2013 (3) TMI 587 - HC - VAT and Sales Tax

PVC resin or HDPE resin - whether falls within the purview of chemical or chemical products? - Held that - In this case it is not in dispute that no expert opinion was obtained by the Department before deciding the question involved in the matter and the authority merely on the basis of their own interpretation has determined that the aforesaid both the commodities are chemical products. Before arriving at such a finding the authority ought to have obtained an expert opinion in this regard. In view of the aforesaid we set aside the impugned order holding that the PVC resin and HDPE resin are chemical products with a direction to the Commissioner Commercial Tax Madhya Pradesh Indore to re-determine the question after obtaining an opinion of departmental expert if any or of independent expert in the subject

Summary

Issues:
1. Classification of PVC resin and HDPE resin as chemical or chemical products.

Analysis:
The High Court of Madhya Pradesh heard three cases involving the classification of PVC resin and HDPE resin as either chemicals or chemical products. The Commissioner of Commercial Tax, Madhya Pradesh, had previously classified them as chemical products without seeking any expert opinion. The respondents argued that these resins should be considered as plastic goods based on their chemical properties and the classification under the Central Excise Tariff Act, 1985. However, the Court noted that expert opinions were crucial in determining such classifications, as highlighted in various judgments, including Commissioner, Sales Tax, U.P. v. Bharat Bone Mill. The Court emphasized the importance of expert opinions and remanded the matter to the Commissioner, Commercial Tax, directing them to seek expert opinions before making a final determination.

The respondents' arguments were based on technical distinctions between chemicals and chemical products, emphasizing the need for specific chemical compositions and origins. They cited reports and classifications from organizations to support their stance that PVC and HDPE resins should be considered as chemical products rather than chemicals. However, the Court found that these arguments lacked expert opinions to substantiate the classification. The Court referred to previous judgments that stressed the significance of expert opinions in such matters and highlighted the need for a proper expert assessment before making a conclusive decision.

The Court set aside the previous order classifying PVC resin and HDPE resin as chemical products and instructed the Commissioner, Commercial Tax, to re-examine the issue after obtaining expert opinions. The Court specified that the Commissioner should seek opinions from departmental or independent experts to ensure a well-informed decision. Parties were directed to appear before the Commissioner for further proceedings, emphasizing the importance of obtaining expert opinions in resolving the classification issue. The Court concluded by stating that no costs would be awarded in this case, considering the circumstances and the need for expert assessments to determine the classification of PVC and HDPE resins accurately.