2019 (7) TMI 477 - HC - VAT and Sales Tax

Classification of goods - rate of tax - paver bricks - Validity of reassessment orders - Karnataka VAT Act - Whether classified under the residuary entry taxable at the rate of 14.5% or at a lesser rate of tax as applicable to the goods coming under entry No.2 of the III schedule of KVAT Act? - HELD THAT - This very issue was the subject matter in the case of THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (ENFORCEMENT) -1 THE COMMISSIONER OF COMMERCIAL TAXES AND STATE OF KARNATAKA VERSUS M/S. H.H. CEMENT PRODUCTS AND M/S. PEECI INDUSTRIES 2016 (3) TMI 1094 - KARNATAKA HIGH COURT wherein the Division Bench of this Court extensively analyzing the issue in the light of various judgments has come to a decision that the attempt of the learned counsel for the assessee that the language used all kinds of bricks in entry No.2 of III schedule should be given to the word bricks cannot be countenanced for the simple reason that the said expression is followed by the words the like . It is evident that the order of the Division Bench in H.H.Cement Products is not set aside by the Hon ble Apex Court. It is only at the request of the assessee to withdraw the appeal with liberty to approach the statutory Authorities permission was granted as sought for with an observation that the statutory Authority is at liberty to take an independent view in the matter. Hence the arguments of the learned counsel for the petitioners that the Division Bench ruling the basis for invoking re-assessment proceedings is nullified cannot be countenanced. The petitioners are at liberty to approach the statutory Authorities and produce any additional evidence in support of their claim - Petition disposed off.

Summary

Issues:
Challenge to reassessment orders under KVAT Act for tax liability on paver bricks at 14.5% based on Division Bench decision.

Analysis:
The petitioners challenged reassessment orders under the KVAT Act for tax liability on paver bricks at 14.5% based on a Division Bench decision. The petitioners, engaged in manufacturing paver bricks, contested the classification of paver bricks under the residuary entry taxable at 14.5%. The petitioners argued that the Division Bench ruling levying VAT at 14.5% on paver bricks is unsustainable, citing a Supreme Court decision allowing the assessee to approach statutory authorities independently. The Revenue contended that the Division Bench ruling was not set aside by the Supreme Court, and the statutory Authority re-examined the issue independently, concluding that paver bricks are taxable at 14.5% under the residuary entry.

The main controversy revolved around whether paver bricks should be taxed under the residuary entry or at a lower rate under a specific entry of the KVAT Act. Entry No.2 of the III schedule to the KVAT Act encompassed various types of bricks, including fly ash bricks and earthen tiles. The Division Bench had previously analyzed this issue in the case of M/s H.H.Cement Products, emphasizing the application of the "Common parlance test" in interpreting entries. The Division Bench ruling was not overturned by the Supreme Court, as the assessee was permitted to withdraw the appeal and approach statutory Authorities independently. Therefore, the argument that the Division Bench ruling was nullified by the Supreme Court was dismissed.

In conclusion, the petitioners were directed to approach the statutory Authorities and present additional evidence to support their claim. They were granted four weeks to file an appeal, and the statutory Authorities were instructed to decide the appeal without being influenced by the Division Bench decision, ensuring an independent assessment in accordance with the law. The writ petitions were disposed of with these observations and directions.