2020 (2) TMI 1192 - HC - VAT and Sales Tax

Sale of agricultural and municipal waste conversion device - Exemption under entry 46 of Part B of III schedule of the Tamil Nadu General Sales Tax Act - denial of exemption on the ground that the commodity in question purchased by Assessee only a boiler - HELD THAT - The Revenue authorities below have unnecessarily taken a narrow and pedantic view of the matter. What was purchased by the Assessee as an exempt item from Trichy dealer was clearly shown to be agricultural and municipal waste conversion device and the detailed description of the goods was also given in the Invoice produced before the authorities below and quoted by us above. Merely because the word 'Boiler' is also used in the said description of goods ignoring the very user of the said commodity as for conversion of Agrowaste like coconut shells etc. to manufacture fuel, it cannot be said that the said commodity loses its character as 'agricultural and municipal waste conversion device'. There is no reason to restrict the said meaning only for those devices which are used for treating the municipal waste like sewage etc. as contended by the learned counsel for the Revenue. The Agrowaste is also a waste which can be converted into fuel and if it is so used, then, it would fall within the ambit and scope of entry 46 of Part B of III schedule of the Act - There is no scope for treating as a simple Boiler, the word adopted by the Revenue authorities for reasons best known to them so as to take it out from the ambit and scope of entry 46. There is no dispute that the assessment of the Trichy dealer who sold the said goods as exempted goods to the Assessee in present case was never questioned on that ground and therefore, there are no justification for authorities below to take a view against the Assessee and deny the exemption to the said Assessee in the present case - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Entitlement to exemption on the sale of agricultural and municipal waste conversion device under entry 46 of Part B of III schedule of the Tamil Nadu General Sales Tax Act.

Analysis:
The Assessee, M/s. Malt and Allied Products, challenged the order of the Tamil Nadu Sales Tax Appellate Tribunal denying exemption on the sale of a device under entry 46 of the Act. The Tribunal held that the commodity purchased by the Assessee was only a boiler and not entitled to the exemption. The Tribunal emphasized that the goods sold were parts and accessories of a simple boiler, contradicting the claim of the Assessee regarding the purchase of a Municipal Waste Conversion device. The Tribunal concluded that the sold item was not a renewable energy device and, therefore, not eligible for exemption under Entry 46.

The Assessee argued that the goods purchased were agricultural and municipal waste conversion devices, used for manufacturing fuel from agrowaste. The Assessee highlighted that the Trichy dealer treated the goods as exempt from Sales Tax, supporting the claim for exemption. The Assessee contended that the Revenue Authorities incorrectly categorized the item as a simple boiler, ignoring its actual use for waste conversion. The Assessee asserted that the commodity fell within the exemption entry despite being labeled as a boiler, as it was utilized for converting agrowaste into fuel.

Upon review, the High Court found that the Revenue authorities had taken a narrow view by disregarding the actual purpose of the purchased item. The Court noted that the goods were clearly identified as agricultural and municipal waste conversion devices in the provided documentation. The Court emphasized that the term 'agricultural and municipal waste conversion device' should not be limited to devices treating only municipal waste like sewage. It held that agrowaste, such as coconut shells, could also be converted into fuel, aligning with the exemption criteria under Entry 46.

The High Court criticized the Revenue authorities for categorizing the item as a simple boiler and upheld the Assessee's claim for exemption. The Court emphasized that the item was initially sold as an exempted good within the State and should not lose its exempt status when resold interstate. The Court concluded that the denial of exemption to the Assessee was unjustified, allowing the writ petition and setting aside all previous orders denying exemption.