2000 (7) TMI 945 - HC - VAT and Sales Tax

Summary

Issues: Classification of mosquito repellent mats as insecticides for sales tax purposes

Analysis:
1. The main issue in this judgment is whether mosquito repellent mats manufactured by the petitioners can be classified as insecticides for the purpose of levying sales tax under the Kerala General Sales Tax Act, 1963. The mats in question are made of paper pulp impregnated with the insecticide chemical allethrin, which is volatile and fatal to mosquitoes. The classification of these mats changed over time, with a specific entry introduced on April 1, 1991, under "Mosquito repellent." The dispute arises regarding the classification and tax applicability before this specific entry was introduced.

2. Before April 1, 1991, there was no specific classification for mosquito repellent mats. The petitioners argued that the mats should be classified under entry No. 87 or later rearranged as entry 139, which pertains to "Pesticides, fungicides, and plant protection chemicals." However, the department contended that the mats were not insecticides but merely emitted a pleasant smell for repelling mosquitoes, being harmless to humans and pets. The department argued for a general tax liability instead of a specific insecticide classification.

3. The judgment referred to a decision by the Madras High Court and the Sales Tax Appellate Tribunal, West Bengal, which classified similar products as insecticides. The petitioners highlighted that they held a license to manufacture insecticides under the Insecticides Act, and the allethrin in the mats was fatal to mosquitoes. The court agreed that the mats could be classified as insecticides based on their composition and effects on mosquitoes until the specific classification was introduced in 1991 and 1992.

4. The Government Pleader cited a Supreme Court decision where a specific mention of mosquito repellent mats in the Schedule precluded their classification as insecticides. However, the court noted that mats containing allethrin had insecticidal qualities and capabilities. Despite the specific mention in the Schedule, the court held that the mats could be classified under entries 87 and 139 as pesticides before the specific classification took effect.

5. Ultimately, the court allowed the petition, holding that the mosquito repellent mats could be classified as pesticides under entries 87 and 139 before the specific classification as a mosquito repellent from April 1, 1991, onwards. The authorities were directed to conclude proceedings based on this classification, dismissing a related order in the process.