2023 (2) TMI 937 - HC - VAT and Sales Tax

Classification of mosquito repellant Good Knight - to be classified as insecticide under Entry 30 of Part II of Schedule B to the OVAT Act attracting 4% tax or would fall in the residual entry of all other goods under Part III of Schedule B to the OVAT Act in which case it would be amenable to tax @ 12.5%? - HELD THAT - The ACST and the Tribunal have concurrently held that the product in question is in fact an insecticide within the meaning of that expression in Entry 30 of Part II of Schedule B and, therefore, amendable to tax @ 4% thereby rejecting the plea of the Department that it should be classified as all other goods in terms of Part III of Schedule B of the OVAT Act, amenable to tax at 12.5%. The literature accompanying the product, which has been enclosed with the present revision petition, reveals that one of the principal ingredients of the product is Transfluthrin 0.88% w/w Liquid Vaporiser . It is explained in the said literature that Transfluthrin 0.88% w/w Liquid is an effective insecticide recommended for the control of adult mosquitoes in the household - It is evident therefore, that the product sold by the Opposite Party Page Dealer has been correctly categorized as an insecticide under Entry 30 of Part II of Schedule B of the OVAT Act. The Court is, therefore, satisfied that no error has been committed either by the ACST or the Tribunal in accepting the plea of the dealer and negativing the contrary plea of the Department. Revision petition dismissed.

Summary

Issues: Classification of product under Odisha Value Added Tax Act, 2004

Issue 1: Classification of 'Good Knight' mosquito repellant under the Odisha Value Added Tax Act
The Department filed a revision petition challenging the Odisha Sales Tax Tribunal's order, which set aside an assessment order classifying the product as an insecticide under Entry 30 of Part II of Schedule B, attracting 4% tax. The main issue was whether 'Good Knight' fell under the insecticide category or as 'all other goods' under Part III of Schedule B, subject to 12.5% tax.

Analysis:
The Additional Commissioner of Sales Tax and the Tribunal determined that 'Good Knight' qualified as an insecticide under Entry 30 of Part II of Schedule B, hence liable for 4% tax. This decision was based on the product's literature, which highlighted 'Transfluthrin 0.88% w/w Liquid Vaporiser' as a key ingredient effective against adult mosquitoes. Moreover, the Opposite Party-Dealer possessed a registration certificate under the Insecticides Act, 1968 for manufacturing the insecticide, further supporting the classification. Consequently, both the ACST and the Tribunal correctly categorized the product as an insecticide, rejecting the Department's argument for a higher tax rate.

Issue 2: Judicial review of the classification decision
The Court had to determine whether the Department's request for a judicial review of the classification decision was warranted, considering the factual and legal basis presented in the case.

Analysis:
After reviewing the facts and legal arguments, the Court found no merit in the Department's contention for a judicial review. The Court was satisfied with the reasoning provided by the ACST and the Tribunal in classifying 'Good Knight' as an insecticide, thereby dismissing the revision petition.

In conclusion, the judgment upheld the classification of 'Good Knight' as an insecticide under the Odisha Value Added Tax Act, affirming the 4% tax rate and dismissing the Department's revision petition.