2013 (7) TMI 238 - HC - VAT and Sales Tax

Classification of Lizol and Harpic - Authorities classifying items as unclassified items - Held that - Interim order is quashed with the direction that the tribunal shall consider the application of the petitioner for interim protection afresh as expeditiously as possible preferably within six week and till the consideration/decision of the application afresh or the decision of the appeal whichever is earlier, the disputed amount of tax for the assessment year 2008-09 shall not be realized from the petitioner subject to deposit made or security furnished pursuant to the order of the first appellate authority - Decided in favour of Assessee.

Summary

Issues:
1. Classification of Lizol and Harpic products for tax purposes.
2. Reduction of interim protection by the tribunal.

Analysis:
1. Classification of Lizol and Harpic products for tax purposes:
The petitioner, a manufacturer of Lizol and Harpic products, argued that these items should be taxed as pesticides, contrary to the authorities' classification as unclassified items. The petitioner contended that previous judgments by Gauhati High Court and Andhra Pradesh High Court had deemed Lizol and Harpic as disinfectants taxable as pesticides. The petitioner also highlighted that a previous decision by the Commissioner should not bind them, as per an interim order by the Division Bench of the High Court. The court acknowledged the legal position established by the aforementioned High Court judgments and directed the tribunal to reconsider the petitioner's application for interim protection in light of these decisions. The court emphasized that the tribunal had not adequately considered the merits of the petitioner's case and quashed the tribunal's order, allowing the petitioner to avoid tax realization until a fresh decision by the tribunal or the appeal's conclusion.

2. Reduction of interim protection by the tribunal:
The tribunal had reduced the interim protection available to the petitioner during the appeal process from 85% to 65% of the disputed tax amount. The petitioner challenged this reduction, arguing that the tribunal had not properly considered the legal precedents set by the High Courts regarding the tax classification of Lizol and Harpic products. The court found the tribunal's order to be lacking in proper consideration of the legal position and directed the tribunal to reevaluate the petitioner's application for interim protection without being influenced by the Commissioner's decision. The court emphasized the need for a thorough consideration of the petitioner's case and instructed the tribunal to expedite the process, ensuring that the petitioner is not subjected to tax realization until a fresh decision is made or the appeal is concluded.