2012 (8) TMI 949 - HC - VAT and Sales Tax

Classification of goods - Bitumen Emulsion - Whether, the Bitumen and Bitumen Emulsion are one and the same commodity for the purposes of interpretation of Entry No. 22 Schedule II Part A of the U.P. Value Added Tax Act, 2008 as was originally enacted i.e. upto enforcement of notification No. 2758 dated 29.9.2008? Held that - Bitumen in its emulsified form also remains Bitumen - learned Standing Counsel has not able to establish that any new commodity emerges from the mixing of solubles with Bitumen in order to give it a new commercial identity or use. Revision allowed - decided in favor of assessee.

Summary

Issues:
Interpretation of Entry No. 22 Schedule II Part A of the U.P. Value Added Tax Act, 2008 regarding classification of Bitumen and Bitumen Emulsion.

Analysis:
The case involved a dispute over the classification of "Bitumen Emulsion" under the U.P. Value Added Tax Act, 2008. The petitioner, engaged in manufacturing and trading Bitumen Emulsion, argued that it should be classified under the same provision as Bitumen, which is taxable at 4%. However, the Commissioner of Commercial Tax classified Bitumen Emulsion as a separate commodity liable to be taxed at 12.5%. The Tribunal, in line with a previous case, initially concluded that Bitumen Emulsion is different from Bitumen.

Upon examination of technical reports from Government Approved Laboratories, it was found that Bitumen and Bitumen Emulsion are essentially the same, with Bitumen Emulsion making Bitumen more usable in its emulsified form. The Tribunal failed to establish any change in identity, character, or use between Bitumen and Bitumen Emulsion. Citing a Supreme Court case, the petitioner argued that unless a new and distinct article emerges from mixing materials with Bitumen, it should still be considered Bitumen. The Apex Court's decision emphasized that Bitumen remains Bitumen even after mixing with other substances.

The learned Standing Counsel failed to demonstrate that a new commercial identity or use emerges from mixing solubles with Bitumen. Consequently, the Tribunal's conclusion was deemed incorrect and set aside. It was established that Bitumen in its emulsified form remains Bitumen, leading to a ruling in favor of the assessee against the Revenue. As a result, the revision was allowed, resolving the issue in favor of the petitioner.