2014 (7) TMI 1089 - HC - VAT and Sales Tax

Classification of goods - Whether Tribunal was justified in holding that the product Cement Bonded Board sold by the respondent fits in to the description similar board of other ligneous material covered by the said schedule entry or it falls in the residual entry - Held that - Original Order as also order on the Reference Application indicates that the Tribunal had in mind such of the products which are timber, bamboo, plywood, hard board, particle board and similar board of wood or other ligneous materials. Even by the common parlance and ordinary meaning of the term as understood in the commercial world is taken, we do not find that the Tribunal has in any way misdirected itself. The interpretation, therefore, is in consonance with the product and goods which have been mentioned in the entry. We are of the opinion that the Tribunal's order and in the given facts and circumstances does not give rise to any substantial question of law and which needs to be determined by this Court. - Decided against Revenue.

Summary

Issues:
Interpretation of Schedule Entry C-II (63) of Bombay Sales Tax Act, 1959 for the product "Cement Bonded Board" - Applicability of tax rate at 8% or 13%.

Analysis:

1. The revenue filed an application seeking the Tribunal to forward a question of law regarding the classification of the product "Cement Bonded Board" under Schedule Entry C-II (63) of the Bombay Sales Tax Act, 1959. The respondent claimed the product fits within the description of similar board of ligneous material under this entry, while the revenue argued it falls under a residual entry (152).

2. The respondent, holding registration certificates under the relevant tax acts, distributed Bision Panel and Laminated Board. Disagreement arose on the tax rate applicable to Laminated Board, with the respondent contending it falls under entry C-II-63 taxed at 8%, and the revenue asserting it falls under entry C-II-152 taxed at 13%. The assessment was initially done at 8% but later revised to 13% by the Joint Commissioner of Sales Tax.

3. The Tribunal, in Appeal No. 28 of 2009, ruled in favor of the respondent, stating that cement bonded particle boards cannot be excluded from the entry C-II (63). The revenue's subsequent Reference Application under section 61 of the Act was also rejected.

4. The Tribunal analyzed the entry in question, emphasizing that the product in question involves wooden particles blended with cement and additives, qualifying as particle boards of ligneous material. The revenue contended that the Tribunal misinterpreted the entry, but the Court found the Tribunal's interpretation aligned with the products listed under the entry.

5. The Court concluded that the Tribunal's decision was in line with the product's characteristics and the ordinary meaning of the terms used in the entry. It was determined that no substantial question of law arose from the Tribunal's decision, dismissing the revenue's application and upholding the Tribunal's view on the classification of the product for tax purposes.