2012 (8) TMI 873 - HC - VAT and Sales Tax

Taxability of PVC granules and PVC resins by treating the same as being covered by entry 51 of the Schedule to the Assam Entry Tax Act, 2008, i.e., chemicals - Held that - Whether the expression chemicals will include PVC granules and PVC resin is primarily a question of fact, without expressing any opinion on merits, on the contention raised on behalf of the petitioners, we consider it appropriate to direct that the said question may be gone into by the concerned authority in appropriate proceedings, independently of the view of the Commissioner. Since in some cases remedy of appeal/revision is available, the petitioners will be at liberty to take their remedies accordingly. It is made clear that if limitation for filing an appeal/revision has expired, the petitioners will be allowed to file such appeal or revision within one month from today. We are informed that during the pendency of these petitions, notification dated July 11, 2011, has been issued by the State of Assam exempting entry tax on entry of PVC resins, LLDPE and PVC granules for use as raw materials in manufacture of plastic items for the period from February 28, 2005 to December 8, 2009. We leave it open to the concerned petitioners to claim the benefit of the said notification for the period in question in appropriate proceedings.

Summary

Issues:
Quashing of orders under Assam Value Added Tax Act regarding taxability of PVC granules and PVC resins.

Analysis:
The petitions sought to quash orders issued by the Commissioner of Taxes, Assam, Guwahati under the Assam Value Added Tax Act, 2003, regarding the taxability of PVC granules and PVC resins as "chemicals" under the Assam Entry Tax Act, 2008. The petitioners contended that the items imported by them did not fall under the category of "chemicals" as per the common parlance test or the user test applied for interpreting fiscal statutes. The Commissioner, however, held that PVC granules and PVC resins were indeed covered by the expression "chemicals" based on their processing and usage in further manufacturing processes.

The petitioners argued that the expression "chemical" should be interpreted based on the Assam Value Added Tax Act, 2003, but the court disagreed, stating that the interpretation of entries in the Schedule should follow established principles and not necessarily rely on definitions within the Act. Additionally, the petitioners pointed out that plastic material was not considered "chemicals" under the Central Excise Tariff Act, 1985, but the court held that different taxing statutes could have varying classifications for goods, and past classifications were not binding for the present statute.

Furthermore, the petitioners contended that PVC granules and PVC resins should not be classified as "chemicals" based on the common parlance test and the user test, citing judgments that emphasized distinctions between materials used in production and the final products. The court acknowledged that these principles were not considered in the impugned order and directed the concerned authority to independently examine whether PVC granules and PVC resins should be classified as "chemicals." The court granted the petitioners the opportunity to appeal or seek revision if applicable.

Moreover, the court noted that an exemption notification had been issued by the State of Assam during the pendency of the petitions, allowing the entry of PVC resins, LLDPE, and PVC granules as raw materials without entry tax for a specific period. The petitioners were permitted to claim the benefit of this notification in relevant proceedings. Ultimately, the writ petitions were disposed of accordingly, with the direction for further examination of the classification of PVC granules and PVC resins.