2016 (7) TMI 990 - HC - VAT and Sales Tax

Rate of Tax on Aluminium Grills, Aluminium Diffusers and Dumpers - manufacture and sale of Aluminium Grills, which are fixed on ceiling or on the wall of the building as ventilators opening. - Held that - Aluminium Grill cannot be said to be an integral part of the Air Conditioning or Air Cooling plant, and therefore, cannot be taxed at the rate of 15%. The questions raised are answered in favour of the assessee and against the department.

Summary

Issues:
Assessment of tax rate on Aluminium Grills, Diffusers, and Dumpers for the assessment year 2000-01.

Analysis:
The assessee, a registered partnership firm, manufactured and sold Aluminium Grills, Diffusers, and Dumpers assessed at 10% for previous years but was charged at 15% for the year in dispute. The First Appeal in favor of the assessee was overturned in a Second Appeal, leading to the present revision. The Tribunal concluded these items were to be taxed at 15% as used for Air Conditioning and Cooling systems, not as unclassified items at 10%.

The contention raised was that these items were not solely for Air Conditioning Industry but for general ventilation purposes. The counsel relied on a Division Bench decision indicating these items were accessories, not integral parts of Air Conditioners. The Tribunal's decision was influenced by orders from an Air Conditioning Industry client, but it was argued these items had broader applications beyond Air Conditioning systems.

The Court analyzed the use of Aluminium Grills in various settings, not limited to Air Conditioning systems, as per the Division Bench precedent. It was established that these items were accessories and not integral parts of Air Conditioning systems, as evident from previous orders. Consequently, the Court ruled in favor of the assessee, stating Aluminium Grills could not be considered integral parts of Air Conditioning or Cooling systems and should not be taxed at 15%.

In conclusion, the revision was allowed, and no costs were imposed. The judgment favored the assessee, highlighting the broader application of Aluminium Grills beyond Air Conditioning systems and emphasizing their classification as accessories rather than integral components of such systems.