1983 (10) TMI 226 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Classification of "brick tiles" under the relevant sales tax notification.
2. Applicability of previous judgments and principles regarding tax classification.
3. Determination of the appropriate tax entry for "brick tiles" based on their commercial use and contractual specifications.
4. Application of the principle that the more beneficial tax notification should be applied if an item falls under multiple notifications.

Detailed Analysis

1. Classification of "Brick Tiles" under the Relevant Sales Tax Notification
The primary issue was whether the "brick tiles" manufactured by the assessee should be classified under Entry 13 ("bricks") or Entry 96 ("tiles of all kinds") of Notification No. ST-11-332/X-1012-1971 dated 15th November 1971. The Tribunal had found that the process of manufacturing bricks and brick tiles was the same and that in commercial circles, brick tiles were neither sold nor used as tiles. Based on these findings, the Tribunal held that the assessee was liable to pay tax on the turnover of brick tiles treating them as bricks.

2. Applicability of Previous Judgments and Principles Regarding Tax Classification
The Commissioner of Sales Tax relied on a previous decision in Commissioner of Sales Tax v. R.C. Gupta & Company, where it was held that the commodity sold by the assessee came under the category of "tiles of all kinds." The assessee's counsel referred to the case of Raj Narain Tiwari v. Commissioner, Sales Tax, where "jhawan bricks," a special variety of bricks, were held to be taxable as bricks. Additionally, the case of Commissioner of Sales Tax v. Ram Babu and Company was cited, where a material (Tinopal) was classified based on its commercial use rather than its chemical composition.

3. Determination of the Appropriate Tax Entry for "Brick Tiles" Based on Their Commercial Use and Contractual Specifications
The court noted that the contract specified bricks and brick tiles separately, indicating that they were treated as distinct items. The court emphasized that Entry No. 96 ("tiles of all kinds") did not exclude any category of tiles, including those resembling bricks. Therefore, the court concluded that the brick tiles manufactured by the assessee fell under Entry No. 96 and not Entry No. 13.

4. Application of the Principle that the More Beneficial Tax Notification Should Be Applied if an Item Falls Under Multiple Notifications
The assessee argued that if the material sold falls under both notifications, the one with the lower tax rate should be applied. This principle was supported by the case of Shakti Lace Factory v. Commissioner, Sales Tax, where it was held that if an item is covered under two notifications, the one more beneficial to the assessee should be applied. However, the court found that Entry No. 96 and Entry No. 13 were distinct and did not overlap in this case. Therefore, the principle did not apply here.

Conclusion
The court allowed the revision, holding that the assessee's sale of brick tiles should be taxed under Entry No. 96 as "tiles of all kinds" rather than Entry No. 13 as "bricks." The papers were sent to the Sales Tax Tribunal for appropriate orders in accordance with section 11(8) of the Act. The Commissioner was entitled to costs assessed at Rs. 200.