2008 (4) TMI 684 - HC - VAT and Sales Tax

Whether the non-stick cookware is classifiable under entry 5 of the First Schedule to the Kerala General Sales Tax Act, 1963 or whether the item would fall under entry 104 of the First Schedule, which provides for levy of tax on pressure cooker, cook and serveware, casseroles, water filters and similar home appliances not coming under any other entry in this Schedule or in the Fifth Schedule? Held that - Until non-stick items were specifically brought under entry 104, those items were covered under the residuary category similar home appliances referred to in entry 104. In the result, we hold that, non-stick cookware made of aluminium are home appliances and classifiable under entry 104 of the First Schedule to the KGST Act.

Summary

Issues Involved:
1. Classification of 'non-stick cookware' under the Kerala General Sales Tax Act, 1963.
2. Applicability of Entry 5 versus Entry 104 of the First Schedule to the KGST Act.
3. Interpretation of the terms "aluminium household utensils" and "similar home appliances."

Detailed Analysis:

Classification of 'Non-stick Cookware':
The primary issue is whether 'non-stick cookware' should be classified under Entry 5 or Entry 104 of the First Schedule to the Kerala General Sales Tax Act, 1963. Entry 5 pertains to "aluminium household utensils," while Entry 104 covers "pressure cooker, cook-and-serve ware, casseroles, water filters, and similar home appliances not coming under any other entry."

Applicability of Entry 5 versus Entry 104:
The court examined previous conflicting judgments. One Division Bench held that non-stick wares like frying pans and dosa thavas are "aluminium household utensils" under Entry 5. Another Bench concluded that "satilon-coated aluminium products" fall under Entry 104 as "similar home appliances."

Arguments were presented from both sides. The assessee argued that non-stick cookware should be classified under Entry 5 due to their primary material being aluminium. The Revenue contended that the satilon coating alters the product's identity, making it fall under Entry 104.

Interpretation of Terms:
The court analyzed the definitions and common parlance meanings of "household utensils" and "home appliances." It emphasized that for taxation purposes, the predominant use and common understanding of the terms are crucial.

Entry 5 Analysis:
- Entry 5 is limited to utensils made purely of aluminium and aluminium alloys, primarily used in kitchens by people below the poverty line.
- The court noted that the Legislature intended this entry for basic aluminium utensils, not modified or value-added products like non-stick cookware.

Entry 104 Analysis:
- Entry 104 includes home appliances that are not covered under any other entry in the Schedule.
- The term "similar home appliances" was interpreted to include items that are not identical but have a general likeness to those enumerated.
- The court found that non-stick cookware, despite being made of aluminium, is coated with satilon, which changes its classification to a "similar home appliance."

Commercial Parlance Rule:
- The court reiterated that items should be classified based on their common or commercial understanding rather than their scientific or technical definitions.
- Non-stick cookware, due to its satilon coating, is not commonly understood as a basic aluminium household utensil.

Previous Judgments:
- The court overruled the judgment in P. Ratnakaran's case, which classified non-stick cookware under Entry 5, stating that the court did not consider the expression "similar home appliances" in Entry 104.
- It concluded that non-stick cookware should be classified under Entry 104 as they are value-added products and not pure aluminium utensils.

Conclusion:
The court held that "non-stick cookware made of aluminium" are home appliances and should be classified under Entry 104 of the First Schedule to the KGST Act. The revision petitions were to be placed before the Division Bench for appropriate orders.