2020 (3) TMI 252 - HC - VAT and Sales Tax

Classification of goods - rate of tax - Digital Multimeter AV0410, Digital insulation resistance tester, Primary current injection set, Digital clamp meter, Tan delta kit - revisionist has claimed that the goods manufactured by him are liable to be taxed in the category of Gain Measuring Instrument at the rate of 5%, while the Assessing Authority rejecting the contention of the revisionist has taxed the said instrument at the rate of 14% being unclassified items - HELD THAT - The revisionist has produced the certificate of Dean Research Development, Electronics Engineering Department, Institute of Engineering and Technology Uttar Pradesh University, Sitapur Road, Lucknow. In support of his contention and the said certificate having been issued by expert body was required to be given due weightage and due consideration by the authorities below. The Assessing Authority as well as Tribunal have without given any cogent explanation rejected the said report. It was clearly open for the Tribunal looking into the technical nature of the question involved to seek an expert opinion with regard to the exact nature and classification of the items prepared by the revisionist and thereby after due consideration return and finding in this regard and the Tribunal firstly having rejected the expert opinion and secondly did not further seek any expert opinion in this regard has committed material irregularity and therefore the judgment of the Tribunal cannot be sustained. The matter is remitted back to the Tribunal and it shall be open for the Tribunal to seek any expert opinion before forming an opinion regarding classification of the instrument manufactured by the revisionist - Revision allowed by way of remand.

Summary

Issues:
1. Classification of goods for tax purposes
2. Rejection of expert opinion by authorities
3. Correctness of classification by Assessing Authority and Tribunal

Analysis:

Issue 1: Classification of goods for tax purposes
The revisionist, engaged in trading "Gain Measurement Instrument," challenged the tax rate imposed on goods manufactured during the assessment year 2014-15. The Assessing Authority classified the goods as unclassified items taxed at 14%, contrary to the revisionist's claim of 5% under Entry No. 378 of the Schedule of Rates. The revisionist argued that the instruments produced fell under the category of Gain Measuring Instruments, supported by an expert opinion from a reputable institute. However, both the Assessing Authority and the Tribunal rejected this classification, leading to the revisionist's appeal.

Issue 2: Rejection of expert opinion by authorities
The expert opinion provided by the revisionist from the Dean Research & Development, Electronics Engineering Department, was crucial in determining the classification of the manufactured goods. Despite the expert report supporting the revisionist's claim, the authorities failed to give it due weightage and consideration. The Tribunal, as the final fact-finding body, dismissed the expert opinion without seeking an alternative expert view, which was deemed as a material irregularity in the judgment.

Issue 3: Correctness of classification by Assessing Authority and Tribunal
The Assessing Authority and the Tribunal's refusal to consider the expert opinion and their failure to seek additional expert advice were highlighted as errors by the court. The judgment emphasized that in cases involving technical classifications, expert opinions should be given proper weight, and authorities must seek further expert input if necessary. Consequently, the court allowed the revision, remitted the matter back to the Tribunal, and directed the Tribunal to seek expert opinion within six months for a more informed classification.

In conclusion, the court's decision to remit the matter back to the Tribunal for reevaluation with the inclusion of expert opinion reflects the importance of considering expert views in technical classification disputes for tax purposes.