2022 (4) TMI 1353 - HC - VAT and Sales Tax

Exemption of entry tax - Indian Made Foreign Liquor (IMFL) or rectified spirit - Section 13 of the Madhya Pradesh Entry Tax Act, 1976 read with Section 53 of the Madhya Pradesh Value Added Tax Act, 2002 - validity of Entry 18 to Schedule I of the M.P. Commercial Tax Act and Entry 47 of Schedule I of the VAT Act - HELD THAT - The rectified spirit's manufacture and sale by the present appellant is not a liquor to claim an exemption under Entry 47 of Schedule I or Entry 6 Part III-A of Schedule II of the VAT Act. The MPCTAB has also held that in common parlance meaning of Indian Made Foreign Liquor means the liquor which is being sold from the shop has a licence for human consumption which does not include the rectified spirit, therefore, it is not exempted from Entry 47 of Schedule I or Entry 6 Part III-A of Schedule II of the VAT Act. There are no substantial questions of law involved in the present appeal - appeal dismissed.

Issues Involved:
1. Classification of spirit under VAT Act post-01.04.2013.
2. Exemption status of spirit under Entry Tax Act post-01.04.2013.
3. Interpretation of the term "liquor" in the context of VAT and Entry Tax Acts.
4. Application of common parlance test for the term "liquor."

Detailed Analysis:

1. Classification of Spirit under VAT Act Post-01.04.2013:
The appellant argued that the spirit should be classified under Entry 47 of Schedule I or Entry 6 Part III-A of Schedule II of the VAT Act, as it was prior to the amendment on 01.04.2013. The court noted that post-amendment, the classification changed, and the spirit was no longer covered under these entries. The court upheld the decision of the Assessing Officer, Appellate Authority, and the Madhya Pradesh Commercial Tax Appellate Board (MPCTAB) that the spirit is not classified under the aforementioned entries post-amendment, thus subjecting it to VAT.

2. Exemption Status of Spirit under Entry Tax Act Post-01.04.2013:
The appellant claimed that spirit should be exempt from entry tax under Entry 1 & 2 of Schedule I of the Entry Tax Act. The court referred to previous judgments and concluded that the exemption status changed post-01.04.2013. The spirit, being a separate class of commodity under the M.P. Excise Act, required a specific license and was not exempt under the revised entries, thus justifying the imposition of VAT.

3. Interpretation of the Term "Liquor" in the Context of VAT and Entry Tax Acts:
The appellant contended that the definition of "liquor" from the M.P. Excise Act should be applied to the VAT Act. The court acknowledged that "liquor" includes spirit as per the Excise Act but emphasized that the VAT Act's classification post-01.04.2013 did not include spirit under the exempted categories. The court highlighted that the term "liquor" in the VAT Act should be interpreted within the context of the specific legislative framework and amendments.

4. Application of Common Parlance Test for the Term "Liquor":
The appellant argued against the application of the common parlance test, asserting that the statutory definition should prevail. The court held that in common parlance, Indian Made Foreign Liquor (IMFL) refers to liquor sold for human consumption, which does not include rectified spirit. Therefore, rectified spirit does not qualify for exemption under the VAT Act entries post-01.04.2013.

Conclusion:
The court concluded that the rectified spirit manufactured and sold by the appellant is not classified as "liquor" for exemption purposes under Entry 47 of Schedule I or Entry 6 Part III-A of Schedule II of the VAT Act post-01.04.2013. The MPCTAB's application of the common parlance test was upheld, and no substantial questions of law were found in the appellant's arguments. Consequently, the Value Added Tax Appeal was dismissed, along with the connected appeal.

Order:
The present Value Added Tax Appeal and the connected appeal (Value Added Tax Appeal No.5/2022) are dismissed. A copy of the order shall be kept in the connected appeal.

← Previous Next →