1996 (12) TMI 378 - AT - VAT and Sales Tax

Summary

Issues:
1. Challenge to imposition of tax on sale of mineral water for specific assessment years.
2. Interpretation of the term "aerated water" in relation to taxation.
3. Exemption of mineral water from taxation under relevant provisions.

Analysis:
The judgment pertains to two applications challenging the imposition of tax on the sale of mineral water for specific assessment years. The Tribunal considered whether mineral water falls under the category of aerated water for tax purposes. The applicant argued that mineral water is not aerated water and should be exempt from taxation. The Tribunal analyzed the relevant provisions and notifications to determine the taxability of mineral water.

The Tribunal noted that the Additional Commissioner had previously held that mineral water is aerated water and thus taxable. However, the applicant provided evidence that mineral water is not aerated, as it undergoes a specific process involving bleaching powder and activated charcoal, without the addition of gases. The Tribunal found that mineral water is distinct from aerated water and should be exempt from taxation.

The Tribunal referred to a notification exempting water excluding distilled, mineral, or aerated waters from taxation, clarifying that mineral water is not the same as aerated water. The notification made it clear that mineral water is not subject to tax. The Tribunal also considered the Chambers Dictionary definition of "aerated," which supports the argument that mineral water is not aerated water.

The Tribunal concluded that mineral water is not taxable until September 30, 1995, based on the notification and the distinct nature of mineral water from aerated water. Therefore, the show cause notice and assessment order imposing tax on the sale of mineral water were quashed. The applications were allowed, with no costs imposed on either party.

In summary, the Tribunal ruled in favor of the applicant, holding that mineral water is not subject to taxation as it is not considered aerated water under the relevant provisions. The judgment provides clarity on the taxability of mineral water and emphasizes the distinction between mineral water and aerated water for taxation purposes.