2010 (8) TMI 721 - HC - VAT and Sales Tax

Religious pictures not for use as Calendars - Commissioner, VAT rejected the contention of the respondent that the framed religious pictures dealt with by the respondent fell within the ambit of Entry No. 45 of the First Schedule of the DVAT Act and thus were exempt from tax and held that the pictures in question were General Unclassified Goods thereby attracting tax @ 12.5% u/s 4(1)(e) of the DVAT Act, 2004. Consequently, the determination order was passed against the respondent who went in appeal before the Appellate Tribunal Held that - the frames of the religious pictures in the instant case are nothing more than accessories for the safe-keeping of the religious pictures and do not give any essential characteristics to the goods. Merely because the religious pictures are mounted, it cannot be said that they are no longer religious pictures. Pictures of the divine, whether mounted, framed or otherwise would not change their intrinsic character by virtue of such mounting or framing. Applicability of the principle of ejusdem generis - held that - When Entry No. 45 is absolutely clear and unambiguous, the rule of ejusdem generis can have no application. As held in Siddeshwari Cotton Mills (P) Ltd. (1989 -TMI - 42392 - SUPREME COURT OF INDIA) and Grasim Industries Ltd. (2002 -TMI - 46155 - SUPREME COURT OF INDIA) , the said rule has to be applied with caution and not pushed too far. The rule reflects an attempt to reconcile incompatibility between the specific and general words and applies only where the context of the enactment does not require restricted meaning to be attached to the words of general import. But, as stated above, a note of caution has been sounded by the Apex Court in this regard, namely, that the rule is to be applied with care and caution and in the absence of any indication to the contrary. In the instant case, in our view, the said rule of ejusdem generis is wholly inapplicable, no merit in the appeal. The appeal is accordingly dismissed.

Issues Involved:

1. Classification of religious pictures under Entry No. 45 of the First Schedule of the DVAT Act.
2. Applicability of the principle of ejusdem generis.
3. Interpretation of terms in a taxing statute based on popular and commercial parlance.
4. Impact of mounting or framing on the classification of religious pictures.
5. Relevance of the value of materials used in religious pictures for tax classification.

Detailed Analysis:

1. Classification of Religious Pictures under Entry No. 45:

The respondent, engaged in importing and selling pictures of various deities on gold-plated nickel foils, argued that these items are religious pictures not for use as calendars, thus falling under Entry No. 45 of the First Schedule and exempt from tax. The Commissioner, VAT, rejected this contention, classifying the pictures as "General Unclassified Goods" subject to a 12.5% tax under Section 4(1)(e) of the DVAT Act, 2004. The Appellate Tribunal, however, after detailed discussion and dictionary references, held that the religious pictures dealt with by the respondent, which cannot be used as calendars, fell under Entry 45 and were exempt from tax.

2. Applicability of the Principle of Ejusdem Generis:

The respondent's counsel argued that the principle of ejusdem generis was not applicable in this case. The Tribunal agreed, stating that the words and phrases used in a taxing statute but not specifically defined must be understood in their popular and commercial parlance. The Department's counsel contended that the principle should apply, relying on Supreme Court judgments. However, the court concluded that the principle of ejusdem generis was inapplicable as Entry No. 45 was clear and unambiguous.

3. Interpretation of Terms in a Taxing Statute Based on Popular and Commercial Parlance:

The court emphasized that terms in a taxing statute should be interpreted based on their popular and commercial meaning, not their scientific or technical meaning. This approach was supported by Supreme Court judgments, including Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, and Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Akola. The court held that "religious pictures" should be understood in their common parlance, meaning pictures used for religious worship and propagation.

4. Impact of Mounting or Framing on the Classification of Religious Pictures:

The Department argued that mounting or framing the religious pictures disqualified them from being classified under Entry No. 45. The court disagreed, stating that mounting or framing did not change the intrinsic character of the religious pictures. The frames were considered accessories for the safe-keeping of the pictures and did not alter their classification as religious pictures.

5. Relevance of the Value of Materials Used in Religious Pictures for Tax Classification:

The Department contended that the value of the gold-plated nickel foils indicated that the pictures were not religious pictures stricto senso. The court rejected this argument, citing Supreme Court judgments that an item's classification should be based on its nature and use, not the value of its accessories. The use of gold in religious pictures was deemed consistent with the concept of the divine, enhancing their aesthetic value for religious sentiments.

Conclusion:

The court concluded that the religious pictures imported by the respondent fell within Entry 45, exempt from tax. The appeal by the Department was dismissed, affirming the Tribunal's decision. The court reiterated that the principle of ejusdem generis was inapplicable and that terms in a taxing statute should be interpreted based on their popular and commercial meaning. The mounting or framing of the pictures and the value of the materials used were deemed irrelevant to their classification as religious pictures.

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