2015 (8) TMI 1264 - HC - VAT and Sales Tax

Seeking correct tax rate - Sale of metal polishing soap used abrasively for polishing and smoothing the various metals - Whether to be classified under Entry 67 of Part B of I Schedule to the Act levying 14.5% VAT or under Entry 67-A of I Schedule levying 5% VAT - Held that - in view of the clarification issued by Advance Ruling Committee , the goods are to be classified under Entry 67-A of I Schedule levying 5% VAT. - Decided in favour of petitioner

Summary

Issues:
1. Interpretation of tax rate on sales turnover of Metal Polishing Soap under TNVAT Act, 2006.

Analysis:
The petitioner, a manufacturer of Metal Polishing Soap, challenged the assessment order by the 1st respondent under the TNVAT Act for the year 2014-15, where 14.5% VAT was levied on sales contrary to the petitioner's claim of 5% under Entry 67-A of Part B of I Schedule. The petitioner contended that Metal Polishing Soap falls under the category of abrasive used for polishing metals, classified under Entry 67-A. The petitioner sought the court to quash the order and direct the 1st respondent to consider the correct tax rate as per the relevant entry.

Upon considering the matter, the court noted that a clarification issued by the Advance Ruling Committee on 28.07.2015 confirmed that Metal Polish Soap, when sold as a 'Metal Polishing agent,' is taxable at 5% under Entry 67-A(a) of the TNVAT Act. Relying on this clarification, the court opined that the impugned order levying 14.5% VAT was erroneous and should be quashed.

Consequently, the court set aside the impugned order dated 10.06.2015 and directed the 1st respondent to issue a new order based on the clarification provided by the Advance Ruling Committee within two weeks. The court's decision was in line with the clarification, ensuring the correct tax rate application on the sales turnover of Metal Polishing Soap. The connected miscellaneous petition was closed without costs.