2010 (12) TMI 1107 - HC - VAT and Sales Tax

Whether or not the products of cello company, i.e., serving tray, flask, stainless steel tiffin with plastic body, water jug and hotpot (casserole) would fall within the meaning of utensils under entry No. 13 of Part II of Schedule II of the Chhattisgarh Value Added Tax Act, 2005? Held that - hermal flask/vacuum flask is known in common parlance as article used for storing beverages like coffee, tea, milk, etc., at a particular temperature which is frequently and commonly used in the household. The hotpot (casserole) is also used for keeping the vegetables, chapatis, rice and other food-stuff hot to be delectable. Serving tray is used regularly for serving dishes and other food-stuff. Water jug and stainless steel tiffin with plastic body, are also frequently used in kitchen and for domestic purposes. For the reasons mentioned hereinabove, there is no dispute that the above stated articles are utensils and are used regularly for domestic purposes. Thus the articles in question are taxable only at the rate of four per cent. Accordingly, the authorities are directed to reassess and pass appropriate order in accordance with law. Appeal allowed.

Summary

Issues:
Interpretation of the term "utensils" under the Chhattisgarh Value Added Tax Act, 2005 for products of a company.

Detailed Analysis:

1. Issue of Interpretation of "Utensils":
The main issue in this case revolves around determining whether the products of a company, including serving tray, flask, stainless steel tiffin with a plastic body, water jug, and hotpot (casserole), fall under the definition of "utensils" as per entry No. 13 of Part II of Schedule II of the Chhattisgarh Value Added Tax Act, 2005. The petitioner argued that since these products are not made of precious metals and are commonly used in households, they should be taxed at a lower rate of four percent, as specified under entry 13. On the other hand, the State contended that certain items like the hotpot (casserole) do not qualify as kitchen utensils due to their composition and lack of specific mention in the Schedule.

2. Legal Interpretation of "Utensils":
The court delved into the legal interpretation of the term "utensils" through references to various dictionaries and legal precedents. Definitions from sources like Stroud's Judicial Dictionary, Chambers 21st Century Dictionary, and The Oxford English Dictionary were cited to establish that utensils encompass items useful for kitchen and domestic purposes. The court emphasized that the term should be understood in ordinary parlance and in the context of the law in force, leading to the conclusion that the products in question indeed qualify as utensils.

3. Precedent and Case Law Analysis:
The judgment referred to a previous ruling by the High Court of Karnataka in Stovekraft Pvt. Ltd. v. State of Karnataka, where similar items like stainless steel LPG stoves and vacuum flasks were considered utensils for taxation purposes. Drawing parallels, the court held that the products under consideration should also be taxed at the lower rate of four percent, in line with the precedent set by the Karnataka High Court.

4. Final Decision and Order:
After a comprehensive analysis of definitions, precedents, and the specific provisions of the Chhattisgarh Value Added Tax Act, 2005, the court concluded that the products in question indeed fall under the category of utensils as per entry 13 of the Act. Therefore, the court allowed the petitions, directing the authorities to reassess and apply the lower tax rate of four percent to the products. The judgment highlighted the importance of interpreting tax laws in alignment with common understanding and usage, ensuring a fair and consistent application of tax rates.

5. Conclusion:
In a detailed and meticulous analysis, the court clarified the interpretation of "utensils" under the tax law, emphasizing the broad scope of the term and its application to everyday household items. By relying on legal definitions, precedents, and common understanding, the judgment provided a clear resolution to the tax treatment of the products in question, ensuring a fair and just application of tax rates as per the provisions of the Chhattisgarh Value Added Tax Act, 2005.