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2016 (11) TMI 1321 - HC - VAT and Sales TaxTaxability of submersible pumps upto 5 HP upto June 30, 2006 and thereafter - Classification of goods - classified under Entry 71A of Schedule C or under Entry 1(D)(9) of Schedule B - Whether submersible pumps are covered under entry 71-A of Schedule C of the Haryana Value Added Tax Act, 2003 amended on 20.6.2006 with effect from 01.07.2006 vide Notification No. S.O. 58/HA/6/2003/S.59/2006? - Held that - agricultural pump sets were exempted from payment of tax in Haryana whereas other pump sets were taxed @12.5%. On the other hand, tax on such pumps in the neighbouring State was 4%. It was in the light of these facts that the amendment was carried out while adding Entry 71-A in Schedule C taxing pump sets below 5 HP uniformly. It was for the reason that in agriculture normally the pump sets above 5 HP capacity are used - submersible pump sets used for agricultural purposes fall in Entry 1(D)(9) of Schedule B upto June 30, 2006, hence tax free. From 1.7.2006 onwards pump sets below 5 HP capacity will fall in Entry 71-A in Schedule C , hence will be taxable irrespective of its end use. Appeals disposed off.
Issues Involved:
1. Classification of submersible pumps under the Haryana Value Added Tax Act, 2003. 2. Taxability of submersible pumps up to 5 HP before and after 30.06.2006. 3. Interpretation of entries in Schedules 'B' and 'C' of the HVAT Act. 4. Applicability of Note 4 to Schedule 'C' and its impact on the exclusion of goods from Schedule 'B'. 5. The principle of preferring the more beneficial entry to the assessee. 6. The scope of the government’s opinion when clarification is sought under Section 56(3) of the HVAT Act. Detailed Analysis: 1. Classification of Submersible Pumps: The core issue is whether submersible pumps are covered under Entry 71A of Schedule 'C' or under Entry 1(D)(9) of Schedule 'B' of the HVAT Act, 2003. The Tribunal held that submersible pumps are covered under Entry 71A of Schedule 'C' and not under Entry 1(D)(9) of Schedule 'B', thus taxable at 4%. 2. Taxability Before and After 30.06.2006: The appellant argued that submersible pumps were tax-free under Entry 1(D)(9) of Schedule 'B' before the amendment on 20.06.2006. The government, however, opined that submersible pumps below 5 HP were taxable at 12.5% up to 30.06.2006 and at 4% from 01.07.2006, as per Entry 71A of Schedule 'C'. The court clarified that up to 30.06.2006, submersible pumps fell under Entry 1(D)(9) of Schedule 'B' and were tax-free. From 01.07.2006, they fell under Entry 71A of Schedule 'C' and were taxable at 4%. 3. Interpretation of Entries in Schedules 'B' and 'C': The court examined the relevant entries: - Schedule 'B': Entry 1(D)(9) includes agricultural pumping sets of all kinds, including submersible pumps, and their components. - Schedule 'C': Entry 71A specifies pump sets below 5 HP. The court noted that the plain reading of Entry 1(D)(9) in Schedule 'B' includes submersible pumps without any capacity limit, thus making them tax-free up to 30.06.2006. The addition of Entry 71A in Schedule 'C' from 01.07.2006, along with Note 4, implied that submersible pumps below 5 HP were excluded from Schedule 'B' and became taxable. 4. Applicability of Note 4 to Schedule 'C': Note 4 to Schedule 'C' states that goods described in this schedule are deemed excluded from Schedule 'B'. This means that from 01.07.2006, submersible pumps below 5 HP, now listed in Schedule 'C', were no longer tax-free under Schedule 'B'. 5. Principle of Preferring the More Beneficial Entry: The appellant contended that when an item is listed in both tax-free and taxable schedules, the tax-free entry should be preferred. However, the court held that due to Note 4, the entries in Schedules 'B' and 'C' are mutually exclusive. Therefore, after 01.07.2006, submersible pumps below 5 HP were taxable under Schedule 'C'. 6. Scope of Government’s Opinion: The court observed that the government’s opinion should have been limited to the issue for which clarification was sought. The government should not have opined on matters not specifically raised by the parties. Conclusion: The court concluded that submersible pumps used for agricultural purposes were tax-free under Entry 1(D)(9) of Schedule 'B' up to 30.06.2006. From 01.07.2006, submersible pumps below 5 HP were taxable under Entry 71A of Schedule 'C'. The appeals were disposed of accordingly, and the court emphasized the need for government opinions to stay within the scope of the issues raised.
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