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2013 (1) TMI 712 - HC - VAT and Sales TaxInterpretation of chemistry of POP and gypsum - tax imposed at 12.5 per cent over POP - Whether the tax should be levied over POP as per entry 16 of Schedule A or as per entries of Schedule B appendix to the Punjab Value Added Tax Act 2005? Held that - Find no merit in the present appeal. The appellant has brought POP within the State of Punjab. Though the chemical properties may be similar but the fact remains that the uses of gypsum and POP are different. Entry 16 of Schedule A exempts fertilizers from tax. The definition is inclusive which includes gypsum as a fertilizer. Entry 16 exempts fertilizer from tax whereas POP cannot even remotely be used as a fertilizer. Therefore POP does not fall within entry 16 of Schedule A. Thus do not find any illegality in the findings recorded by the Excise and Taxation Commissioner in the order dated August 27 2008 holding that POP is not gypsum. The alternative argument of the appellant that POP is a sulphate falling at Sr. No. 71 of entry 58 of Schedule B attracting tax at four per cent is not acceptable as Entry 58 of Schedule B pertains to industrial inputs and packing material. POP is not an input for industry nor for packing material therefore it will not fall within entry 58 of Schedule B attracting rate of tax at four per cent. Once the POP does not fall within entry 16 of Schedule A or any of the items of list appended to entry 58 of Schedule B the same is taxable as per Schedule F of the Act. Appeal dismissed.
Issues:
1. Interpretation of tax liability on imported plaster of paris (POP) under Punjab Value Added Tax Act, 2005. Analysis: The appellant imported POP from outside Punjab for sale within the state, claiming it as exempt from tax under entry 16 of Schedule A of the Act. The Excise and Taxation Commissioner rejected this claim, stating that gypsum and POP have different uses, with gypsum being tax-exempt only when used as a fertilizer. The VAT Tribunal remanded the case to determine the tax rate, leading to a finding that POP is a building material attracting 12.5% tax. The appellant argued that POP is a tax-free product under entry 16 or falls under industrial inputs in Schedule B, attracting 4% tax. The court held that while the chemical properties of gypsum and POP may be similar, their uses differ. Entry 16 of Schedule A exempts fertilizers from tax, including gypsum, but POP cannot be used as a fertilizer, thus not falling under this entry. The Excise and Taxation Commissioner's decision that POP is not gypsum was upheld. The alternative argument that POP is a sulphate under Schedule B was rejected as POP is not an industrial input or packing material, leading to taxation under Schedule F at 12.5%. In conclusion, the court found no merit in the appeal, dismissing it as no substantial question of law arose. The judgment affirmed the tax liability on POP as per Schedule F of the Punjab Value Added Tax Act, 2005.
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