2008 (8) TMI 831 - HC - VAT and Sales Tax

Whether looking glass is taxable as unclassified item under the U.P. Trade Tax Act? Held that - Glass mirror is taxable as toilet requisite. The learned counsel for the dealer could not show anything to the contrary. It may be added here that toilet requisites are also taxable at 15 per cent, the rate which was levied by the assessing officer on the turnover of imported glass mirror. Thus the authorities below were not justified in taxing the glass-mirror as unclassified item. It is also held that glass mirror is taxable as toilet requisite. The order of the Tribunal is therefore, set aside.

Summary

Issues:
1. Classification of looking glass under U.P. Trade Tax Act as glassware or unclassified item.
2. Whether looking glass can be taxed as toilet requisite.

Analysis:
1. The dispute revolves around the classification of looking glass under the U.P. Trade Tax Act. The Department levied trade tax on looking glass at 15%, treating it as imported mirror glass sheet falling under the entry for glassware. However, the dealer contended that looking glass should be taxed as an unclassified item at 10%. Both the First Appellate Authority and the Tribunal agreed with the dealer's argument, citing relevant legal precedents such as Hindustan Safety Glass Works and Atul Glass Industries. The key question raised by the Department was whether looking glass should be taxed as an unclassified item or as glassware/toilet requisite. The Tribunal's decision was based on the understanding that the fundamental character of a glass mirror lies in its reflective function, making it distinct from regular glassware. The Tribunal's decision to classify looking glass as an unclassified item was overturned, and it was held that looking glass should be taxed as a toilet requisite at 15%.

2. The second issue pertains to whether looking glass can be taxed as a toilet requisite. The Department argued that even if looking glass is not considered glassware, it should be taxed as a toilet requisite based on a previous Division Bench judgment. The dealer's counsel opposed this argument, stating that the original dispute was regarding the classification of looking glass as glassware or an unclassified item. The Tribunal's rejection of the Department's plea to tax looking glass as a toilet requisite was found to be justified. The High Court upheld the Tribunal's decision, emphasizing that looking glass should indeed be taxed as a toilet requisite at the prescribed rate of 15%. The legal analysis considered various precedents and the manufacturing process of glass mirrors to arrive at this conclusion.

In conclusion, the High Court ruled in favor of the Department, setting aside the Tribunal's order and confirming that looking glass should be classified and taxed as a toilet requisite under the U.P. Trade Tax Act. The judgment provides a detailed analysis of the classification criteria, legal precedents, and manufacturing process of glass mirrors to support this decision.