2022 (12) TMI 1378 - HC - VAT and Sales Tax

Classification of goods - Chlormint and Happydent - whether the goods sold by the petitioner, namely, Chlormint and Happydent, are to be classified as falling under Entry-88 or Item 117 of the IV-Schedule of the A.P. VAT Act, 2005 or to be considered as unclassified goods falling under V-Schedule of the Act? - HELD THAT - Since the issue raised in the present Writ Petitions being similar to the issue which has been considered by the Sales Tax Appellate Tribunal in this State, as well as the other two High Courts, which also received approval by the dismissal of the SLP preferred there against, this Court is of the considered view that there are no justiciable grounds to take a different view there from, for us to sustain the order of assessment passed by the respondent. This Court is of the considered view that the impugned orders as passed by the respondent-authority cannot be sustained - Petition allowed.

Summary

Issues:
Classification of goods under Entry-88 or Item 117 of the IV-Schedule of the A.P. VAT Act, 2005, or as unclassified goods under V-Schedule.

Analysis:
1. The Writ Petitions involved a common issue regarding the classification of goods, Chlormint and Happydent, under the A.P. VAT Act, 2005. The petitioner contended that the products should be classified under Entry-88 and taxed at 4%, while the Assessing Authority classified them under V-Schedule and taxed at 12.5%.

2. The petitioner argued that the Tribunal's orders in previous cases supported their classification under Entry-88, and the State did not challenge those orders. Similar issues were considered by the Uttarakhand and Allahabad High Courts, where the goods were classified as medicines under Entry-88, with the Supreme Court dismissing the Revenue's appeal.

3. The Special Standing Counsel for the respondent argued that the petitioner failed to prove the products were manufactured under a valid drug license, justifying the reclassification as confectionery under V-Schedule. The Court noted the decisions of the Uttarakhand and Allahabad High Courts, which classified the goods as medicines under Entry-88.

4. The Court considered the principle established by the Supreme Court in Puma Ayurvedic Herbal (P) Ltd. v. CEE, Nagpur, supporting the classification of Chlormint and Happydent as medicines under Entry-88. The Sales Tax Appellate Tribunal and High Courts' decisions were consistent in this regard.

5. The Assessing Authority's reliance on past decisions to justify reclassification was deemed invalid, as subsequent rulings, including the Full Bench decision in Indo National Ltd. v. Commissioner of Commercial Taxes, overruled the notion of no res-judicata in tax matters.

6. Ultimately, the Court held that the goods in question should be classified as medicines under Entry-88, in line with previous decisions and legal principles. The impugned orders were set aside, and the Writ Petitions were allowed, with no costs awarded.

7. The judgment emphasized the importance of consistent legal interpretation across different assessment periods and jurisdictions, ensuring fair treatment and adherence to established legal principles in tax matters.