9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (4) TMI 1443 - HC - VAT and Sales TaxRate of tax - nylon - taxable at 4% or 11%? - Tribunal treated the item falling under Entry 51 in Part B of First Schedule to the Tamil Nadu General Sales Tax Act, 1959 - Held that - Tax exempted goods, listed in Schedule III of Tamil Nadu General Sales Tax Act, 1959, include tobacco, sugar, cotton and woolen fabrics, handloom cloth and few other commodities. Besides, conditional exemption, effected through special notifications, is also accorded to the sale/purchase of a number of goods by certain persons or institutions - The Tribunal has rightly held that polymide - Nylon-6 is a plastic raw material, would fall under Entry 51 in Part B of First Schedule to TNGST Act, 1959, at the relevant time and eligible to be taxed at 4%. Tax case revision dismissed.
Issues:
1. Classification of Polymide (Nylon - 6) as a plastic raw material. 2. Applicability of the clarification issued under Section 28A of the TNGST Act, 1959. 3. Prospective effect of the clarification issued by the Commissioner of Commercial Taxes. 4. Interpretation of the applicability of the clarification issued on 27/1/2001 for the assessment year 1999-2000. Analysis: 1. The Tax Case Revision was filed to challenge the order passed by the Tamil Nadu Sales Tax Appellate Tribunal, which set aside the assessment of Nylon at 11% and directed assessment at 4% under Entry 51 of the First Schedule. The dispute arose from the classification of Polymide (Nylon) as a plastic raw material. The Appellate Assistant Commissioner upheld the higher tax levy based on a clarification stating that Polymide is an additive and not a plastic raw material. However, the Tribunal, citing precedents, determined that Polymide-Nylon 6 qualifies as a plastic raw material and should be taxed at 4%, in accordance with the relevant entry in the TNGST Act. 2. The Tribunal considered the applicability of the clarification issued under Section 28A of the TNGST Act, 1959, which stated that the sale of Polymide is taxable at 11%. The Tribunal held that the clarification dated 10.08.1993, based on a reference from a registered dealer, was binding until the benefits were withdrawn. The Tribunal concluded that Polymide-Nylon 6 falls under Entry 51 of the First Schedule and should be taxed at 4%. 3. The Tribunal addressed the prospective effect of the clarification issued by the Commissioner of Commercial Taxes, dated 27.01.2001, stating that the sale of Polymide is taxable at 11%. The Tribunal held that the clarification had prospective effect only, implying that it did not apply retrospectively to the assessment year 1999-2000. 4. The Tribunal also interpreted the applicability of the clarification issued on 27/1/2001 for the assessment year 1999-2000. Despite the final order being passed after the clarification date, the Tribunal held that the clarification should not be applied retroactively. The Tribunal's decision favored the assessee, confirming that Polymide-Nylon 6 is a plastic raw material taxable at 4%. In conclusion, the High Court dismissed the Tax Case Revision, upholding the Tribunal's decision that Polymide-Nylon 6 qualifies as a plastic raw material under Entry 51 of the TNGST Act and should be taxed at 4%. The Court found no error in the Tribunal's analysis and ruled against the revenue, emphasizing the legality of the assessment based on the classification of the product.
|
