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2006 (2) TMI 603 - HC - VAT and Sales Tax


Issues:
Interpretation of the term "utensils" under the Karnataka Value Added Tax Act, 2003 for tax rate determination on stainless steel LPG stove, kerosene wick stove, and stainless steel vacuum flask.

Analysis:
The appellant, a registered dealer under the KVAT Act, challenged the Authority's order levying a 12.5% tax rate on stainless steel LPG stove, kerosene wick stove, and stainless steel vacuum flask. The appellant believed these items fell under the definition of utensils and should be taxed at 4%. The Third Schedule of the Act previously included aluminum utensils but was amended to include "all utensils including pressure cookers and pans." The appellant argued that stoves should be considered utensils as they are kitchen appliances. The Authority, however, held that stoves are not utensils as they are appliances for kitchen use, not tools or instruments. The court analyzed various dictionary definitions of "utensil" and concluded that stoves and flasks are utensils due to their common utility in households, falling within the definition of entry No. 5 of the Third Schedule.

The court emphasized the legislative intent behind the tax rates, noting that utensils are commonly used items in households. It highlighted the complementary nature of stoves and vessels in a kitchen, emphasizing their common use. The court also referred to previous judgments emphasizing that taxing statutes should be understood in ordinary parlance and commercial usage. It rejected the Authority's narrow interpretation and ruled that stoves and flasks are utensils, taxable at 4%, not 12.5%. The court modified the Authority's order, allowing the appeal without costs.

 

 

 

 

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