not chemical. This contention of the Revenue was negatived by the High Court. 5.. In view of the aforesaid decision of this Court there should no....

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....] 36 STC 116, three broad categories of chemicals have been referred to by the Division Bench of this High Court. They are as follows: (i) basic chemicals; (ii) chemical products which are intermediary and which are used for producing other subordinate articles; (iii) end-products. Once it is held that refined bentonite is chemical, by necessary corollary it has got to be held that unrefined bentonite powder is basic chemical from which refined bentonite powder is derived. We have been taken through the judgment of this High Court in the case of Gujarat Distributors [1975] 36 STC 116. We are in respectful agreement with the reasons given and the conclusion arrived at in the aforesaid decision. We see no reason to differ with the same. ....