2012 (8) TMI 438 - HC - VAT and Sales Tax

Taxability of non-prescription sunglasses - at 4% as under the schedule entry C-107(8) read with Notification dated 23rd November, 2005 or at 12.5% under residuary entry E-1 of the schedule to the 2002 Act - Held that - As per item 5 of the notification dated 23rd November, 2005 corrective spectacles as also protective spectacles are liable to be considered as medical device - If the Legislature in its wisdom has included the sunglasses within the category of Medical Devices and Implants covered under entry C-107(8) by issuing a notification on 23rd November, 2005, it would not be open to the Commissioner of Sales Tax to hold that non prescriptive sunglasses are not medical devices and hence not covered under the notification dated 23rd November, 2005 The decision of the Tribunal that the items in question viz. protective sunglasses covered under notification dated 23rd November, 2005 are liable to be treated as medical device up to the date of its amendment on 27th April, 2011, cannot be faulted as with effect from 1st May, 2011 by notification dated 27th April, 2011 by substituting the words corrective spectacles in place of the words spectacles , correctives, protective or other - in favour of assessee.

Summary

Issues:
1) Interpretation of the Maharashtra Sales Tax Tribunal's decision on the classification of non-prescription sunglasses as medical devices under Schedule Entry C-107(8).
2) Determination of the tax rate applicable to non-prescription sunglasses - 4% under Schedule Entry C-107(8) or 12.5% under residuary entry E-1.

Analysis:
1) The respondent-assessee, a registered dealer under the Maharashtra Value Added Tax Act, 2002, sought clarification on the taxability of non-prescription sunglasses. The Commissioner of Sales Tax determined that non-prescriptive sunglasses would be taxed at 12.5% under the residuary entry E-1, not as medical devices under Entry 107(8) of Schedule 'C'. However, the Joint Commissioner had previously clarified that sunglasses fall under "Medical Devices and Implants."

2) The Maharashtra Sales Tax Tribunal held that if the Commissioner concluded that the sunglasses are covered by the Notification, they would be taxed at 4% under Schedule Entry C-107(8). The revenue challenged this decision, arguing that sunglasses were deliberately excluded from the Notification, making them taxable at 12.5% under the residuary entry E-1.

3) The High Court rejected the revenue's argument, stating that the notification did not require protective sunglasses to be sold under prescription to be considered medical devices. The Court emphasized that if the legislature included sunglasses as medical devices, the Commissioner could not hold otherwise. The Court highlighted that subsequent amendments excluded protective sunglasses from the medical device category.

4) The Court noted that the Tribunal's decision, considering protective sunglasses as medical devices until the amendment, was correct. Consequently, the appeal was decided in favor of the assessee, upholding the classification of protective sunglasses as medical devices under Schedule Entry C-107(8) until the amendment in 2011.

5) The judgment clarified that the protective sunglasses were correctly classified as medical devices under the relevant notification until the subsequent amendment. The appeal was disposed of in favor of the assessee, with no costs awarded.