2019 (8) TMI 124 - HC - VAT and Sales Tax

Classification of goods - metal brake shoe casting - classified under notification entry no. 4 Schedule-II Part-A of the U.P. VAT Act, 2008 or covered by notification no. 67 dated 1.1.2008? - HELD THAT - In the first place, the aluminium castings manufactured and sold by the assessee have been identified even by the revenue authorities as metal castings. It is an admitted case between the parties that those items were not identified as brake shoe or another item. The fact that the assessee may have done some processing on raw brake shoe castings, would be inconsequential in view of the clear language of entry no. 4 Schedule-II Part-A of the U.P. Act. That legislative entry takes within its ambit all types of metal castings whether processed or raw - So long as the commodity continued to be identified as a metal casting, the level of processing offered on those goods would be an irrelevant factor. Revision dismissed.

Summary

Issues:
1. Interpretation of taxing entry under U.P. VAT Act, 2008 for brake shoe castings.
2. Classification of processed metal castings for tax purposes.
3. Application of rule of consistency in tax assessments.

Issue 1: The main issue in this case was the interpretation of the taxing entry under the U.P. VAT Act, 2008 for brake shoe castings. The Tribunal had allowed the appeal by the assessee, holding that the brake shoe castings were liable to tax at 4% under a specific notification entry. The revenue contended that the processed brake shoe castings should be classified differently as unclassified goods, not falling under the specified taxing entry.

Issue 2: The classification of processed metal castings for tax purposes was a key point of contention. The revenue argued that since the assessee processed raw aluminium castings into brake shoe castings, the processed goods should be considered unclassified and taxed at a higher rate. However, the Tribunal rejected this argument, stating that as long as the commodity continued to be identified as metal castings, the level of processing was irrelevant for classification under the taxing entry.

Issue 3: The application of the rule of consistency in tax assessments was also discussed. The assessee relied on previous assessments where the same goods had been taxed at 4%, emphasizing the need for consistency in tax treatment. The Tribunal noted that the rule of consistency should apply when a fundamental aspect had been decided in favor of the assessee in previous assessments and had attained finality, as changing the position in subsequent years would not be appropriate.

In conclusion, the High Court dismissed the revision filed by the revenue, upholding the Tribunal's decision in favor of the assessee. The Court emphasized that the processed brake shoe castings were correctly classified under the specified taxing entry for metal castings, regardless of the level of processing done by the assessee. The application of the rule of consistency in tax assessments further supported the decision in favor of the assessee, based on previous assessments where similar goods had been taxed at the same rate.