2011 (7) TMI 1071 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to order under Kerala Value Added Tax Act on tax rate for stone crushing unit based on machine size.

Analysis:
The appellant sought to pay tax at a compounded rate for their stone crushing unit based on machine size. The rates for different machine sizes were specified in section 8(b) of the Act. The appellant's machine dimensions were 55cm in length and 22.5cm in width. The Intelligence Wing of the Department contended that the machine fell under a higher tax bracket, resulting in additional tax demand. The appellant argued that since the width was less than the specified width in the relevant clause, the machine should not fall under that category. However, the court observed that the length of the machine was the crucial factor determining tax liability, as it directly related to the volume and quantity of production. The tax rates were directly proportional to the machine's capacity, calculated by multiplying the length with the width. Despite minor width variation, the appellant's machine was deemed to fall under the higher tax bracket as per the specified length criteria.

The court upheld the clarification issued by the authority, stating that the machine's length was the determinative feature for tax classification. The judgment emphasized that tax liability was linked to the volume and quantity of goods produced by the machines, with the length playing a significant role in this determination. The court concluded that the minor width difference in the appellant's machine did not exclude it from the higher tax bracket specified under clause (iii) of the Act. Consequently, the appeal challenging the order under the Kerala Value Added Tax Act was dismissed.