2013 (7) TMI 397 - HC - VAT and Sales Tax

Rate of tax - Assessee is a manufacturer and dealer in medical electronic items - Tribunal levied tax at rate of 5% - Held that - There is specific entry in TNGST Act, 1959, to deal with medical instruments and appliances, which makes no reference to it being electrical or electronic - Thus irrespective of whether the parts or the heart of the instrument is electronic, the instrument of the petitioner is that of the medical instrument and the appliances, the Assessing Officer rightly brought the item under Entry 20, Part C of the First Schedule, assessable at 5%. It is settled law that when there is a special entry to deal with the item in question, one has to give preference to the same over the general entry. Entry 50, Part B of the First Schedule being the general entry, Entry 20, Part C of the First Schedule being one to deal with the instruments and appliances in medical, surgical, dental or veterinary science, we have no hesitation in confirming the order of the Sales Tax Appellate Tribunal that the assessee s product attract 5% tax as it comes under Entry 20, Part C of the First Schedule - Decided against assessee.

Summary

Issues:
1. Interpretation of tax rates for electronic medical equipment under specific entries in the TNGST Act, 1959.
2. Consideration of nature and classification of medical electronic items for sales tax assessment.

Analysis:
1. The case involved a dispute over the correct tax rate applicable to electronic medical equipment sold by the assessee for the assessment year 1995-96. The primary question raised was whether the Sales Tax Appellate Tribunal was correct in levying tax at 5% instead of 3% under Entry 29 of Part B of the TNGST Act, 1959. The assessee argued that the equipment should be assessed at 3% under a specific entry in the First Schedule Part C. The Tribunal rejected this argument based on a clarification issued by the Revenue, stating that to be classified as an electronic medical instrument, the core of the instrument must be electronic. As no substantial evidence was provided, the Tribunal upheld the 5% tax rate assessment, leading to the Tax Case Revision.

2. The assessee, engaged in manufacturing and dealing with medical electronic items like Neonatal Intensive care Incubator and Phototherapy Unit, contended that the presence of a micro-processor in the equipment should classify them under a specific entry for electronic goods. However, the Revenue argued that the items fell under a different entry assessable at a higher rate of 5%. The Court analyzed the relevant entries in the First Schedule of the Act, noting that Entry 20, Part C specifically dealt with instruments used in medical sciences, irrespective of their electronic components. The Court emphasized that when a specific entry exists for a particular item, it takes precedence over a general entry. Therefore, the Court upheld the Tribunal's decision, confirming the 5% tax assessment under Entry 20, Part C for medical instruments and appliances.

In conclusion, the Court dismissed the Tax Case Revision, affirming the Sales Tax Appellate Tribunal's order. The judgment highlighted the importance of specific entries in tax laws for accurate classification and assessment of goods, emphasizing that special entries should prevail over general ones.