2006 (7) TMI 672 - HC - VAT and Sales Tax

Summary

Issues:
1. Classification of 'EVA Footwear' for tax purposes.
2. Classification of 'Walkie Chappals' for tax purposes.

Issue 1: Classification of 'EVA Footwear' for tax purposes

The appellant, a footwear manufacturer, sought clarification on the tax liability of 'EVA Footwear' under different schedule entries. The Third Schedule initially classified it as 'Plastic Footwear' at 4% tax rate until 6.6.2005, then under Entry 64 from 7.6.2005. The Authority ruled EVA Footwear to be taxed at 12.5% from 7.6.2005, citing non-compliance with Single Mould requirement. The appellant argued that the Single Mould theory was not applicable as per clear statutory entries. The court agreed, noting the subsequent amendment introducing Single Mould. Thus, the court accepted the appellant's argument, setting the tax rate for EVA Footwear at 4% from 1.4.2005 to 6.6.2005 and as 'Moulded Plastic Footwear' from 7.6.2005.

Issue 2: Classification of 'Walkie Chappals' for tax purposes

The appellant contended that 'Walkie Chappals' should be classified as 'Plastic Footwear' for the period from 1.4.2005 to 6.6.2005 due to the material used in manufacturing. The Authority had classified it differently, leading to the appeal. The court examined the material composition, noting the use of Man-made Fabric with plastic coating for the upper portion. Based on this, the court agreed with the Authority's classification, rejecting the appellant's argument. Consequently, the court dismissed the appellant's contention regarding the classification of 'Walkie Chappals'.

In conclusion, the High Court partially allowed the appeal, setting the tax rate for 'Walkie Chappals' as per the Authority's classification and adjusting the tax rate for 'EVA Footwear' in line with the statutory entries. The judgment clarified the tax liability of the footwear products based on their composition and the relevant schedule entries, providing a clear interpretation of the law in this context.