2016 (11) TMI 1079 - HC - VAT and Sales Tax

Interpretation of the Schedule Entries C-II-17 and C-II-46A appended to the Bombay Sales Tax Act, 1959 - hard-anodised utensils - whether Tribunal legally justified in holding that the hard-anodised utensils sold by the appellant under his sale invoice dated 12.01.1995 is a heat-resistent cookware under the Schedule Entry C-II- 46A and hence does not get covered by the Schedule Entry C-II-17? - Held that - if cookware, serveware and kitchenware (which would obviously include utensils) is heat resistant or non-stick by virtue of any coating (whether formed, applied or treated), on the utensils, then the same would clearly fall within Schedule Entries C-II-46A (heat resistant) or C-II- 46B (non-stick) before amendment , and C-II-26 after amendment , as the case may be. Therefore, they cannot be classified under Schedule Entries C-II-17 (before amendment) or C-II-24 (after amendment). This is the clear intention of the Legislature in classifying different products in different Entries. Whether the Tribunal legally justified in holding that the hard-anodised utensils sold by the appellant under his sales invoice dated 06.02.1996 falls under Schedule Entry C-II-26 and hence would not get covered by the Schedule Entry C-II-24? - Held that - satilon coating is a hard anodizing coating which is not brushed or sprayed on. It is an integral part of the metal built up molecule to the thickness of more than 50 microns, under very carefully controlled conditions, through electrolysis. Satilon forms an extremely stable surface that is nontoxic, non-staining and non-reactive with foods. It is a naturally dark grey colour. No pigment is added. Satilon does not tarnish, stays looking new for years and makes the utensil non-stick. It will not scratch, is highly abrasion resistant and is 2.4 times harder than stainless steel - the products of the Applicant cannot be classified under Schedule Entry C-II-17 (prior to amendment) and CII- 24 (after amendment). We have no hesitation in holding that the products of the Applicant sold under its invoice dated 12th January, 1995 would fall under Schedule Entry C-II-46B and the Applicant s products sold under its invoice 6th February, 1996 would fall under Schedule Entry C-II-26. The Sales Tax References are answered in the aforesaid terms.

Summary

Issues Involved:
1. Classification of hard-anodised utensils under Schedule Entries C-II-17 and C-II-46A of the Bombay Sales Tax Act, 1959.
2. Classification of hard-anodised utensils under Schedule Entries C-II-24 and C-II-26 of the Bombay Sales Tax Act, 1959.

Issue-wise Detailed Analysis:

1. Classification under Schedule Entries C-II-17 and C-II-46A:

The primary issue was whether the hard-anodised utensils sold by the applicant on 12.01.1995 fell under Schedule Entry C-II-17 or C-II-46A. Schedule Entry C-II-17 pertains to utensils made of non-ferrous metals, while Schedule Entry C-II-46A pertains to heat-resistant cookware.

The Tribunal held that the applicant's products should be classified under Schedule Entry C-II-46A. The Tribunal reasoned that the process of anodizing forms a coating on the utensils, making them heat-resistant. The applicant's argument that their products were merely aluminium utensils without any special coating was rejected. The Tribunal noted that the anodizing process creates a stick-resistant coating, and thus, the products were not simple aluminium utensils.

The High Court agreed with the Tribunal's reasoning, emphasizing that the anodizing process forms a coating on the metal, giving it stick-resistant properties. Thus, the products sold on 12.01.1995 were correctly classified under Schedule Entry C-II-46A.

2. Classification under Schedule Entries C-II-24 and C-II-26:

The second issue was whether the hard-anodised utensils sold by the applicant on 06.02.1996 fell under Schedule Entry C-II-24 or C-II-26. Schedule Entry C-II-24 pertains to household utensils made of non-ferrous metals, while Schedule Entry C-II-26 pertains to cookware coated to make it heat-resistant or non-stick.

The Tribunal held that the applicant's products should be classified under Schedule Entry C-II-26. The Tribunal reasoned that after 01.10.1995, Schedule Entry C-II-26 encompassed cookware coated with any material to make it heat-resistant or non-stick. The anodizing process forms a coating that makes the utensils stick-resistant, thereby falling under Schedule Entry C-II-26.

The High Court upheld the Tribunal's decision, stating that the anodizing process forms a coating on the utensils, making them stick-resistant. Thus, the products sold on 06.02.1996 were correctly classified under Schedule Entry C-II-26.

Conclusion:

The High Court concluded that the products sold on 12.01.1995 fell under Schedule Entry C-II-46A and those sold on 06.02.1996 fell under Schedule Entry C-II-26. The Court emphasized that the anodizing process forms a coating on the utensils, giving them stick-resistant properties, and thus, they cannot be classified as simple aluminium utensils. The references were answered accordingly, with no order as to costs.