2011 (1) TMI 1262 - HC - VAT and Sales Tax

Whether, in the facts and circumstances of the case, clean air equipment (laminar flow clean air equipment) and accessories thereof are electrical appliances under entry 18, Schedule A of the Act or industrial machinery (general goods)? Whether the assessee was liable to pay interest under section 25(5) of the Act ibid. in view of the honourable Supreme Court of India judgment in J.K. Synthetics Ltd. v. Commercial Taxes Officer reported in 1994 (5) TMI 233 - SUPREME COURT ? Held that - There is no dispute that the equipment in question is run with the electrical energy and provides filtered air. No distinction can be made on the basis of domestic purpose or the industrial purpose for use of the article. We, thus, do not find any reason to take a view different from the one taken by the Tribunal. The question is, thus, answered against the assessee and in favour of the Revenue. Now coming to question (ii), it is not disputed on behalf of the State that in view of the Constitution Bench judgment of the honourable Supreme Court in J.K. Synthetics Ltd. v. Commercial Taxes Officer supra the levy of interest was effective from the date of issuance of demand notice and not from the date of filing of return. The said question, thus, stands answered in favour of the assessee and against the Revenue.

Summary

Issues:
1. Classification of goods as electrical appliances or industrial machinery under the Haryana General Sales Tax Act, 1973.
2. Liability of the assessee to pay interest under section 25(5) of the Act based on the judgment in J.K. Synthetics Ltd. v. Commercial Taxes Officer.

Analysis:

*Issue 1: Classification of goods as electrical appliances or industrial machinery*
The case involved a dispute regarding the classification of laminar flow clean air equipment manufactured by the assessee. The Assessing Authority classified the goods as "electrical appliances" attracting a higher rate of tax, while the assessee claimed they were industrial machinery taxed at a lower rate. The Tribunal upheld the classification as electrical appliances based on the dependency of the equipment on electricity for operation. The assessee argued that the test for determining electrical appliances should be based on whether the appliance converts electric energy into another form of energy, citing relevant legal and technical definitions. However, the court agreed with the Tribunal's interpretation, emphasizing that the goods in question could not operate without electricity, thus falling under the category of electrical appliances as per the Act.

*Issue 2: Liability to pay interest under section 25(5) of the Act*
Regarding the liability of the assessee to pay interest under section 25(5) of the Act, the court referred to the judgment in J.K. Synthetics Ltd. v. Commercial Taxes Officer, which clarified that interest is levied from the date of the demand notice, not the filing of the return. The court acknowledged this legal principle and ruled in favor of the assessee, stating that the interest should be calculated from the issuance of the demand notice. Consequently, the court resolved this issue in favor of the assessee and against the Revenue.

In conclusion, the court upheld the classification of the goods as electrical appliances and confirmed the liability of the assessee to pay interest as per the judgment in J.K. Synthetics Ltd. v. Commercial Taxes Officer. The reference was disposed of accordingly, settling the legal disputes raised in the case.