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2019 (6) TMI 178 - HC - VAT and Sales TaxTax liability - 'Jute Sutli' imported by the applicant from Nepal - Enhancement of tax liability - rejection of books of accounts and disclosed turnover - HELD THAT - This Court has considered the meaning of word Yarn . Word Yarn has not been defined either in the Act or Rules or in the notifications. Yarn means Sute. A fibre in order to answer the description of the yarn in the ordinary commercial sense must have two characteristics Firstly it should be spun strand. Secondly such strand should be primarily meant for use in weaving, knitting or rope making. Whether the 'Jute Sutli' is Yarn or not? - HELD THAT - In common parlance 'Jute Sutli' as is found is used mainly for the purpose of Tat, Patti or Bags etc. It is not disputed that the Sutli is made of Jute and is Yarn. In this connection it may also be mentioned here that subsequently the State Government has issued a notification dated 7th October 2002 imposing the tax on Tat, Patti or Bags made from Jute, Sutli or Jute Yarn at the rate of 5% - The notification dated 7th October 2002 is clarificatory in nature. In the notification dated 15th January 2000 the word Sutli or Jute Yarn are missing however, in the subsequent notification dated 7th October 2002 the words Sutli or Jute Yarn are included. Revision petition allowed.
Issues Involved:
1. Liability of tax on 'Jute Sutli' imported from Nepal. 2. Applicability of different notifications and their respective tax rates on 'Jute Sutli'. 3. Interpretation of 'Jute Sutli' as 'Yarn' and its tax implications. Issue-wise Detailed Analysis: 1. Liability of Tax on 'Jute Sutli' Imported from Nepal: The primary issue in the revision petition was to determine the correct liability of tax on 'Jute Sutli' imported by the applicant from Nepal. The assessing authority initially imposed a tax rate of 20% based on the notification dated 13.9.2001, which categorized 'Yarn of all kinds imported from outside India' under entry no. 58, attracting a 20% tax rate. The applicant contested this, arguing that 'Jute Sutli' should be taxed at a lower rate as per earlier notifications. 2. Applicability of Different Notifications and Their Respective Tax Rates on 'Jute Sutli': The applicant argued that 'Jute Sutli' should be taxed at 5% as per notification no. 101 dated 15.1.2000, which under entry no. 21(i) and (ii) taxed goods made from jute or hemp at 5% and 10% respectively. The first appellate authority accepted this contention, treating 'Jute Sutli' under the notification dated 15.1.2000 and imposing a 5% tax rate. However, the Trade Tax Tribunal later upheld the assessing authority's decision, reaffirming the 20% tax rate based on the notification dated 13.9.2001. The Tribunal also considered notification no. 3481 dated 7.10.2002, which explicitly included 'Jute Sutli' and set a 5% tax rate, but concluded that this rate was applicable only post-issuance of the notification. 3. Interpretation of 'Jute Sutli' as 'Yarn' and Its Tax Implications: The applicant's counsel argued that 'Jute Sutli' is essentially 'Yarn' used for making Tat, Patti, or bags, and thus should fall under the lower tax rate categories. The court referred to previous judgments and dictionary definitions to interpret 'Yarn' as any spun thread prepared for weaving, knitting, or rope-making. The court noted that 'Jute Sutli' fits this description, being a spun strand used primarily in making jute products. The court also considered the clarificatory nature of the notification dated 7.10.2002, which explicitly included 'Jute Sutli' and set a 5% tax rate, indicating that earlier notifications implicitly covered 'Jute Sutli' under similar tax rates. Conclusion: The court concluded that 'Jute Sutli' should be taxed at 5% as per the notification dated 15.1.2000. The notification dated 7.10.2002 was deemed clarificatory, affirming that 'Jute Sutli' was always intended to be taxed at 5%. Consequently, the revision petition was allowed, the Tribunal's order was set aside, and the first appellate authority's decision was restored, imposing a 5% tax rate on 'Jute Sutli'.
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