2013 (3) TMI 254 - HC - VAT and Sales Tax

Information of rate of tax on Kattal Gitti - leviable @ 12.5% being unclassified item as held by department OR @ 4% as held by Tribunal - Held that - As decided in Commissioner, Sales Tax, U.P. vs. Lalkuan Stone Crusher Pvt. Ltd. (2000 (3) TMI 58 - SUPREME COURT OF INDIA) observed that gitti, kankere, stone ballast etc. will have to be covered by the Entry 40 of the notifications being alike. It has carried the size of 90 MM or more. With effect from 01.01.2008, the tax is leviable @ 4% on the grit. Thus the Tribunal has followed the ratio laid down in the case of Lalkuan (supra) and held that upto 90 MM of stone, whatever name may be called, is gitti and attract the tax @ 4%. Only more than 90 MM pieces will not be covered by the said entry and will be treated as unclassified item - the revision filed by the Department is hereby dismissed - in favour of assessee.

Summary

Issues:
Interpretation of VAT Act regarding tax rate on "Kattal Gitti" - Applicability of Schedule II, Entry 109 - Discrepancy in tax rate determination - Jurisdiction of Commercial Tax Tribunal - Compliance with legal principles set by Hon'ble Apex Court.

Analysis:
The High Court of Allahabad dealt with a revision filed by the Department under the VAT Act challenging a judgment by the Commercial Tax Tribunal regarding the tax rate on "Kattal Gitti." The Tribunal had determined that "Kattal Gitti" falls under the same category as grit, thus attracting a lower tax rate of 4% instead of 12.5% levied on unclassified items. The Department contested this decision, leading to the present revision.

Upon review, the High Court examined the nature of "Kattal Gitti" in relation to the VAT Act. It was observed that "Kattal Gitti" is produced by breaking big stone pieces into smaller ones, with a size of 90 MM or more. The Court noted that as of 01.01.2008, the tax rate on grit was set at 4%. Furthermore, the Court referenced the judgment in Commissioner, Sales Tax, U.P. vs. Lalkuan Stone Crusher Pvt. Ltd., where it was established that items like gitti and stone ballast are covered under specific entries in the notifications.

The High Court endorsed the Tribunal's decision, aligning with the legal principles established by the Hon'ble Apex Court in the Lalkuan case. The Court concurred that stones up to 90 MM in size, regardless of nomenclature, are considered gitti and subject to a 4% tax rate. Stones exceeding 90 MM are classified as unclassified items. Consequently, the Court found no grounds to interfere with the Tribunal's order, as it was based on sound legal reasoning and consistent with the precedents set by the Apex Court.

In conclusion, the High Court dismissed the Department's revision, upholding the Tribunal's decision and reasoning. The judgment emphasized the importance of adhering to legal principles and established precedents in interpreting tax laws under the VAT Act. The ruling underscored the significance of consistency and compliance with legal standards in tax rate determinations to ensure fairness and clarity in tax assessments.