2009 (3) TMI 945 - HC - VAT and Sales Tax

Whether, in the facts and circumstances of the case, aluminium foil is covered under the expression sheets and whether the aluminium foil purchased and used as a raw material by the respondent and the manufactured products, i.e., wrapping and packing material for medicines are two different commercial commodities in the common parlance and whether the wrapping and packing material for medicines sold by respondent No. 1 is covered by notification dated November 25, 1994? Held that - The Assessing Authority consistently has taken the aluminium foil to mean aluminium sheet . The aforesaid orders of the Assessing Authority have been accepted by the Revenue without being challenged either before the Appellate Authority or the Tribunal. Those orders have also attained finality. Therefore, it is not possible to permit re-opening of that issue. The aforesaid principles have been laid down by the Supreme Court in the case of Radhasoami Satsang v. Commissioner of Income-tax 1991 (11) TMI 2 - SUPREME Court . The aforesaid judgment has also been affirmed in the case of Municipal Corporation of City of Thane v. Vidyut Mettalics Ltd. 2007 (9) TMI 399 - SUPREME COURT OF INDIA . Therefore, the Tribunal has taken the correct view and the question of law referred to this court is liable to be answered against the Revenue and in favour of the Assessee dealer-respondent. For the reasons afore-mentioned, the question of law is answered against the Revenue and in favour of the dealer-respondent.

Summary

Issues:
1. Interpretation of whether "aluminium foil" falls under the expression "sheets" for taxation purposes.
2. Assessment of whether "aluminium foil" and "aluminium sheet" are distinct marketable commodities.
3. Consideration of whether the revisional authority's assessment of "aluminium foil" as a different commodity is valid.
4. Evaluation of the Tribunal's decision on the classification of "aluminium foil."

Issue 1: Interpretation of "aluminium foil" as "sheets"
The court analyzed whether "aluminium foil" could be considered "aluminium sheet" under the tax notification. The Tribunal relied on definitions from the Random House Unabridged Dictionary, concluding that "aluminium foil" is a thin sheet of non-ferrous metal. The court agreed, referencing a Bombay High Court case supporting this interpretation.

Issue 2: Distinction between "aluminium foil" and "aluminium sheet"
The Revenue argued that "aluminium foil" and "aluminium sheet" are distinct commodities with different end-uses, justifying different tax rates. They cited a Supreme Court case emphasizing differences between foils, sheets, and films. However, the dealer-respondent contended that "aluminium foil" could be considered "aluminium sheet" based on common parlance and dictionary definitions.

Issue 3: Validity of revisional authority's assessment
The revisional authority reclassified "aluminium foil" as a different commodity, leading to a higher tax rate. The court examined whether this reclassification was valid, considering the Assessing Authority's consistent classification and the principle that revisional authorities cannot reverse decisions based on possible alternative views.

Issue 4: Tribunal's classification of "aluminium foil"
The Tribunal upheld the classification of "aluminium foil" as "aluminium sheet" based on past decisions and definitions. The court affirmed the Tribunal's decision, emphasizing the principle that finality of orders and consistency in classification prevent reopening of settled issues.

In conclusion, the court ruled in favor of the dealer-respondent, holding that "aluminium foil" should be considered "aluminium sheet" for tax purposes. The judgment highlighted the importance of consistent classification by authorities and the limitation on revising settled decisions based on alternative interpretations.