2007 (10) TMI 597 - HC - VAT and Sales Tax

Whether the items manufactured by the applicant are covered under the entry all types of passive components ? Held that - Though the Tribunal has accepted that the items manufactured by the applicant are electronic goods but without considering the submissions of the applicant that the items are covered under the entry all types of passive components under clause (i), the Tribunal has held that they are covered under the entry all other electronic goods under clause (iii). The clause (iii) is a residuary entry and only those electronic goods fall under this entry which do not fall under the items mentioned in clause (i). Therefore, the Tribunal should have first considered whether the items manufactured by the applicant are covered under the items mentioned in clause (i) of the entry or not. Since the Tribunal has not considered this aspect of the matter, the matter is remanded back to the Tribunal to consider whether the items manufactured by the applicant are covered under the entry all types of passive components which is one of the items of electronic components mentioned in clause (i) of the entry. For the assessment year under the Central Sales Tax Act the Tribunal is directed to consider the Notification No. TT-2-2473/XI-6(1)/86-Act-74/56-Order-95, dated October 10, 1995 issued under section 8(5) of the Central Sales Tax Act and decide the appeal afresh. Appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of tax rates under the U.P. Trade Tax Act and the Central Sales Tax Act for optic-fibre cable accessories.
2. Classification of optic-fibre cable accessories under specific entries in the tax notifications.
3. Consideration of relevant clauses for determining the applicable tax rates.

Analysis:
1. The case involved two revisions under section 11 of the U.P. Trade Tax Act, 1948 and the Central Sales Tax Act, 1956, concerning the assessment year 1999-2000 for optic-fibre cable accessories. The applicant claimed tax rates of 2.5% and 4% under specific notifications, while the assessing authority levied tax at 12% treating the items as telephone parts. Appeals were filed, and the Tribunal remanded the matter to the assessing officer, classifying the items as electronic components liable to tax at 5% and 8%.

2. The applicant argued that the items fell under the entry "all types of passive components" and should be taxed at 2.5%. The Tribunal, however, categorized them under "all other electronic goods" at 5% and 8%. The Tribunal's decision was based on a residuary entry, implying that items not under clause (i) would fall under clause (iii). The Tribunal failed to consider if the items met the criteria of clause (i) before applying clause (iii), leading to a remand for proper classification.

3. The Tribunal's oversight in not evaluating if the items qualified as "all types of passive components" before placing them under "all other electronic goods" necessitated a remand for reevaluation. Additionally, the Tribunal was directed to consider the Central Sales Tax Act notification for electronic goods to determine the applicable tax rates. The revisions were allowed, the Tribunal's order was set aside, and the matter was sent back for a fresh decision based on the observations made, emphasizing the need for an expedited resolution due to the recurring nature of the issue.