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2020 (1) TMI 550 - HC - VAT and Sales TaxClassification of goods - Bitumen Emulsion - whether classifiable as a product under S.No. 18 of Part (B) of the First Schedule to the Tamil Nadu Value Added Tax Act, 2006 or under residuary heading at S.No. 69 of Part (C) of the First Schedule under the TANVAT Act attracting 14% of Value Added Tax. HELD THAT - Bitumen Emulsion is a processed Bitumen , but the process does not change its composition, commercial identity or its use. The Court further held that the Bitumen Emulsion is regarded and performs the same function as Bitumen and as a result of processing, neither the primary character nor the composition is lost - Thus Bitumen Emulsion is to be classified as Bitumen falling under Serial 18 of Part B of the First Schedule to the TNVAT Act, 2006 and is liable to be taxed at the rate prescribed therein for Bitumen . Hon'ble Supreme Court in the case of COMMISSIONER OF COMMERCIAL TAX, U.P. VERSUS M/S. A.R. THERMOSETS (PVT.) LTD. 2016 (9) TMI 410 - SUPREME COURT has held that the processes result in improvement of the quality of bitumen and there is no change in the characteristics or identity of bitumen so as to transform bitumen into a new product having an identity, characteristic and use. Petition allowed - decided in favor of petitioner.
Issues involved: Classification of Bitumen Emulsion under TNVAT Act, 2006
Analysis: Issue 1: Classification of Bitumen Emulsion The petition challenges the classification of Bitumen Emulsion under SI.No.18 of Part B of the first schedule instead of SI.No.69 of Part C of the first schedule under the Tamil Nadu Value Added Tax Act, 2006. Analysis: The main issue in this case is whether Bitumen Emulsion should be classified under SI.No.18 of Part B or SI.No.69 of Part C of the first schedule under the TNVAT Act, 2006. The petitioner approached the Advance Ruling Authority seeking clarification on this matter. The Authority classified Bitumen Emulsion under SI.No.16, attracting 14.5% VAT. The petitioner argued that Bitumen and Bitumen Emulsion should be treated as the same commodity based on a Supreme Court decision. The court analyzed the nature and composition of Bitumen and Bitumen Emulsion, emphasizing their similarities and common commercial usage. The court concluded that Bitumen Emulsion falls under the classification of Bitumen under the TNVAT Act, 2006. Issue 2: Interpretation of Legal Precedents The petitioner referred to a Supreme Court decision regarding the classification of Bitumen and Bitumen Emulsion under the U.P. Value Added Tax Act, 2008, to support their case. Analysis: The court considered the Supreme Court decision cited by the petitioner, which highlighted the similarities between Bitumen and Bitumen Emulsion in terms of composition, commercial identity, and usage. The court applied the principles laid down in the Supreme Court decision to the current case and concluded that Bitumen Emulsion should be classified under Bitumen based on these similarities. Issue 3: Application of TNVAT Act, 2006 The court examined the provisions of the TNVAT Act, 2006, specifically Entry 18 of Part B of the First Schedule, which deals with Bitumen. Analysis: The court noted that Entry 18 of Part B of the First Schedule to the TNVAT Act, 2006, pertains to Bitumen, with a commodity code for Bitumen being 2018. The court reiterated the Supreme Court's view that Bitumen and Bitumen Emulsion are essentially the same, with Bitumen Emulsion being a variety of Bitumen. Therefore, the court held that Bitumen Emulsion should be classified as Bitumen under the TNVAT Act, 2006, and taxed accordingly. In conclusion, the court allowed the writ petition, directing the classification of Bitumen Emulsion as Bitumen under the TNVAT Act, 2006, in line with the Supreme Court's interpretation and principles applied.
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