1989 (6) TMI 269 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of pea-gravels u/s Item 29 of the Schedule of taxable goods under the Tripura Sales Tax Act, 1976.
2. Levy of penalty and interest u/s 13 and 25 of the Act.
3. Vires of the second proviso to sub-section (1) of section 20 of the Act.

Summary:

1. Taxability of Pea-Gravels:
The primary issue was whether "pea-gravels" supplied by the petitioner fell within the category of goods described in Item 29 of the Schedule of taxable goods under the Tripura Sales Tax Act, 1976. The petitioner, a registered dealer under the Act, contended that pea-gravels did not fall under any taxable items described in the Schedule. The Superintendent of Taxes assessed pea-gravels as a "sub-product of stone," making it taxable under Item 29. The court applied the common parlance test, trade parlance test, and commonsense rule of interpretation, concluding that pea-gravels are not commonly known as stone or sub-products of stone and are not used in building or road constructions. Therefore, pea-gravels do not fall under Item 29 and are not taxable.

2. Levy of Penalty and Interest:
The Superintendent of Taxes levied a penalty u/s 13 of the Act at the rate of 10% of the tax for the petitioner's failure to furnish the return in time and interest u/s 25 of the Act. The petitioner challenged these levies, but the court's decision on the non-taxability of pea-gravels rendered the penalty and interest moot, as the primary tax assessment itself was quashed.

3. Vires of the Second Proviso to Sub-section (1) of Section 20:
The petitioner initially challenged the vires of the second proviso to sub-section (1) of section 20 of the Act, which restricted the appellate authority's power to issue a stay to only 50% of the tax or penalty. However, this submission was not pressed by the petitioner's counsel during the hearing, as the case could be decided by interpreting Item 29 of the Schedule.

Conclusion:
The court held that pea-gravels are not taxable under Item 29 of the Schedule of taxable goods attached to the Tripura Sales Tax Act, 1976. Consequently, the impugned order of assessment was quashed, and the writ petition was allowed without any order as to costs.