2014 (5) TMI 257 - HC - VAT and Sales Tax

Rate of Tax - High Mast poles whether covered under the Entry No.64 of Part II of Schedule-II of the VAT Act or under residuary clause - Held that - Judgment in INDIAN METALS & FERRO ALLOYS LTD. Versus COLLECTOR OF CENTRAL EXCISE 1990 (11) TMI 143 - SUPREME COURT OF INDIA and State of Maharashtra Versus Bradma of India Ltd. 2005 (2) TMI 518 - SUPREME COURT OF INDIA followed -the principle is that in the process of manufacturing of iron poles the product do not cease to be pipes and tubes and it is not much different from pipes and tubes - the product of the petitioner could be defined under entry No.30 (v) of Part II of Schedule II of Iron and Steel , which also includes Steel tubes, both welded and seamless of all diameters and lengths, including tube fittings - It would not be just and proper to charge the product in accordance with residuary entry - resort has to be had to the residuary heading only when by a liberal construction the specific heading cannot cover the goods in question Decided in favour of assessee.

Summary

Issues: Determination of tax rate for high mast iron poles under the M.P. VAT Act 2002.

Analysis:
The petitioner, a Limited Company manufacturing high mast iron poles, filed an application under Section 70 of the VAT Act for tax rate determination. The authority rejected the application, stating that the product falls under the residuary entry, attracting a tax rate of 13%. The petitioner argued that the product should be taxed at 5% under Entry No.64 of Part II of Schedule II as it is essentially pipes and tubes of iron and steel. The petitioner detailed its manufacturing process and product usage, emphasizing the similarity of high mast poles to pipes and tubes used for various purposes.

The court referred to the Hon'ble Supreme Court judgment in Indian Metals & Ferro Alloys Ltd. case, which established that poles manufactured from pipes and tubes do not cease to be pipes and tubes. The court analyzed the relevant entries in the VAT Act and the Central Sales Tax Act, noting that the product could be classified under "Iron and Steel" in Entry No.30 (v) of Part II of Schedule II. The court applied the principle that specific entries override the residuary entry unless a liberal construction necessitates resorting to the residuary heading.

Based on the precedent and interpretation of the relevant entries, the court allowed the petition, quashing the previous order and holding that the high mast iron poles manufactured by the petitioner are taxable under Entry No.30 (v) of Part II of Schedule II of the VAT Act at the rate applicable to iron and steel products. The court emphasized that the specific entry should prevail over the residuary entry when determining the tax liability of goods, aligning with the principles established in previous judgments.