2024 (7) TMI 102 - HC - VAT and Sales Tax

Levy of Entry Tax under the Assam Entry Tax Act, 2008 - PET Reisin - PVC Granuels - challenge on levy on the ground that the said items are nowhere mentioned in the Schedule attached to the Assam Entry Tax Act, 2008 to make the same taxable. Whether PET Reisin and PVC Granuels items can be considered as chemicals as stipulated at entry No. 51 of the Schedule to the Assam Entry Tax Act, 2008 and to make the same taxable or not? HELD THAT - It is well settled that when a taxing statute does not give statutory meaning to a word, that word should be given its popular meaning, i.e. the meaning which is attributed to it in common parlance by people who daily deal with it as consumers or dealers in the market - It is seen that though the Appellate Authority and the Revisional Authority have accepted and held that the items PET Reisins and PVC Granuels are not found in a chemical shop or a chemists shop, the said Common Parlance Test is rejected in the present cases. It would not be that if the items PET Reisins and PVC Granuels are not found in a chemical shop or a chemists shop, ipso facto the common parlance test would apply. However, since the authorities have not made any attempt to apply the common parlance test in the attending facts of the matter as required to be done, such action cannot be countenanced. In the present case, no definition is provided to Chemicals in the Assam Entry Tax Act, 2008. Therefore, for ascertaining the correct meaning of a fiscal entry the same should be construed as understood in common parlance or trade or commercial parlance. In COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS KRISHNA CARBON PAPER CO. 1988 (9) TMI 50 - SUPREME COURT , the Hon ble Supreme Court has held that it is well-settled that where no definition is provided in the statute itself for ascertaining the correct meaning of a fiscal entry, reference to a dictionary is not always safe. The correct guide in such a case is the context and the trade meaning. The trade meaning is that which is prevalent in that particular trade where such goods are known or traded if a special type of goods is the subject- matter of a fiscal entry, then that entry must be understood in the context of that particular trade, bearing in mind that particular word where, however, there is no evidence how the particular goods are understood in the particular market dealing with those goods then the meaning following from the particular statute at the particular time would be the decisive test. It is well-settled, as mentioned before, that where no definition is provided in the statute itself, as in this case, for ascertaining the correct meaning of a fiscal entry, reference to a dictionary is not always safe. The correct guide, it appears in such a case, is the context and the trade meaning. Coming back to the present cases, under the Assam Entry Tax Act, 2008, at Entry 51, Chemicals have been specified, however, at Entry- 55e, 55f and 55g it specified the items Caustic Soda, Sodium Silicate, and Alum, which would be mean and understood as Chemicals. As no mentioned is made of PET Reisin and PVC Granuels and no definition of Chemical is given in the Statute, same have to be therefore, interpreted that PET Reisin and PVC Granuels are not Chemicals. The common parlance/ user test would be applied. Thus, the items PET Reisin and PVC Granuels cannot be considered as Chemicals under Entry 51 of the Schedule attached to the Assam Entry Tax Act, 2008 - this court is persuaded to take a considered view that the items PET Reisin and PVC Granuels would not be classified or considered as Chemicals under Entry 51 of the Schedule attached to the Assam Entry Tax Act, 2008 by applying the common parlance/ user test. The impugned assessment orders by the Assessing authority and impugned orders of the Appellate and revisional Authority are set aside and quashed on being not sustainable - Petition allowed.

Summary

Issues Involved:
1. Legality of the levy of Entry Tax on "PET Reisin" and "PVC Granules" under the Assam Entry Tax Act, 2008.
2. Interpretation of the term "Chemicals" under Entry No. 51 of the Schedule attached to the Assam Entry Tax Act, 2008.
3. Applicability of different interpretative tests (Common Parlance Test, Scientific Test, Dictionary Meaning Test, Internet Meaning Test) for classification of goods.
4. Validity of the assessment orders, appellate orders, and revisional orders related to the levy of Entry Tax on "PET Reisin" and "PVC Granules".

Detailed Analysis:

1. Legality of the Levy of Entry Tax:
The petitioners challenged the levy of Entry Tax on "PET Reisin" and "PVC Granules" under the Assam Entry Tax Act, 2008. They contended that these items are not listed in the Schedule attached to the Act, making the tax imposition illegal. The respondent authorities levied the tax by classifying these items as "Chemicals" under Entry No. 51 of the Schedule.

2. Interpretation of the Term "Chemicals":
The core issue was whether "PET Reisin" and "PVC Granules" could be considered as "Chemicals" under Entry No. 51 of the Schedule. The petitioners argued that these items are synthetic fibers in solid form and not chemicals. They emphasized the need to apply the Common Parlance Test, which interprets terms based on their common understanding among consumers and dealers, rather than scientific or dictionary meanings.

3. Applicability of Different Interpretative Tests:
The authorities used various tests to classify "PET Reisin" and "PVC Granules" as chemicals, including:
- Scientific Test: Defined chemicals as substances obtained through chemical processes.
- Dictionary Meaning Test: Used dictionary definitions to classify the items.
- Internet Meaning Test: Relied on internet sources that categorized plastic granules as chemicals.

However, the court emphasized the importance of the Common Parlance Test, which considers how goods are understood in everyday language and trade. The court found that "PET Reisin" and "PVC Granules" are not commonly sold in chemical shops, supporting the petitioners' argument.

4. Validity of the Assessment, Appellate, and Revisional Orders:
The court reviewed the assessment orders, appellate orders, and revisional orders, which had confirmed the levy of Entry Tax on the items in question. The authorities had rejected the Common Parlance Test and relied on scientific and internet-based definitions, which the court found unsafe and impractical.

Conclusion:
The court concluded that "PET Reisin" and "PVC Granules" cannot be classified as "Chemicals" under Entry No. 51 of the Schedule attached to the Assam Entry Tax Act, 2008. The court applied the Common Parlance Test and found that these items are not understood as chemicals in trade or everyday language. Consequently, the court set aside the impugned assessment orders, appellate orders, and revisional orders. The tax paid by the petitioners on these items, if any, was ordered to be refunded.

Judgment:
The writ petitions were allowed, and the court quashed the impugned orders, directing the refund of any tax paid by the petitioners on "PET Reisin" and "PVC Granules". No order as to costs was made.