2024 (2) TMI 723 - HC - VAT and Sales Tax

Classification of goods - granite stone block and pieces - rate of tax 14.5% or 5%? - applicability of entry no. 109 of the Schedule II Part A as per notification No. KA.NI-2-421/XI-9(1) dated 31.03.2011 - HELD THAT - Entry No. 109 specifically includes stone with the caveat that the same shall not include glazed stone, marble and marble chips. On an interpretation of the intention of the Legislature, it is found that glazed stone, marble and marble chips have been specifically excluded from the definition of stone in Entry No. 109. If the Legislature wanted to exclude granite stone, the same could have very well been done by the amendment carried out on March 31, 2011 - if one were to agree with the submission made by the revenue, one would have to exclude several items that would ordinarily be termed as stone , which is not permissible in law. Upon perusal of the order passed by the Tribunal, one finds that the Tribunal has held that stones that have not been processed in any manner, would be included in Entry No. 109 whereas processed stones that have gone through some kind of procedure would be excluded. The above finding is in consonance with the fact that glazed stone has been specifically excluded from Entry No. 109. There is no scope of interference in the well reasoned order passed by the Tribunal, and accordingly, this revision petition is dismissed.

Summary

Issues involved: Interpretation of tax classification for granite stone under Entry No. 109 of the Schedule II Part A as per notification dated 31.03.2011

Upon admission, the revision petition raised the question of law regarding the taxability of granite stone block and pieces under Entry No. 109 of the Schedule II Part A. The issue was whether the Tribunal was justified in taxing granite stone at 5% under the said entry, despite it not being explicitly mentioned in the notification.

Classification of granite stone for taxation:

The revenue contended that Entry No. 109 did not include granite stone, and thus, it should be taxed at 14.5%. However, the argument presented by Mr. Pandey was that Entry No. 109 was intended for substances of lesser value, such as sand, gitti, bajri, kankar, and stone, excluding high-value items like granite stone.

Legislative intent and interpretation:

The Court examined the legislative intent behind the classification and noted that while Entry No. 109 included "stone," it specifically excluded glazed stone, marble, and marble chips. The Court opined that if the Legislature intended to exclude granite stone, it would have done so explicitly. Excluding granite stone based on its value would lead to excluding other items considered as "stone," which would not be permissible under the law.

Tribunal's interpretation and decision:

The Tribunal held that unprocessed stones fell under Entry No. 109, while processed stones were excluded. This interpretation aligned with the exclusion of glazed stone from the entry. The Court found no grounds for interference in the Tribunal's well-reasoned decision and subsequently dismissed the revision petition.