1992 (3) TMI 325 - AT - VAT and Sales Tax

Summary

Issues Involved:

1. Validity of the seizure of documents on April 19, 1991.
2. Classification of the mosquito mat as an insecticide under the West Bengal Sales Tax Act, 1954.

Detailed Analysis:

1. Validity of the Seizure of Documents on April 19, 1991:

The applicant challenged the seizure of various documents by the Inspector of Commercial Taxes on April 19, 1991, under section 14(3) of the Bengal Finance (Sales Tax) Act, 1941. The applicant contended that the conditions precedent for making the seizure did not exist and were not satisfied. The respondents argued that the seizure was valid, as they believed the mat was not an insecticide under the Insecticides Act, 1968, and thus, the sale of the mat would be governed by the Act of 1941 and not by the Act of 1954. They claimed that detailed reasons for the seizure were recorded.

The Tribunal found that the applicant was regularly paying taxes on the sale of mats under the Act of 1954. The applicant was registered under the Act of 1954 and had obtained necessary permits for importing mats into West Bengal. The Tribunal noted that the reasons given for the seizure, such as bringing notified commodities without a permit, applicability of the Act of 1941, and higher tax rate, were not sufficient to justify the seizure. The Tribunal held that there was no "reason to suspect" that the applicant was attempting to evade tax under the Act of 1941, and thus, the seizure was invalid. Consequently, the Tribunal ordered the release of the seized documents to the applicant.

2. Classification of the Mosquito Mat as an Insecticide:

The applicant argued that the mosquito mat, which contains "d-Allethrin 4 per cent," is an insecticide under the Insecticides Act, 1968. The respondents contended that the mat is not an insecticide as it repels mosquitoes rather than killing them, and thus, it should not be classified as an insecticide under the Act of 1954.

The Tribunal examined the definition of "insecticide" under section 3(e) of the Insecticides Act, 1968, and considered the provisions of sections 5, 9, 27, 29, and 38 of the Act. The Tribunal noted that the Insecticides Act regulates the import, manufacture, sale, transport, distribution, and use of insecticides. The Tribunal found that the mat is understood in commercial parlance as an insecticide due to its labeling as "mosquito mat insecticide" and its content of "d-Allethrin 4 per cent."

The Tribunal rejected the respondents' argument that the Insecticides Act should not be considered for taxation purposes under the Act of 1954. The Tribunal held that the meaning of "insecticide" in commercial parlance should be the determining factor, and since the mat is treated as an insecticide in trade circles, it should be governed by the Act of 1954. The Tribunal directed the respondents to treat the mat as a notified commodity under the Act of 1954 in terms of Notification No. 1259-F.T. dated March 29, 1986.

Conclusion:

The application was allowed. The Tribunal ordered the release of the seized documents to the applicant and directed the respondents to treat the mosquito mat as a notified commodity under the West Bengal Sales Tax Act, 1954. The Tribunal made no order as to costs.