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2023 (10) TMI 493 - SC - VAT and Sales TaxClassification of goods - tinted glass sheets - to be taxed as goods or wares made of glass under the Notification No.5784 dated 07.09.1981 being Entry No.IV or as unclassified item? The plea of assessee that tinted glasses manufactured by it falls under clause (c) of sub-section (1) of Section 3A namely residuary clause and as such tax is to be levied @ 10%; whereas revenue is contending that it would fall under Entry No.4 of the notification No.5784 dated 07.09.1981 which Notification has been issued in exercise of the power conferred under clause(d) of Sub-section (1) of Section 3A of the Act. HELD THAT - This Court in ATUL GLASS INDUSTRIES LTD. VERSUS COLLECTOR OF CENTRAL EXCISE 1986 (7) TMI 90 - SUPREME COURT has held the test commonly applied to determine whether an article after subjecting to manufacturing processes becomes a different article or remains the same is how is the product identified by the class or section of the people dealing with or using such product - In the aforesaid Judgment, the question that arose for consideration was under what tariff item glass mirror would fall, and glass screens fitted in motor vehicles as wind screens, rear screens, window screens would fall under which competing tariff item. Adjudicating this question, this Court held that glass sheet after successive stage of processing undergoes a complete transformation to become a glass mirror and a different commercial product with a reflective surface. There is no vagueness in the notification dated 07.09.1981 and the entry No. 4 is clear and unambiguous namely it has brought within the sweep all goods and wares made of glass exigible to tax but not including plain glass panes and the exemption being the creation of the statute itself, it has to be construed strictly and even if there is any vagueness in the exemption clause must go to the benefit of the revenue. The impugned judgments would not call for interference and accordingly the appeals are dismissed.
Issues Involved:
1. Tax classification of "tinted glass sheets" under Notification No. 5784 dated 07.09.1981. 2. Distinction between "plain glass panes" and "tinted glass sheets" for tax purposes. 3. Applicability of the common parlance test to determine the classification of tinted glass sheets. 4. Burden of proof on the assessee regarding the classification of goods under the residuary category. 5. Interpretation of fiscal statutes and entries under the U.P. Trade Tax Act, 1948. Summary: 1. Tax Classification of "Tinted Glass Sheets": The primary issue was whether "tinted glass sheets" manufactured by the appellant should be taxed as "goods or wares made of glass" under Notification No. 5784 dated 07.09.1981, Entry No. IV, or as an unclassified item. The assessing officer concluded that tinted glass sheets should be taxed at 15% under the category of "all goods and wares made of glass," as they are distinct from plain glass sheets in terms of manufacturing process and properties. 2. Distinction Between "Plain Glass Panes" and "Tinted Glass Sheets": The appellant argued that tinted glass sheets are essentially the same as plain glass sheets, with the only difference being the color. However, the High Court and the Supreme Court found that tinted glass sheets undergo a different manufacturing process, use different raw materials, and have different properties such as transparency and solar radiation absorption. Therefore, they do not fall under the category of plain glass panes. 3. Applicability of the Common Parlance Test: The court applied the common parlance test, which determines how a product is identified by the class or section of people dealing with or using the product. It was found that in common parlance, tinted glass sheets are not considered the same as plain glass sheets. The court also referred to various judgments to support this interpretation, emphasizing that the functional character of the product is crucial in its classification. 4. Burden of Proof on the Assessee: The court held that when an assessee claims that an item falls under the residuary category, the burden of proof lies on the assessee. The Special Investigation Branch's inspection revealed that tinted glass sheets were manufactured through a different process, supporting the revenue's classification. 5. Interpretation of Fiscal Statutes: The court reiterated that words and phrases in taxing statutes must be construed as understood in popular or commercial parlance. The dictionary meanings of "plain" and "pane" were examined, and it was concluded that tinted glass sheets do not fall under the category of plain glass panes. The court also noted that the legislative intent was to include all goods and wares made of glass within the scope of Entry No. IV, except those specifically excluded. Conclusion: The Supreme Court upheld the High Court's decision, affirming that tinted glass sheets should be taxed at 15% under the category of "all goods and wares made of glass" as per Notification No. 5784 dated 07.09.1981. The appeals were dismissed, and the notice for reassessment for the assessment years 1992-93 to 1996-97 was upheld.
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