2016 (12) TMI 311 - HC - VAT and Sales Tax

Classification of goods - tyre, tubes and flaps - parts and accessories - rate of 1% should be applied in accordance with Entry No.8 of the Notification dt 24.3.2005 or 4% as prescribed in Entry No.19 - Held that - though tyre and tubes can certainly be said to be parts and accessories, to be fitted in a motor vehicle, without which a motor vehicle cannot run on the road, but there is a specific Entry for tyre, tube and flaps being Entry No.19 as quoted hereinabove, which is very specific with a rate of 4%. Once there is a specific rate separately ascertainable of the commodity in dispute, in my view the same shall supersede the other Entries, if any. Taking into consideration the aforesaid Notification and the clear description of the items in dispute, in my view no ambiguity is noticed in the said Entry and both, the Tax Board as well as Additional Commissioner, have rightly come to the said conclusion. It may be true that if there is ambiguity, the benefit should be passed on to the dealer/manufacturer/producer - a bare perusal of the Notification does not show any ambiguity or doubt so that any benefit could be conferred on the petitioner - petition dismissed - decided against petitioner.

Summary

Issues:
Interpretation of tax rates for tyre, tubes, and flaps under specific entries in the Notification.

Analysis:
The petitioner, a manufacturer of motor vehicles, purchased tyre, tubes, and flaps from manufacturers at a mutually settled price. The petitioner contended that these items should be considered parts and accessories of motor vehicles and taxed at 1% under Entry No.8 of the Notification, rather than the 4% prescribed in Entry No.19. The Additional Commissioner and the Tax Board upheld the 4% rate under Entry No.19, stating that specific entries prevail over general ones.

The petitioner argued that there was ambiguity in the entries and that the benefit should go to the dealer. They cited legal precedents to support their claim. However, the Revenue contended that there was no ambiguity in the Notification and supported the decisions of the lower authorities.

The judge examined the arguments and the relevant legal provisions. They noted that while tyre and tubes are essential parts of a motor vehicle, the specific Entry No.19 clearly prescribed a 4% rate for these items. The judge emphasized that when a specific rate is provided, it supersedes general entries. Despite the petitioner's argument for ambiguity benefiting them, the judge found no ambiguity in the Notification regarding the tax rates for the items in question.

Ultimately, the judge concluded that the findings of the lower authorities were based on facts and did not warrant interference. As a result, the petition was dismissed for lacking merit. The judgment highlighted the importance of specific entries in tax notifications and upheld the decision to tax tyre, tubes, and flaps at 4% under Entry No.19, rejecting the petitioner's claim for a lower rate under Entry No.8.