2014 (5) TMI 759 - HC - VAT and Sales Tax

Rate of Tax - Rubber products Classification Entry 55 Schedule 1 Held that - It is seen from the I Schedule that there is a specific entry both before and after the amendment to the Schedule as regards rubber belting and automobiles, tractors and two wheelers with parts and accessories - While there is specific entry for automobiles, two wheelers and tractors inclusive of parts and accessories, Entry 50 is a general entry dealing with rubber products - The enumeration shows the products enumerated there are in the nature of compound rubber, unvulcanised, in primary forms or in plates, sheets or strips, other forms of rubber, rubber thread and cord - Sub clause (vi) deals with conveyor, transmission or elevator belts or belting of rubber whether combined with any textile material or otherwise - Going by the enumeration therein particularly as regards belting referable to conveyor and transmission belting, it is clear that goods referred under Entry 50 has no relevance to the belts used in automobile, two wheelers or tractors - The enumeration in Entry 50 thus takes its colour from the reference as regards its particular usage. When there is a specific entry with parts and accessories, the reference to the particular goods thus excludes the applicability of general entry on rubber products - Thus, going by the nature of enumeration contained in Entry 50 of I Schedule, No justification to accept the case of the Revenue that the product dealt with by the assessee would fall as a rubber product - The assessee is a dealer in automobile parts and not a general dealer in rubber products, and that the belts used for tractors and cars are not conveyor belts, thus, the plea of the Revenue is rejected - Revisions are dismissed Decided against Revenue.

Summary

Issues:
Interpretation of tax assessment on sales of rubber belts for automobiles, two wheelers, and tractors under different entries of the First Schedule.

Analysis:
The High Court of Madras dealt with the issue of tax assessment on sales of rubber belts for automobiles, two wheelers, and tractors for the assessment years 1992-93, 1993-94, and 1994-95. The Revenue contended that fan belts sold to these vehicles should be assessed as rubber products under specific entries in the First Schedule. The assessee argued that these fan belts should be taxed as automobile parts and accessories under a different entry. The Appellate Assistant Commissioner upheld the Revenue's assessment, considering the fan belts as rubber beltings taxable at 8%. However, the Tribunal disagreed, highlighting that the fan belts were parts and accessories of vehicles, not rubber products like conveyor belts. The Tribunal referred to specific evidence and entries in the Schedule to support the assessee's position. The Tribunal allowed the appeal in part, applying different tax rates for different periods and vehicle types. The Tribunal also upheld the best judgment assessment for certain years and reduced the penalty. The Revenue challenged this decision in revisions.

The High Court analyzed the entries in the First Schedule related to rubber beltings, automobiles, tractors, and two wheelers. The Court noted specific entries for parts and accessories of vehicles, distinguishing them from general entries on rubber products. The Court highlighted that the nature and usage of the goods listed under different entries determine the applicable tax treatment. The Court emphasized that the assessee's business focused on automobile parts, not general rubber products. Therefore, the Court rejected the Revenue's argument that the fan belts should be treated as rubber products. The Court found no justification to accept the Revenue's position and dismissed the Tax Case Revisions, ruling in favor of the assessee.