2014 (12) TMI 1408 - HC - VAT and Sales Tax

Interpretation of statute - entry C-I-29 and notification thereunder dated 9.5.2002 - packing materials - classification of goods - HELD THAT - The Notification itself states that in exercise of powers conferred by Entry 29 of the schedule C appended to the Bombay Sales Tax Act, 1959 (Bom.LI of 1959), the Government of Maharashtra, with effect from the 1st April, 2001, and in supersession of the Government Notification, Finance Department, No.STA.1100/CR-122/Taxation-1, dated 11th August, 2000, specifies the goods, more particularly described in the Schedule appended to this Notification, to be Industrial inputs and packing materials, whether sold under a generic name or any brand name, for the purposes of the said entry no.29. If the Industrial inputs and packing materials and covered from time to time under the heading or sub-headings as the case may be of the Central Excise Tariff Act, 1985 have been brought within the purview of a single Notification then we must see as to why the supersession was effected. The earlier Notification of 11th August, 2000 also notified the Industrial inputs and packing materials. The articles such as Ghamelas might be used in construction, agriculture etc. but they are not industrial inputs or packing materials would exhibit complete ignorance of the commercial word as well. It is for that reason that we emphasised the principles evolved by the Hon ble Supreme Court. If they would guide us and they were equally binding and ought to have guided the Tribunal when it exercise its initial Appellate jurisdiction. In such circumstances, the plain reading of the entry and as made by the Tribunal in the initial stage while deciding the Appeal to be found in paras 10 to 12 of its order would demonstrate that it is this exercise which thereafter put the Tribunal itself in doubt. It is that doubt which required it to refer the questions to this Court. None would now therefore fault the Tribunal for reading the entry industrial inputs and packing materials properly. The fact that the Industrial inputs and packing materials have been notified throughout under the Notifications and in terms of the heading or sub-headings of these articles and materials under the Central Exercise Tariff Act, 1985 would show that household wares or domestic articles were not intended and rather never intended to be brought in. The exclusionary part of the entry itself will clarify this aspect. The articles of plastics and notified for use of conveying or carrying articles packed in plastic materials would denote that the understanding throughout was to bring in such articles which are used in trade, commerce and Industry. The Tribunal was not correct in concluding that all articles which have been manufactured by the dealer would not fall in the Entry C-I-29 and Notification dated 9th May, 2002 - the issue is necessarily have to be answered and in terms of the articles referred to in the notification in favour of the dealer against the Revenue. Reference disposed off.

Summary

Issues Involved:
1. Interpretation of Schedule Entry C-I-29 and Notification dated 9.5.2002 under the Bombay Sales Tax Act, 1959.
2. Classification of plastic articles under Schedule Entry C-I-29 or C-II-93.
3. Applicability of tax rates to specific plastic articles.

Issue-wise Detailed Analysis:

1. Interpretation of Schedule Entry C-I-29 and Notification dated 9.5.2002:
The core issue is whether the plastic articles manufactured by the Applicant fall under Schedule Entry C-I-29 as per the Notification dated 9.5.2002. The Applicant argued that the goods are covered by Chapter head 39.23 of the Central Excise Tariff Act, 1985, and thus should be taxed at 4%. The Tribunal initially held that these items are not covered by Entry C-I-29 but by Entry C-II-93. The Applicant contended that the plain language of the Notification should be interpreted in line with commercial understanding, where the plastic items in question are used for packing and not as household items. The Tribunal's interpretation was challenged as it allegedly ignored the broad description of industrial inputs and packing materials.

2. Classification of Plastic Articles under Schedule Entry C-I-29 or C-II-93:
The Tribunal's decision classified the plastic articles as follows:
- The plastic steel kettle was classified under Schedule Entry C-II-152, liable to tax at 13%.
- Other items, such as plastic ghamelas, buckets, and mugs, were classified under Schedule Entry C-II-93, with a tax rate of 13%, except for mugs and buckets, which were taxed at a concessional rate of 8% as per Notification entry A-27.
The Applicant argued that the Tribunal should have considered the items as industrial inputs and packing materials under Entry C-I-29, thus qualifying for a lower tax rate.

3. Applicability of Tax Rates to Specific Plastic Articles:
The Tribunal upheld the Commissioner's classification of the items under different tax rates:
- Plastic steel kettle: 13% under Entry C-II-152.
- Other plastic items: 13% under Entry C-II-93.
- Mugs and buckets: 8% under Notification entry A-27.
The Applicant contested this classification, arguing that the items should uniformly fall under Entry C-I-29, attracting a 4% tax rate, as they are used for packing and conveyance of goods, consistent with the Notification's description.

Court's Rationale and Judgment:
The Court referred to principles laid down by the Supreme Court for interpreting tax entries, emphasizing the importance of commercial parlance and the intended use of the goods. The Court noted that the Notifications aimed to cover industrial inputs and packing materials, excluding household items. The Tribunal's reliance on the description in advertisements to classify the items as household goods was deemed erroneous. The Court highlighted that the items should be considered industrial inputs if they are used in trade, commerce, and industry.

Conclusion:
The Court concluded that the Tribunal was incorrect in excluding the Applicant's plastic articles from Entry C-I-29. The items should be classified under Entry C-I-29, and the question of law was answered in favor of the Applicant, against the Revenue. The Reference was disposed of accordingly, underscoring the need for expeditious resolution in such matters to ensure certainty for both the dealer and the Revenue.