1998 (5) TMI 29 - HC - VAT and Sales Tax

Summary

Issues:
Classification of plastic storage tanks under Entry 145 or 217 of the Kerala General Sales Tax Act, 1963.

Analysis:
The core issue in this tax revision case was whether plastic storage tanks should be classified under Entry 145 or Entry 217 of the First Schedule appended to the Kerala General Sales Tax Act, 1963. The revision-petitioner argued that plastic tanks, being articles of plastic, should fall under Entry 145, while the Sales Tax Appellate Tribunal held that they should be classified under Entry 217 as plastic water tanks related to the water supply system.

The Appellate Tribunal found that the plastic tanks sold were indeed plastic water tanks, which are articles made of plastic, thus indicating they should fall under Entry 145 which specifically refers to articles made of plastics. The Tribunal's reasoning that water tanks are related to the water supply system and therefore should be classified under Entry 217 was challenged.

The High Court analyzed the Tribunal's reasoning in light of a Supreme Court decision regarding a similar issue with G.I. pipes. The Supreme Court had clarified that the words "water supply" in Entry 217 should be interpreted in conjunction with "sanitary fittings." It was determined that items related to water supply system do not automatically qualify as sanitary fittings unless they are specifically for use in lavatories, urinals, or bathrooms.

Based on this interpretation, the High Court concluded that water storage tanks made of plastic, being articles of plastic, should fall under Entry 145 and not Entry 217. The reasoning that any item related to the water supply system would be considered sanitary fittings was deemed flawed. The inclusion of plastic pipes under Entry 145 further supported this conclusion, indicating that not all items related to the water supply system are classified as sanitary fittings under Entry 217.

Ultimately, the High Court allowed the revisions, setting aside the Appellate Tribunal's decision that water storage plastic tanks should be classified under Entry 217 of the First Schedule, affirming that they should be categorized under Entry 145 instead.