2012 (1) TMI 147 - HC - VAT and Sales Tax

Block assessment - levy tax at 13 per cent on the sale of the items in question - restricting the meaning of utensils to the items used in the kitchen - Held that - We are of the opinion that in common parlance utensils mean items of daily household use generally used for preparing, serving or keeping food or beverages. The Commissioner, by the impugned order, has taken the view that only the items which are used in the kitchen are covered within the meaning of utensils. The said interpretation of the Commissioner is not correct. It is too narrow an interpretation which cannot be upheld keeping in view the common parlance meaning of utensils. Even otherwise, the view which has been taken by the Commissioner runs counter to the Division Bench judgment of this court in the matter of Yadav Metal Industries v. Commissioner of Sales Tax, M.P. reported in 1979 (12) TMI 137 - MADHYA PRADESH HIGH COURT . Thus, the impugned order passed by the Commissioner under section 70 of the Act restricting the meaning of utensils to the items used in the kitchen cannot be sustained and is hereby set aside. The matter is remanded back to the Commissioner for deciding the matter afresh

Summary

Issues:
1. Correctness of the order dated August 5, 2010 passed by the Commissioner under section 70 of the Madhya Pradesh VAT Act, 2002.
2. Determination of the rate of tax on various items by the Commissioner.
3. Interpretation of the term "utensils" under the Act.

Analysis:

Issue 1: Correctness of the Commissioner's Order
The petitioner challenged the order dated August 5, 2010, passed by the Commissioner under section 70 of the Madhya Pradesh VAT Act, 2002. The Commissioner had determined the tax rates for the items sold by the petitioner, concluding that only water jugs fell under the category of utensils taxable at five per cent, while other items were taxable at 13 per cent. The petitioner contended that the Commissioner's interpretation was erroneous, as the other items should also be considered utensils and taxed at four or five per cent.

Issue 2: Determination of Tax Rates
The petitioner, engaged in the sale of various items, sought the Commissioner's determination of tax rates on different products. The Commissioner, in the impugned order, categorized the items differently for taxation purposes based on specific entries in the Act. The petitioner disagreed with this categorization and argued for a broader interpretation of the term "utensils" to include a wider range of products, as opposed to the limited interpretation provided by the Commissioner.

Issue 3: Interpretation of the Term "Utensils"
The main contention revolved around the interpretation of the term "utensils" under the Act. The Commissioner's order restricted the definition of utensils to items specifically used in the kitchen, leading to a higher tax rate for certain products. The petitioner argued for a broader understanding of utensils, citing dictionary definitions and previous court judgments that supported a more inclusive interpretation. The court, after considering various definitions and legal precedents, concluded that utensils encompass items of daily household use for preparing, serving, or storing food and beverages. The court held that the Commissioner's narrow interpretation was incorrect and remanded the matter for reconsideration in line with the broader understanding of utensils.

In conclusion, the High Court set aside the Commissioner's order and remanded the case for a fresh determination of the tax rates on the items sold by the petitioner, emphasizing a broader interpretation of the term "utensils" in accordance with common parlance and legal principles.