2022 (8) TMI 5 - HC - VAT and Sales Tax

Levy of Sales Tax - whether tin containers sold by the Petitioner were exigible to sales tax not under Entry 129 of List-C of the rate chart appended to the Orissa Sales Tax Act, 1947 (OST Act) but under the residual entry where the rate of the tax was 12%? - Application of principles of consistency - HELD THAT - From the copy of the assessment order for 2004-05, it is evident that the tin containers have been taxed at 4% and not 12%. That order has not been further questioned by the Revenue. Since for the subsequent year the plea of the assessee in the above regard has been accepted there is no reason why even on the principles of consistency it should not govern the earlier AY i.e. 2003-04. There is merit of the contention of the counsel for the Assessee that the expression tin containers is to be understood the in the normal commercial and trade parlance and it would be erroneous for the Department to insist that only containers manufactured entirely out of tin should be considered to be tin containers. The essential character of the product being that of a metal container, as understood in trade and common parlance, metal containers with a coating of tin would satisfy the description of tin containers . There is, therefore, merit in the contention that it is classifiable under Entry 129 of List-C of the rate chart appended to the OST Act. Decided in favor of assessee - revision petition is disposed of.

Summary

Issues: Classification of tin containers for sales tax purposes under the Orissa Sales Tax Act, 1947.

Analysis:
1. The petitioner, an assessee, filed a revision petition against the Orissa Sales Tax Tribunal's order, which upheld the Assessing Officer's decision to tax tin containers at a higher rate of 12% under a residual entry, rather than under Entry 129 of List-C of the Orissa Sales Tax Act.

2. The High Court framed two questions for consideration: (i) whether containers made of tin-coated steel plates qualify as "tin containers" under the common meaning, and (ii) whether the Assessing Authority can tax the petitioner's products differently in consecutive years based on the classification of tin containers.

3. The counsel for the assessee argued that for the subsequent assessment year, the Assessing Officer accepted that tin containers fall under Entry 129 of List-C, taxed at 4%, not 12%. The court noted that consistency in classification should govern the earlier assessment year as well.

4. The court agreed with the assessee's contention that "tin containers" should be interpreted based on normal commercial and trade understanding, not limited to containers made entirely of tin. Metal containers with a tin coating fulfill the description of "tin containers" under Entry 129 of List-C.

5. Consequently, the court ruled in favor of the assessee, answering question (i) in the affirmative and question (ii) in the negative. The impugned orders of the Tribunal and Assessing Officer were set aside, restoring the order of the Assistant Commissioner of Sales Tax.

6. The revision petition was disposed of accordingly, emphasizing the correct classification of tin containers for sales tax purposes under the Orissa Sales Tax Act, 1947.