2014 (11) TMI 332 - SC - VAT and Sales Tax

Rate of tax - rate of tax applicable on the sale of Stainless Steel Pressure Cooker, Aluminium Pressure Cooker, Stainless Steel LPG Stoves, Kerosene Stoves and Aluminium Non-stick tawa - Authority, clarified that the rate of tax applicable on the sale of Stainless Steel LPG Stoves, Kerosene Wick Stove and Stainless steel vacuum flask would be 12.5% under Section 4(1) (b) of the KVAT Act and on Aluminium Non-stick cookware would be 4% under Section 5 in Third Schedule of KVAT Act - Held that - Legislature has amended the Schedule by specifically excluding Stainless Steel LPG Stoves and Kerosene Wick Stoves from Entry 5 of the Third Schedule of the KVAT Act. Since the legislature has amended the relevant entries, in our opinion, as of now nothing remains to be considered and decided by this Court - Appeal disposed of.

Summary

Issues:
1. Interpretation of the term "utensils" under the Karnataka Value Added Tax Act, 2003.
2. Applicability of tax rates on specific items such as stainless steel LPG stoves and kerosene wick stoves.
3. Legislative amendments affecting tax liabilities and refund claims.

Analysis:
1. The case involved a dispute over the interpretation of the term "utensils" under the Karnataka Value Added Tax Act, 2003. The respondent, a registered dealer engaged in the manufacture and sale of various items, sought clarification on the applicable tax rates for specific products like pressure cookers, stoves, and flasks. The Authority for Clarification and Advance Rulings clarified the tax rates for certain items, leading to a disagreement that was taken to the High Court.

2. The High Court, in Sales Tax Appeal No.31 of 2005, ruled that the phrase "utensils" in the Third Schedule of the KVAT Act includes stainless steel LPG stoves, kerosene stoves, and vacuum flasks, subject to a tax rate of 4%. This decision was challenged by the revenue in an appeal before the Supreme Court. The Supreme Court limited the appeal to determining whether stainless steel LPG stoves and kerosene wick stoves qualified as utensils under the relevant entry of the KVAT Act.

3. During the proceedings, it was highlighted that the legislature had subsequently amended the Schedule to exclude stainless steel LPG stoves and kerosene wick stoves from the specified entry. The respondent had already paid the tax liability at a higher rate of 12.5%, even though the High Court had ruled in their favor. The respondent, acknowledging the legislative changes, confirmed they would not seek a refund of the excess tax paid. Considering the legislative amendments and the respondent's stance, the Supreme Court concluded that no further action was required, and the civil appeal was disposed of. The respondent was prohibited from claiming a refund for the tax paid in the relevant assessment years in line with the legislative amendments.

This detailed analysis outlines the legal issues, interpretations, court decisions, legislative amendments, and the final resolution of the case regarding tax liabilities and refund claims under the Karnataka Value Added Tax Act, 2003.