9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (10) TMI 147 - AAR - VAT and Sales TaxRate of tax - Classification of goods - Shaheen Misri - section 55 of MVAT ACT, 2002 - whether the Product Shahin Masheri to be held as covered by the Entry E-1 Of the MVAT Act, 2002? Held that - It is revealed that the tobacco and tobacco products are classified as unmanufactured tobacco, manufactured tobacco and different products of tobacco in different entries - Further it is seen that out of tobacco products cigar and cigarettes are subjected to higher rate of tax equal to 35 percent. Thus, it is found that most relevant schedule entry D-12 for the purpose of classification. On analysis of this schedule entry, it is seen that the manufactured tobacco products excluding cigar and cigarettes are grouped under this schedule entry. Thus, tobacco products are classified under two schedule entry appended to D schedule i.e. D-12 and D-14. Now, it is necessary to see whether the impugned product is classified in schedule entry D-12 or otherwise. The Masheri is roasted or burnt powdered tobacco. The salt is added to the tobacco and it is burnt and packed. In common parlance, it is understood in its popular sense, and in conversant with the class of people uses it as tooth powder. There is no doubt that it is the product of tobacco. It is applied on gum for consumption of Nicotine. It is also to be noted that for the purpose of MVAT ACT, 2002 the schedule entry provided was A-45A- as Unmanufactured tobacco covered by Tariff heading 2401for earlier periods. The appellant has stated that the Hon. Apex court held that the product is tooth powder and covered by the Excise heading 3306. So the product is manufactured tobacco product. Hence the masher is manufactured tobacco product - the nature of impugned product, Masheri is roasted or burnt powdered tobacco with addition of salt is prepared from tobacco. It is applied on teeth and gums due to addiction of Nicotine. It is commonly used as tooth powder. In common parlance it is identified as tobacco product and is advertised accordingly. Even Hon. Apex court in the appellant case held that it is tooth powder and classified under CETH No.3306.10. Analysis of Schedule entry D-12 and schedule entry E-1 - Held that - On analysis of both entries, we found that the schedule entry D-12 is most specific related to tobacco and tobacco products. The another entry is residuary entry, and it is settled principle the resort of residuary entry shall be considered when the goods not covered in any of the other schedules namely Schedule-A, B, C and D of MVAT ACT, 2002. The Hon. Apex court and various High courts have laid dawn the principle that in taxing statute, the specific schedule entry overrules general schedule entry - The product shahin Bhajki Masheri is covered by schedule entry, D-12 of MVAT ACT, 2002. It is settled principle for applicability of specific entry or residuary entry that only such goods as cannot be brought under the various specific entries in the schedules should be attempted to be brought under the residuary entry . Prospective effect - Held that - It is settled principle for applicability of specific entry or residuary entry that only such goods as cannot be brought under the various specific entries in the schedules should be attempted to be brought under the residuary entry . In present case, there is specific entry applicable to tobacco products so the ratio of various judgments relied upon are not applicable. Thus, the applicant cannot prove existence of circumstances which warrant us to use the discretionary power. In fact use of such discretionary powers in the absence of compelling circumstances would be detrimental to legitimate government revenue and would wipe out the legitimate tax liability. In these circumstances, we do not allow the use of prospective effect as a tool to protect or to wipe of legitimate tax liability. Ruling - The product shahin Bhajki Masheri is covered by schedule entry, D-12 of MVAT ACT, 2002. Thus, the product is liable to tax at the prescribed schedule rate (20 %) as provided under the said schedule entry from time to time. The prayar to grant prospective effect to this order is rejected.
Issues Involved:
1. Classification of "Shaheen Misri" under MVAT Act, 2002. 2. Application of common parlance test. 3. Applicability of previous court rulings under Excise Act. 4. Prospective effect of the Advance Ruling. Issue-wise Detailed Analysis: 1. Classification of "Shaheen Misri" under MVAT Act, 2002: The applicant, M/s. Borsad Tobacco Co. Pvt. Ltd., sought determination of the tax rate on "Shaheen Misri" under section 55 of the MVAT Act, 2002. The product is made from the 'Dust' and 'Rava' of tobacco and is used as a tooth powder. The applicant argued that the product should be classified under Entry No. E-1 of the MVAT Act, 2002, which pertains to tooth powder and is taxed at 12.5%. However, the Authority for Advance Ruling (AAR) analyzed the schedules under the MVAT Act and found that tobacco products are classified under Schedule D-12, which includes manufactured tobacco products and is taxed at 20%. 2. Application of Common Parlance Test: The AAR applied the common parlance test, which is used to interpret terms in sales tax statutes based on their popular and commercial sense. The AAR referred to various court judgments that support the use of common parlance in determining the classification of goods. The AAR concluded that "Shaheen Misri," being a product of tobacco used as a tooth powder, is understood in common parlance as a tobacco product and thus falls under Schedule D-12. 3. Applicability of Previous Court Rulings under Excise Act: The applicant relied on previous court rulings under the Excise Act, where similar products were classified as tooth powder under Chapter Heading 3306. However, the AAR noted that the provisions and classifications under the Excise Act and MVAT Act are not pari materia (not identical). The AAR emphasized that the specific entry for tobacco products in the MVAT Act should take precedence over the general classification of tooth powder. The AAR cited several judgments to support the principle that specific entries in taxing statutes override general entries. 4. Prospective Effect of the Advance Ruling: The applicant requested that the ruling be given prospective effect to avoid financial burden from past tax liabilities. The AAR referred to Section 55(9) of the MVAT Act, which allows for prospective effect if warranted by circumstances. However, the AAR found no compelling reason to grant this request, noting that the applicant was aware of the tax rate and had chosen to litigate despite clear legal provisions. The AAR emphasized that granting prospective effect without strong justification would be detrimental to legitimate government revenue. Conclusion: The AAR concluded that "Shaheen Misri" is classified under Schedule D-12 of the MVAT Act, 2002, and is liable to tax at 20%. The request for prospective effect was rejected. The applicant was advised to file an appeal before the Maharashtra Sales Tax Tribunal if aggrieved by the order. Order: A. The product "Shaheen Bhajki Masheri" is covered by Schedule D-12 of the MVAT Act, 2002, and is liable to tax at the prescribed rate of 20%. B. The request for prospective effect to this order is rejected.
|
