2021 (3) TMI 436 - HC - VAT and Sales Tax

Classification of goods - Glow Mint Moisturiser - Glow Fair Moisturiser etc. - whether these items were in the nature of ayurvedic medicines and drugs on which according to the Schedule-II(a) to TVAT Act, 5% duty would be attracted? - Department claims that these items were in the nature of cosmetics and toilet articles which according to Entry No.45 to Schedule -II(b) of the Act, the rate of duty would be 12.5 percent to 14.5 percent as fixed by the Government from time to time - HELD THAT - The names of the products suggest they are all in the nature of cosmetics. These products are moisturisers, fair skin solutions, hair solutions for better glow etc. One of them is plain and simple shampoo for glowing hair. Even the supplier is aptly described as Glamour World. It is of course unsafe to base our conclusions on the basis of a title of the product. However, the petitioner himself has brought about the situation since as noted by the Assessing Officer despite opportunity been given, the petitioner failed to provide samples which could be sent for chemical analysis. On record, there is a letter dated 04.02.2016 written by the Superintendent of Taxes to the petitioner asking the petitioner to provide samples of such products. His recording of the order that despite opportunities, the petitioner did not supply the samples, cannot be disputed without any firm basis for the same. Petition dismissed.

Summary

Issues:
1. Classification of imported items under Tripura Value Added Tax Act, 2004.
2. Authority of Tax Audit Officer to make assessment.
3. Requirement of chemical analysis for assessment.
4. Nature of imported goods - cosmetics or medicines.
5. Legal remedy for challenging assessment orders.

Analysis:
1. The petitioner challenged an order demanding additional value added tax for importing items classified as either ayurvedic medicines or cosmetics under the Tripura Value Added Tax Act, 2004. The dispute arose as the department considered the items to be cosmetics attracting a higher duty rate, while the petitioner claimed they were medicines with a lower duty rate under the Act.

2. The Tax Audit Officer issued an assessment order for the disputed periods, which was later set aside by the Commissioner for reassessment. The fresh assessment order was passed by the Assessing Officer, leading to the current challenge. The petitioner raised concerns about the authority of the Tax Audit Officer to make assessments under the Act.

3. The petitioner contended that the assessment order was invalid as no chemical analysis was conducted on the imported items. The department argued that the petitioner failed to provide samples for analysis, hindering the assessment process. The court noted the importance of such analysis in determining the nature of the goods.

4. The central issue revolved around whether the imported items were cosmetics or medicines. The court examined the list of imported products, which included moisturizers, skin solutions, and hair products. Despite the suggestive names and the supplier being described as Glamour World, the petitioner did not provide samples for chemical analysis to support their claim of importing medicines.

5. While the court typically requires aggrieved parties to file statutory appeals against assessment orders, in this case, the petition was admitted, allowing a direct inquiry into legal questions. The court dismissed the petition, emphasizing the petitioner's failure to provide samples for analysis and the lack of evidence supporting the claim of importing medicines. The legal remedy for challenging the assessment order was not granted due to the petitioner's non-compliance with the assessment process.