2018 (12) TMI 485 - HC - VAT and Sales Tax

Levy of Tax - chemicals used as consumables in the process of job work of dyeing of fabric - property in the goods has passed on to the principals - Held that - The matter is no longer res integra. This Court in a recent judgment in M/s AP Processors, Plot No.103, Sector 24, Faridabad through its partner Shri Arvind Jain vs. State of Haryana through Principal Secretary to Government of Haryana, Excise and Taxation Department, Civil Secretariat, Haryana, Chandigarh 2018 (5) TMI 1797 - PUNJAB AND HARYANA HIGH COURT has already settled the legal issue against the respondent-revenue. Therein, after considering the relevant statutory provisions and the entire case law on the point, it has been concluded that the chemicals used in the job work are taxable but the pertinent question to be answered would be as to how much of dyes/colours are taxable which is transferred to the fabric when the whole quantity of consumable is not transferred. The tax on the entire value of chemicals consumed during the process of dyeing and job work are not to be included for the purpose of levy of VAT as substantial portion of the same is not transferred to the principal eventually. The matter is remanded to the Assessing Officer to decide the matter afresh.

Summary

Issues:
1. Application under Section 151 of the Code of Civil Procedure for amending the head note of VAT Appeal No. 85 of 2018.
2. Disposal of VATAP Nos. 53, 85, and 61 of 2018 due to identical issues.
3. Appeal filed by the appellant-assessee under Section 36 of the Haryana Value Added Tax Act, 2003 against the order of the Haryana Tax Tribunal.
4. Questions of law challenging the levy of tax on chemicals and dyes used in job work of bleaching, washing, processing, and dyeing of cloth.
5. Interpretation of property transfer in the job work process and taxability of chemicals and dyes used.
6. Legal precedents and judgments cited in support of the arguments.
7. Decision based on recent judgment in a similar case regarding taxability of chemicals and dyes in job work processes.

Analysis:
1. The judgment addresses an application under Section 151 of the Code of Civil Procedure seeking an amendment to the head note of VAT Appeal No. 85 of 2018. The court allowed the amendment, thereby disposing of the civil miscellaneous application.
2. The court consolidated the disposal of VATAP Nos. 53, 85, and 61 of 2018 as they involved identical issues, streamlining the process for all appeals.
3. The appellant-assessee filed an appeal under Section 36 of the Haryana Value Added Tax Act, 2003, challenging the order of the Haryana Tax Tribunal regarding the levy of tax on chemicals and dyes used in job work processes.
4. The substantial questions of law raised by the appellant focused on the justification of tax levy on chemicals and dyes used in bleaching, washing, processing, and dyeing of cloth, emphasizing the property transfer and taxability aspects.
5. The judgment delved into the interpretation of property transfer in job work processes, analyzing the tax implications of chemicals and dyes used, considering the extent of transfer to the principals.
6. Legal arguments revolved around the findings of the Tribunal, citing precedents like the judgment of the Bombay High Court and emphasizing the factual aspects of property transfer and tax liability.
7. The decision was influenced by a recent judgment in a similar case, establishing the taxability of chemicals and dyes used in job work processes, emphasizing the need for factual evidence to determine the quantity of consumables transferred and the tax implications based on property transfer. The court remanded the matter to the Assessing Officer for a detailed assessment in line with the legal principles outlined in the referenced judgment.