2020 (10) TMI 210 - HC - VAT and Sales Tax

Classification of goods - lever files made of cardboards - whether taxable under the Residuary Entry No.40, Part-B of the First Schedule of the TNGST Act or under Section Entry 40(iv) of the First Schedule to the TNGST Act, which is taxable at 10%? - HELD THAT - The lever files dealt with by the petitioner, which also contains print, would squarely fall under the Entry 40(iv). The reasoning of the respondents that printing of just a few words alone in the file is unacceptable, since the Entry does not define what the nature of print should be. Moreover, when other materials like folders and file covers have been brought under the purview of Entry 40(iv), the claim by the respondents that lever files made of cardboards has to be brought under the Residuary Entry under 40 Part (B) is far-fetched. The intention of the legislature while bringing them in certain categories of goods under Entry 40(iv) alone requires to be seen and I am of the view that when 'folders and file covers', which carries certain prints are brought under 40(iv), 'lever files made of cardboards' with some print on it, will also squarely fall under the same Entry. Thus, the commodity lever files made of cardboards with any print on it, will fall under Entry 40(iv) of the First Schedule of the TNGST Act - petition allowed.

Summary

Issues:
Interpretation of tax entry for lever files under the Tamil Nadu General Sales Tax Act, 1959.

Analysis:
The petitioner, a dealer of stationery items, specifically lever files made of cardboards, challenged a clarification by the respondents that these files are taxable at 12% under a specific entry of the Act. The petitioner argued that lever files fall under a different entry, which is taxable at 10%. The court considered the description of goods under the relevant tax entry, which includes printed materials like folders and file covers. The court analyzed the definition of "file" and "folder" from the Oxford Dictionary to establish that lever files, even with some print, would fit under the same tax entry as folders and file covers. The court concluded that lever files made of cardboards with any print should be classified under the specific tax entry applicable to printed materials, not the residuary entry, and quashed the impugned clarification.

The court emphasized that the legislative intent behind the tax entry was to cover all printed materials, including folders and file covers. The court rejected the argument that printing only a few words on the file is insufficient for classification, as the entry does not specify the nature of the print required. Given that folders and file covers with prints are categorized under the specific entry, the court reasoned that lever files made of cardboards with prints should also fall under the same category. The court directed the reassessment of the petitioner's firm for the relevant assessment year, instructing the tax authorities to consider the findings of the court and provide the petitioner with a personal hearing to address any objections promptly.

In conclusion, the court allowed the writ petition, setting aside the clarification and remanding the matter for reassessment in accordance with the court's interpretation of the tax entry. No costs were awarded in this decision.