2009 (3) TMI 954 - HC - VAT and Sales Tax

LPG pressure regulators - whether inseparable from LPG cylinders and as such they are part and parcel of cylinders? Held that - Pressure regulators cannot form part of the utensils to which the notification dated May 25 2006 is applicable. That being so no error of law committed either by the Full Bench of the Commercial Tax Tribunal or by the Additional Commissioner Commercial Tax in holding that LPG pressure regulators are not containers and as such the tax payable on LPG pressure regulators is 12.5 per cent applicable to unclassified items and not four per cent which is applicable to the utensils. Revision dismissed.

Summary

Issues:
Rate of tax applicable on LPG pressure regulators under the Uttaranchal Value Added Tax Act, 2005.

Analysis:
The case involved a dispute regarding the rate of tax applicable on LPG pressure regulators under the Uttaranchal Value Added Tax Act, 2005. The assessee contended that the LPG pressure regulators should be taxed at a rate of four per cent as per a specific notification, while the Additional Commissioner, Commercial Tax held that they should be taxed as an unclassified item at 12.5 per cent. The Full Bench of the Commercial Tax Tribunal upheld the decision of the Additional Commissioner, leading to the appeal before the High Court.

The revisionist argued that LPG pressure regulators are inseparable from LPG cylinders and should be considered part of the cylinders, which are classified as utensils under a specific notification. The definition of "gas cylinders" and "cylinders" provided in the Gas Cylinders Rules, 2004 was highlighted to support this argument. However, the High Court observed that the definitions and rules clearly distinguish between cylinders and pressure regulators, indicating that they are separate items.

The High Court further considered the argument that a LPG connection cannot function without both the cylinder and pressure regulator, but concluded that this does not make the pressure regulators containers or utensils as per the relevant notification. The court emphasized that pressure regulators are equipment used for regulating the flow of gas from a cylinder to a gas stove, not containers themselves. Therefore, the court found no error in the decision of the Commercial Tax Tribunal and the Additional Commissioner to tax LPG pressure regulators at 12.5 per cent as unclassified items, rather than at four per cent applicable to utensils.

In conclusion, the High Court dismissed the revision, affirming the decision to tax LPG pressure regulators at 12.5 per cent. The Stay Application related to the case was also dismissed accordingly.