2009 (12) TMI 908 - HC - VAT and Sales Tax

Summary

Issues involved: Determination of tax rate for stainless steel fan hooks under different entries of the Kerala Value Added Tax Act.

The judgment addresses the issue of whether stainless steel fan hooks made by the appellant attract tax at 12.5 per cent under entry 103 of Notification SRO No. 82/006 or fall under subentry (21) or (22) of entry 43 of the Third Schedule to the Kerala Value Added Tax Act. The appellant argued that fan hooks are not specifically covered under the clarification issued by the Commissioner, which mentioned hooks and eyes as taxable at 12.5 per cent. The appellant contended that fan hooks are simple products made by bending stainless steel rods, falling under sub-entries (21) and (22) of entry 43. The court directed the Commissioner to clarify the tax rate on stainless steel fan hooks within one month of receiving the application from the appellant, and until then, the excess tax assessed should not be recovered for two months.

The court considered the clarification issued by the Commissioner regarding the tax rate on hooks and eyes, which are attachments for windows, and found that fan hooks were not explicitly mentioned in the clarification. The appellant argued that fan hooks are essentially stainless steel rods cut to size and bent, constituting a simple manufacturing process covered under sub-entries (21) and (22) of entry 43. Since stainless steel fan hooks were not specifically listed in the notification except under the residuary entry of entry 103, the court directed the Commissioner to provide clarification on the tax rate for fan hooks upon application by the appellant. The court instructed the assessing officer to adjust the tax rate based on the Commissioner's clarification and to refrain from recovering any excess tax for two months.

In conclusion, the judgment focused on the interpretation of the relevant entries in the Kerala Value Added Tax Act to determine the appropriate tax rate for stainless steel fan hooks manufactured by the appellant. The court emphasized the need for clarification from the Commissioner on the tax treatment of fan hooks and instructed the assessing officer to await the clarification before making any adjustments to the tax rate applied to the appellant.