2015 (12) TMI 1297 - HC - VAT and Sales Tax

Denial of exemption claim - whether the subject items/goods which are insecticides/pesticides are covered under Entry 38B of Schedule B appended to the HVAT Act or not - Held that - As per language of the entry, two conditions have to be fulfilled in order to qualify for exemption. Firstly, the items must be pesticides or weedicides or insecticides and secondly, these should be meant for use for plants only. The Tribunal has considered the matter in detail and recorded that the products used by the assessee are pesticides, weedicides and insecticides. Further, they are technical grades in concentrated form and after dilution, these products remain insecticides/pesticides or weedicides and are used for plants after mixing inerts and other such agents to make them fit for use on the plants. - Merely because a chemical may not be recommended for spraying on crops, it cannot be said that it cannot be used for plant protection as it could be added to seeds or to the soil. In the said case, Chemical Aldrex 30 EC was held to be the pesticide used for plant protection and therefore the same was covered by Entry 27 of the Third Schedule to the Delhi Sales Tax Act, 1975 - Tribunal was right in concluding that the product of the respondent assessees was covered under Entry 38B of Schedule B of the HVAT Act. The substantial questions of law are answered against the State. There is delay in filing the appeals ranging from 442 to 756 days. No satisfactory explanation has been given for the same. With regard to delay in filing the appeal, in Amalendu Kumar Bera s case (2015 (9) TMI 117 - SUPREME COURT), the Apex Court held that merely because the respondent is the State, delay in filing the appeal or revision could not be and shall not be mechanically considered and in the absence of sufficient cause delay shall not be condoned. - Decided against Revenue.

Summary

Issues Involved:
1. Classification of chemicals under Entry 38B of Schedule B of HVAT Act 2003.
2. Justification of the Haryana Tax Tribunal's decision.
3. Determination of whether the final product used for plants is similar to the raw material.

Issue-wise Detailed Analysis:

1. Classification of Chemicals under Entry 38B of Schedule B of HVAT Act 2003:
The primary issue was whether certain chemicals (Methyl Parathion, Cartap Hydrochloride, Acephate, Acetamiprid, Imidacloprid, Pretilachlor, Paraquat Dichloride, Carbendazim) sold by the appellant firm, which are intermediate products and not final products, fall under Entry 38B of Schedule B of the HVAT Act 2003. The appellant-State argued that these chemicals, being industrial raw materials used in manufacturing pesticides and insecticides, do not qualify for exemption under Entry 38B as they are not in a marketable state directly for use on plants. The Tribunal, however, held that these chemicals, after dilution and mixing with other agents, remain insecticides/pesticides and are used for plant protection, thus qualifying for exemption.

2. Justification of the Haryana Tax Tribunal's Decision:
The Tribunal's decision was scrutinized to determine if it was justified in holding that the intermediate chemicals are covered by Entry 38B. The Tribunal concluded that the products in question are indeed insecticides, weedicides, and pesticides. It noted that these products, after being diluted and mixed with inerts and emulsifying agents, are used for plant protection, thus meeting the conditions of Entry 38B. The Tribunal's order emphasized that the products, even in their technical grade form, are intended for use on plants, aligning with the exemption criteria.

3. Determination of Whether the Final Product Used for Plants is Similar to the Raw Material:
The court examined whether the process involved in obtaining the final product from the mentioned chemicals in manufacturing aligns with the exemption criteria. It was observed that the dilution process does not change the nature of the chemicals; they remain insecticides/pesticides or weedicides used for plant protection. The Tribunal's findings were supported by documentary evidence, including registration certificates and expert recommendations, proving that the products are used for plants. The court also referenced similar judicial precedents, such as the Madras High Court's decision in Southern Distributors' case and the Supreme Court's ruling in Bombay Chemical Pvt. Limited's case, which supported the Tribunal's interpretation.

Conclusion:
The court upheld the Tribunal's decision, confirming that the chemicals in question, even as intermediate products, qualify for exemption under Entry 38B of Schedule B of the HVAT Act 2003. Additionally, the appeals were dismissed on the grounds of delay, with the court noting that the State had not provided a satisfactory explanation for the delay in filing the appeals. The substantial questions of law were answered against the State, and the appeals were dismissed both on merits and due to the limitation period.