2011 (6) TMI 706 - AT - VAT and Sales Tax

Summary

Issues:
Interpretation of the correct tax entry for vacuum cleaners, sweeping machines, etc. under the West Bengal Value Added Tax Act, 2003. Justification of interest and demand notice issued by the Revenue for unpaid tax.

Issue 1: Tax Entry Interpretation
The petitioner contended that the disputed items fell under item (xxviii) of entry 54B in Part I of Schedule C of the VAT Act, making them taxable at four per cent. The assessing authority, however, taxed the items at 12.5 per cent under the residuary entry of Schedule CA. The petitioner argued that the disputed items were machinery used for cleaning, falling under the broad definition of machinery. Citing various case references, the petitioner emphasized that similar items had been classified as machinery by competent courts. The Tribunal agreed with the petitioner, ruling that the disputed items were covered under item (xxviii) of entry 54B and were taxable at four per cent, precluding the need to invoke the residuary entry.

Issue 2: Interest and Demand Notice
The Revenue issued a demand notice for unpaid tax, including interest under section 33 of the VAT Act. The petitioner argued that interest was unwarranted as they had paid tax at the rate deemed appropriate in their returns. The Tribunal concurred, stating that since the petitioner had paid tax at four per cent as per their returns, there was no basis for levying interest under section 33. The determination of interest and demand notice were deemed unauthorized and unjustified.

Conclusion
The Tribunal ruled in favor of the petitioner, holding that the disputed items were correctly classified under item (xxviii) of entry 54B and were taxable at four per cent. The interest levied by the Revenue was deemed unnecessary as the petitioner had paid tax according to their returns. The application succeeded, with no costs awarded. The judgment was delivered by Pranab Kumar Deb, Chairman, and concurred by Sabyasachi Roy, Technical Member.