2015 (11) TMI 713 - HC - VAT and Sales Tax

Exemption for payment of entry tax under section 3(2) of the Assam Entry Tax Act, 2008 - Import of hot rolled sheets in coil when processed to cold rolled sheets in coil form - Held that - hot rolled coil, imported into local area in the State of Assam and the same is sold after processing it to a product which is called as cold rolled coil. It is found that both the products aforesaid are sold in coil form. Entry at Sl. No. 50 to the Schedule aforesaid reveals that sheets, hoops, strips and skelp, both in hot rolled coil as well as cold rolled coil, are specified goods and as such, only for changing the hot rolled coil to cold rolled coil, later does not cease to be the specified goods as mentioned in aforesaid entry and as such, the benefit under section 3(2) of the Act of 2008 needs to be extended to the petitioner provided VAT is also payable in respect of sale of such goods. - Decision in Tata Tea Ltd. v. State of Assam 2015 (11) TMI 326 - GAUHATI HIGH COURT squarely cover the present case since facts and circumstances in both the cases are strikingly similar. - Decided in favour of assessee.

Issues Involved:
1. Entitlement for exemption from payment of entry tax under Section 3(2) of the Assam Entry Tax Act, 2008.
2. Interpretation of "specified goods" under the Act of 2008.
3. Applicability of judicial precedents to the case.

Detailed Analysis:

1. Entitlement for Exemption from Payment of Entry Tax:
The primary issue is whether the petitioner is entitled to exemption from payment of entry tax under Section 3(2) of the Assam Entry Tax Act, 2008. The petitioner argued that hot rolled coil, despite being processed into cold rolled coil, remains "specified goods" under entry at serial No. 50(iv) of the Schedule attached to the Act of 2008. The petitioner contended that both hot rolled and cold rolled coils are covered by the same entry, and thus, no entry tax should be payable if such goods are sold within the state and tax is payable under the Assam Value Added Tax Act, 2003.

2. Interpretation of "Specified Goods":
The Commissioner of Taxes held that once hot rolled coil is processed into cold rolled coil, it no longer remains the same "specified goods" as mentioned in entry at serial No. 50(iv) of the Schedule attached to the Act of 2008. The Commissioner stated that the exemption from entry tax under Section 3(2) of the Act of 2008 cannot be claimed if the goods undergo any processing that changes their form. The court, however, found that both hot rolled and cold rolled coils are sold in coil form and are specified under the same entry. Therefore, changing hot rolled coil to cold rolled coil does not alter its status as specified goods.

3. Applicability of Judicial Precedents:
The petitioner relied on the decisions in State of Bihar v. Universal Hydrocarbons Co. Ltd. and Tata Tea Ltd. v. State of Assam to support their contention. The court agreed with the petitioner, noting that in Tata Tea Ltd., the blending of imported tea with local varieties did not change its nature as specified goods. Similarly, in the present case, processing hot rolled coil into cold rolled coil does not change its status as specified goods. The court also referred to the Supreme Court's decision in State of Bihar, which held that the transformation of raw petroleum coke to calcined petroleum coke did not take it out of the purview of the specified entry.

Conclusion:
The court concluded that the Commissioner of Taxes' clarification was unsustainable. The court held that changing hot rolled coil to cold rolled coil does not alter its status as specified goods under entry at serial No. 50(iv) of the Schedule attached to the Act of 2008. Consequently, the petitioner is entitled to exemption from payment of entry tax under Section 3(2) of the Act of 2008, provided that VAT is also payable on the sale of such goods. The court quashed and set aside the clarification rendered by the Commissioner of Taxes and allowed the writ petition.

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