2007 (7) TMI 669 - HC - VAT and Sales Tax

Summary

Issues involved: Determination of tax rate for the commodity 'Swad', levy of interest on additional tax, consideration of additional evidence by the Tax Board.

Tax rate for 'Swad': The Rajasthan Sales Tax Tribunal classified 'Swad' as a confectionery item, subject to a general tax rate of 10% instead of the concessional rate of 6% for Ayurvedic medicines. The Tribunal exempted interest on the additional tax due to the assessee's genuine contention. The High Court referred to a similar case from the Madhya Pradesh High Court where 'SWAD' tablets were considered Ayurvedic medicine. The Hon'ble Supreme Court allowed the assessee to present evidence supporting 'Swad' as a medicine, leading to a remand for further consideration.

Levy of interest: The Tribunal did not impose interest on the additional tax, acknowledging the assessee's reasonable argument against the general tax rate for 'Swad'. The Revenue challenged this decision through a revision petition, seeking to levy interest. The High Court upheld the Tribunal's decision to waive interest due to the genuine dispute regarding the tax classification of 'Swad'.

Consideration of additional evidence: The Hon'ble Supreme Court permitted the assessee to submit additional evidence demonstrating that 'Swad' is perceived as a medicine, drug, or pharmaceutical preparation in the market. Following the production of additional evidence, the matter was transferred back to the High Court for review. The High Court directed the Tax Board to reconsider the case, taking into account the new evidence provided by the assessee, emphasizing a swift resolution due to the case's age dating back to the assessment year 1986-87.