2023 (5) TMI 930 - HC - VAT and Sales Tax

Classification of goods - Gas Metering Skids - classifiable under Chapter Tariff Heading No. 90328990 or classified as machinery under Entry No. 58A in Schedule II of the Gujarat Value Added Tax Act, 2002 where the rate of tax is 4 paise in the rupee - Gas Meter Skid are not used in the manufacture of the final product but only for transportation of Gas, or not - whether the Gas Metering Skid was not an accessory and/or component of the machine used in the manufacture of goods and therefore appropriately classifiable under Entry 58A of the Schedule II of the GVAT Act? HELD THAT - As far as the Special Civil Applications are concerned, the orders challenged therein are the orders passed by the Deputy Commissioner respondent No.4 herein. The Deputy Commissioner, it was submitted, ex-parte relied on the order passed by the Tribunal which is subject matter of challenge in the above captioned appeals and that they are passed even without hearing the petitioners to dismiss the case of the petitioners - Since the aforesaid appeals are admitted and in ultimate analysis the issue involved in the petition is identical, there shall be notice in all the petitions, returnable on 7.6.2023. Since, it was stated that in the two appeals as well as in the Special Civil Applications, the appellants-petitioners have paid the amount towards tax payable, which is also reflected from the impugned orders, by way of ad-interim relief, it is directed that there shall be no coercive steps against the appellants/petitioners in respect of the further recovery of tax. The petitioners, however, shall be obliged to pay the tax with interest, if so adjudged and ordered by the court at the final conclusion of the matter. Application disposed off.

Summary

Issues Involved:
The judgment involves the classification of Gas Metering Skids for tax purposes under the Gujarat Value Added Tax Act, 2002.

Issue 1: Classification of Gas Metering Skids

The Tax Appeals and Special Civil Applications were filed challenging the classification of Gas Metering Skids under the Gujarat Value Added Tax Act, 2002. The appellants argue that the skids should be classified as 'machinery' under Entry No. 58A, attracting a tax rate of 4 paise in the rupee. However, the authorities contend that the skids do not involve a manufacturing process and should be classified under Entry 87, attracting a tax rate of 12.5 + 2.5%. The Tribunal held that the skids, although machinery, are not used in manufacturing and thus fall under the residuary Entry 87. The appellants dispute this classification, emphasizing that the skids are processed for compression, which falls within the definition of 'manufacture' in the Act.

Issue 2: Substantial Questions of Law

The substantial questions of law arising from the controversy include whether the authorities were justified in classifying Gas Metering Skids under Entry 87 instead of Entry 58A, whether the skids are used in manufacturing or only for gas transportation, and whether the skids can be considered accessories or components of machinery under Entry 58A. These questions are crucial for determining the appropriate classification and tax rate applicable to the Gas Metering Skids.

Separate Judgment by Judges:
The judgment was delivered by Honourable Mr. Justice N. V. Anjaria.

This comprehensive summary provides an overview of the issues involved in the legal judgment, including the classification of Gas Metering Skids and the substantial questions of law arising from the dispute. The arguments presented by the appellants and the authorities, as well as the Tribunal's reasoning, are highlighted to capture the essence of the case.