2014 (9) TMI 454 - HC - VAT and Sales Tax

Rate of tax - Classification of Aluminum foil - Liability of tax @ 4% or concessional rate of 1% - Whether aluminium foil falling in word sheets , therefore, covered under the notification dated December 31, 1975 and, further, whether the notification dated June 13, 1985 issued by the Revenue is applicable for the purpose of granting exemption for five years commencing from June 13, 1985, the day on which the notification was issued by the Revenue - Held that - there is no quarrel with regard to adjudication made by the honourable Supreme Court that mere change in the shape by mechanical pressing does not change the commodity and the commodity continues to hold the essential characteristics. Here, in the instant case, specifically a separate notification was issued for aluminium foil because it is used for packing purposes, therefore, if any aluminium sheet after processing created a new purpose for use then the Legislature can prescribe separate tariff for the use of that commodity. Here, in this case, both the aforesaid notifications are separate and distinct. Notification dated December 31, 1975 was issued for the purpose of one per cent tax upon non-ferrous rods, pipes, strips, section, sheets, circles and tubings but aluminium foil was not included in the above commodities and another notification was issued on June 13, 1985 which was not in continuance of aforesaid notification dated December 31, 1975 but it was separate notification granting time-bound exemption in tax upon aluminium foil. Therefore, all the judgments cited by learned counsel for the petitioners do not support the plea taken by the petitioner-assessee for the purpose of taking advantage of notification dated December 31, 1975. With regard to non-applicability of the notification dated June 13, 1985 for the reason that it has not been issued in supersession of the earlier notification dated December 31, 1975, yet another baseless ground has been taken by the petitioner-assessee because the general tax is at the rate of four per cent and exemption is granted for some of the goods as per their use vide notification dated December 31, 1975 purposely; and, later on, for five years the said exemption was granted for aluminium foil vide notification dated June 13, 1985; meaning thereby, the intention of the Legislature is expressive that except for the commodities falling under the entry of notification dated December 31, 1975, general tax will be levied and purposely with regard to aluminium foil exemption for five years was granted while issuing notification dated June 13, 1985, therefore, on this ground also no case is made out for interference. More so, the Tax Board has considered the entire facts and circumstances of the case in right perspective. There is no error in the adjudication made by the Tax Board in holding that aluminium foil is different commodity than the aluminium sheet. In my opinion, the claim of the petitioner-assessee to treat aluminium foil as non-ferrous sheets covered under notification dated December 31, 1975 is not sustainable in law in view of the fact that vide a separate notification dated June 13, 1985 time-bound exemption for five years to levy one per cent tax instead of four per cent tax was granted, which is not under challenge, itself is sufficient to hold that aluminium foil is different commodity and use of that commodity is also altogether different than the commodities covered under notification dated December 31, 1975. Therefore, claim of the petitioners for treating aluminium foil as aluminium non-ferrous sheets is hereby rejected. - Decided against assessee.

Issues Involved:
1. Whether aluminium foil falls under the category of "sheets" as per the notification dated December 31, 1975.
2. Applicability of the notification dated June 13, 1985, for granting exemption on aluminium foil.
3. Validity of the judgment rendered by the Tax Board on remand dated December 31, 2009.

Issue-Wise Detailed Analysis:

1. Whether aluminium foil falls under the category of "sheets" as per the notification dated December 31, 1975:
The core question was whether aluminium foil is included under the term "sheets" in the notification dated December 31, 1975, which would allow the assessee to pay a concessional tax rate of one percent. The assessees argued that aluminium foil is a thin sheet and should be covered under the term "sheets" as used in the notification. They contended that mere change in shape by pressing does not alter the commodity's essential characteristics. The Tax Board, however, held that aluminium foil is not included in the non-ferrous sheets notified in the 1975 notification and thus is subject to a four percent tax rate. The court upheld the Tax Board's finding, emphasizing that the intention of the Legislature must be considered and that aluminium foil was purposely not included in the 1975 notification.

2. Applicability of the notification dated June 13, 1985, for granting exemption on aluminium foil:
The assessees contended that the subsequent notification dated June 13, 1985, which provided a reduced tax rate of one percent for five years on aluminium foil, did not supersede the 1975 notification and should not affect their claim under the earlier notification. The Revenue argued that the 1985 notification was specific to aluminium foil and was issued to grant a time-bound exemption, indicating that aluminium foil was not covered under the 1975 notification. The court agreed with the Revenue, stating that the issuance of the 1985 notification itself indicates that aluminium foil was treated as a distinct commodity from non-ferrous sheets listed in the 1975 notification.

3. Validity of the judgment rendered by the Tax Board on remand dated December 31, 2009:
The assessees challenged the Tax Board's judgment on remand, arguing that the Board erroneously concluded that aluminium foil is not included in the category of non-ferrous sheets. They cited various judgments to support their claim that aluminium foil should be considered a sheet. The court, however, found no merit in these arguments, noting that the Tax Board had objectively considered all grounds and evidence. The court emphasized that the Legislature's intention was clear in issuing separate notifications for different commodities and purposes. The court dismissed the revision petitions, upholding the Tax Board's judgment that aluminium foil is a distinct commodity and not covered under the 1975 notification.

Conclusion:
The court concluded that aluminium foil does not fall under the category of "sheets" as per the 1975 notification and that the specific exemption provided in the 1985 notification for aluminium foil indicates its distinct treatment. The Tax Board's judgment on remand was upheld, and the assessees' revision petitions were dismissed.

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