1995 (9) TMI 343 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the order imposing tax on dhoop and agarbatti at 10%.
2. Interpretation of the term "perfumery" in the context of tax imposition.
3. Assessment of dhoop and agarbatti under the Punjab General Sales Tax Act.

Detailed Analysis:
The petitioner filed a petition seeking to quash an order imposing a 10% tax on dhoop and agarbatti. The petitioner contended that these items should not be taxed at this rate based on a previous court order and the wording of the relevant schedule. The respondent authorities justified the tax imposition by arguing that the term "perfumery" includes dhoop and agarbatti, citing a Supreme Court decision. The original assessment categorized dhoop and agarbatti as luxury goods, but a prior court ruling had determined they were not luxury goods and should be taxed at a lower rate.

The Punjab General Sales Tax Ordinance of 1975 deleted the term "luxury" from the relevant sections and schedules, with retrospective effect. Subsequently, an amendment was made to the schedule explicitly including "perfumery" in the taxable category, which now covered dhoop and agarbatti. The term "perfume" had been previously interpreted by the Supreme Court to encompass substances emitting agreeable odors, which included dhoop and agarbatti. The court found that the Assessing Authority had lawfully imposed the 10% tax on dhoop and agarbatti for the relevant assessment year.

Ultimately, the court dismissed the writ petition, upholding the tax imposition on dhoop and agarbatti. However, due to a prior stay on tax recovery, the respondents were prohibited from collecting the tax along with interest from the petitioner starting from the assessment order date.