1999 (1) TMI 512 - HC - VAT and Sales Tax

Summary

Issues: Classification of water methanol mixture for taxation under the U.P. Sales Tax Act, levy of interest.

Classification of water methanol mixture:
The judgment deals with two revision petitions challenging a common order passed by the Sales Tax Tribunal regarding the classification of a commodity known as "water methanol mixture." The dispute revolves around whether this product should be classified as methyl alcohol, as contended by the tax department, or as an unclassified item, as argued by the assessee. The product, a mixture of water and methanol used as fuel for boosting aircraft engines, was produced by a special technology. The Court had previously ruled that the water methanol mixture is not methyl alcohol but an unclassified item, citing judgments from the Bombay High Court and the Karnataka High Court supporting this view. The Court also noted that there was no contrary authority or opinion. An affidavit submitted by the tax department claiming that the mixture is methyl alcohol was found to contain a typographical error, further supporting the assessee's position. Consequently, the Court held that the Tribunal's decision to classify the product as methyl alcohol was erroneous, and the product should be taxed as an unclassified item.

Levy of interest:
The second issue raised in the revision petitions pertains to the levy of interest. The counsel for the revisionist clarified that they do not contest the imposition of interest on any amount due after the judgment. As a result, the Court allowed the revision petitions, set aside the Tribunal's order on the classification of the water methanol mixture, and directed the Tribunal to reclassify the product as unclassified goods based on the assessee's admission. The Tribunal was instructed to proceed with the assessment in accordance with section 11(8) of the U.P. Trade Tax Act, 1948.