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2017 (5) TMI 1171 - HC - VAT and Sales TaxRate of tax - Solvent Cement Solution - taxable at 4% or at 10%? - whether PVC Solvent Cement included within Entry No.54 of the Notification dt.26.03.1999 or otherwise? - Held that - in a case of classification one can take into consideration common parlance test, in my view as well, for stopping common leakage some other products will have to be purchased rather than the product which has been used/produced/sold by the assessee. The entry insofar as VAT Act under consideration is concerned, is limited and it is to be read as it is and cannot be enlarged as claimed by the counsel for the petitioner - the finding reached by the Tax Board is a finding of fact and no question of law can be said to arise out of the order of the Tax Board. Penalty u/s 65 of the act - Held that - though it is a case of survey which may have resulted into some taxability @10% as against 4% claimed by the assessee but the fact remains that it is a case of classification and two views are possible and at least the assessee also succeeded before the Dy. Commissioner (A) and in my view, once it is a case of classification then the penalty need not be levied - penalty set aside. Appeal allowed - decided partly in favor of assessee.
Issues:
Taxation of "Solvent Cement Solution" under RVAT Act for assessment years 1997-2001. Analysis: 1. The case involves the taxation of "Solvent Cement Solution" under the RVAT Act for specific assessment years. The issue was raised regarding the classification of the product and the applicable tax rate. 2. The assessee, a limited company engaged in the manufacture and sale of PVC pipes and fittings, was also selling PVC Solvent Cement. The Assessing Officer issued a show cause notice claiming the product was taxable at 10%, while the assessee contended it should be taxed at 4%. The dispute arose from the nature and usage of the product. 3. The Dy. Commissioner (A) allowed the assessee's claim based on a judgment of the Maharashtra Sales Tax Tribunal. However, the Tax Board reversed this decision, holding that the tax should be levied at 10%. The issue of penalty under Sec.65 of the Act was also discussed and eventually deleted by the Tax Board. 4. The assessee argued that the Solvent Cement was essential for jointing PVC pipes and fittings, falling under Entry No.54 of a specific Notification, hence taxable at 4%. They relied on various judgments to support their claim of classification and tax rate. 5. On the contrary, the revenue contended that the product was adhesive Cement, not covered under the restricted entry for PVC pipes and fittings. They argued that the product's usage and nature did not align with the assessee's claims, emphasizing the difference between the product in Maharashtra and Rajasthan. 6. The High Court analyzed the arguments and material on record, concluding that the Tax Board's decision to levy tax at 10% was appropriate. The Court found that the Solvent Cement was distinct from PVC pipes and fittings, and the common parlance test did not support the assessee's classification claim. 7. The Court emphasized that the product in question was not covered under the specific entry for PVC pipes and fittings, and the judgments cited by the assessee were not applicable to the current case. The Tax Board's decision was considered a factual finding without any legal question arising. 8. Regarding the penalty under Sec.65 of the Act, the Court noted that it was a case of classification where two views were possible. Since the assessee's sales were vouched and verifiable, and there was no evidence of tax evasion, the penalty was not justified. The Court upheld the Tax Board's decision to delete the penalty. 9. Ultimately, the Court dismissed all petitions, ruling that they lacked merit and no costs were awarded.
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