2024 (4) TMI 955 - HC - VAT and Sales Tax

Time limitation for passing assessment order - Classification of goods - Polymer Nylon Chips - classifiable under Entry 83 Schedule-II(B) of the Uttarakhand Value Added Tax Act, as Plastic Granules or not - whether re-assessment, under Section 29(4) of the Act could be made on the change of opinion, especially keeping in view that the same records had already been scrutinized by the Assessing Authority? Time limitation for passing assessment order - HELD THAT - As per Section 29(7) of the U.P. Commercial Tax Act, reassessment can be made within a period of 8 years after expiry of the Assessment Year. In the present case, as per the Uttarakhand Value Added Tax Act, Section 29(4) deals with the procedure for doing reassessment - In the present case, the Assessment Year is 2011-12, and before the end of six years, the reassessment order can be passed. The reassessment order has been passed on 27.03.2017, which is before the end of six years of the Assessment Year 2011-12, and hence the reassessment order passed under Section 29(4) of the Act was done within limitation, and this aspect has been affirmed by the Tribunal, and the Appeals, qua this ground, has been rightly dismissed. Whether Nylon Chips manufactured by the appellant are covered by Entry 83 of Schedule-(II)(B) of the Act? - HELD THAT - The appellant-department have themselves accepted that, with respect to the Plastic Granules, when they are put into procedure by adding fillers and additives, the strength of the plastic becomes better. Further, as per the opinion given by the British Plastics Federation, and Central Institute of Plastics Engineering Technology (CIPET), Nylon refers to a group of Plastics known as Polyamide, and there is no change in the original material (raw material) in this manufacturing process of Nylon-6. Hence, the use of raw material, i.e. Plastic Granules to produce Nylon Chips will not alter the character of Nylon Chips, being a Plastic, and under the British Plastics Federation, Nylon is considered under the Plastics group - There is no substantial question of law, which requires to be considered in the present Revision. The Nylon Chips have been rightly held to be falling in Entry 83 of Schedule II(B) of the Act by the Tribunal. There is no merit in the present Revision, and the same is, accordingly, dismissed.

Summary

Issues involved:
The issues involved in the judgment are delay condonation application, reassessment u/s 29(4) of the Uttarakhand Value Added Tax Act, classification of Nylon Chips under Entry 83 of Schedule II(B) of the Act, and tax liability determination.

Delay Condonation Application:
The judgment addressed a delay of 164 days in filing the Revision, which was condoned based on reasons stated in the application seeking condonation of delay. The Delay Condonation Application was allowed.

Reassessment u/s 29(4) of the Act:
The State filed a Revision against the order passed by the Commercial Tax Tribunal, where the dispute revolved around the tax amount for the Assessment Year 2011-12. The Assessing Officer had assessed the total tax on self-manufactured Nylon Chips, and the Tribunal examined whether reassessment u/s 29(4) could be made on a change of opinion. The respondent argued that the reassessment was a clear change of opinion and not u/s 29(1)(c) of the Act.

Classification of Nylon Chips:
The Tribunal analyzed whether Nylon Chips manufactured by the appellant fell under Entry 83 of Schedule II(B) of the Act, which pertains to "Plastic granules, plastic powder, and master batches." The respondent contended that the Nylon Chips were indeed plastic granules based on the manufacturing process and technical characteristics. The Tribunal referred to various definitions of "Plastics" and "Granules" to determine the classification.

Tax Liability Determination:
After detailed examination, the Tribunal concluded that Nylon Chips should be classified under Entry 83 of Schedule II(B) of the Act, and the taxable liability could not be 13.5%. The judgment highlighted that the manufacturing process did not alter the character of Nylon Chips as a plastic product. The appellant-department accepted that the strength of plastic granules improved when additives were included, supporting the classification of Nylon Chips as plastics.

Conclusion:
The Tribunal dismissed the Revision as there was no substantial question of law to be considered. The judgment affirmed that Nylon Chips fell under Entry 83 of Schedule II(B) of the Act. The decision was based on the technical characteristics and manufacturing process of Nylon Chips, supporting their classification as plastic granules.