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TMI Blog2022 (3) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms Tariff Act, 1975 for the purposes of identification. Since the AVP is referable to item denoted by HSN code 3204 as adopted by Customs Tariff Act, 1975, the same can not be ignored for the purposes of H.P. VAT Act. The question of law framed in these petitions finds its answer on all fronts from the aforesaid judgment passed by Hon ble Supreme Court in M/S. MP. AGENCIES VERSUS STATE OF KERALA [ 2015 (3) TMI 787 - SUPREME COURT ]. The product Ujala Supreme is thus held to be classifiable under Entry 55 (113) of Schedule-A, Part II-A of H.P. VAT Act, 2005 as Synthetic organic colouring matter and assessable to the rate of VAT applicable to such Entry of Schedule-A. The product Ujala Supreme is held liable for VAT under H.P. VAT Act at the rate which is applicable for items against Entry 54(113) of the Part-II of Schedule-A of H.P. VAT Act - Petition allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... yable on the product. Whereas, according to the petitioner, the product is covered under Entry 54 (113) of Schedule-A, Part-II-A of H.P. VAT Act, 2005, and thus, is liable to pay tax @ 5%, the respondent denies the factum of coverage of product under aforesaid Entry and maintains it to be falling in Schedule-A, Part- III of H.P. VAT Act, under residuary category. 7. On the basis of the material on record, the following question of law has arisen in common in all the three revision petitions, for consideration of this Court in exercise of its revisional power under Section 48 of the H.P. VAT, Act:- " Whether 'Ujala Supreme' is classifiable under Entry No. No.54 (113) of Schedule-A, Part II-A of H.P. VAT Act, 2005 as 'synthetic organic colouring matter' ". 8. We have heard Mr. V. Lakshmi Kumaran, learned counsel for the petitioner and also Mr. Ajay Vaidya, learned Senior Additional Advocate General for the respondent. 9. It is not in dispute between the parties that the product "Ujala Supreme" is taxable under Section 6 (1)(a) of H.P. VAT Act. The dispute is with respect to the rate of tax payable by the petitioner on the product. Respondent claims VAT @13.5%, whereas t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its judgment in OT Rev. No. 13 of 2009 titled as State of Kerala Vs. M/s Jyothy Laboratories dated 12- 4-2011 had held that "Ujala Supreme" which is admittedly used as laundry whitener for clothes, cannot be treated as AVP falling under Entry 155(8)(d) under list of Third Schedule covering industrial inputs and packing materials because "Ujala Supreme". the product made can no longer be identified with AVP in any manner and in the conversion process it has lost its property as an industrial input used for dying silk and woolen material. Moreover in the process of conversion, there is 99% erosion in the concentration of AVP leaving only an insignificant percentage of the item in water with different properties and different use. IN other words, what is done is that an industrial raw material which is used as a dyeing agent for silk and woolen clothes at high temperature is converted into a laundry whitener. Obviously an acid base industrial raw material cannot be used as a laundry whitener which is exactly what is done by "Jyothy Laboratories". The supplier of the items to the appellant. since in the process, the original item lost its identity and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avour and is accordingly covered by the aforesaid judgment. This contention has, however, been disputed by the respondent. 15. The facts, as noticed by the Hon'ble Supreme Court in aforesaid judgment, are as under:- "1. The appellant, M/s M.P Agencies, is a registered dealer under the Kerala Value Added Tax Act, 2003 (for brevity "the 2003 Act") and is a wholesale distributor for "Ujala Supreme" and "Ujala Stiff and Shine", which are manufactured by M/s Jyothy Laboratories Ltd. "Ujala Supreme" is a fabric whitener and "Ujala Stiff and Shine" is a liquid fabric stiffener. The product "Ujala Supreme" is described as fabric whitener for supreme whiteness of clothes, and "Ujala Stiff and Shine" is given the description, liquid fabric whitener for crisp and shining clothes. 2. As there was an issue relating to rate of tax applicable to the two products, the appellant filed an application for clarification before the Commissioner of Commercial Taxes, Thiruvananthapuram. The Commissioner vide Order No. C7.34151/06.CT dated 25-10-2006 clarified the position which is in the nature of advance ruling by opining that the items "Ujala Supreme" and "Ujala Stiff and Shine" are commercially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed System of Nomenclature (HSN), rate of tax applicable to different goods, etc. and resort to common parlance/commercial parlance test could be made only in respect of those goods, which have no reference to HSN. It was further urged that once a commodity is listed in the Third Schedule along with its HSN under List A, it has to be included in that entry only. 5. The crucial question, as the Commissioner perceived, was that the determination of classification of a particular commodity would be whether the same is listed in the Third Schedule with reference to HSN or not and if so listed there would be no scope to interpret the commodity differently relying on common parlance or commercial parlance. The Commissioner took note of the fact that the appellant had purchased the product in question from Jyothy Laboratories that was charging tax @ 4%on the products. Thereafter the Commissioner took note of all the contentions of the appellant and referred to the HSN codes allotted to the commodities, clause 43 of the rules of interpretation, referred to the test reports filed by the appellant and addressed to the commodity, namely, acid violet paste (AVP), and at one point observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside the ambit of a classification made under the CET Act, then the interpretation that could be given under the KVAT Act would be based on the preamble and definitions under the statute." Thereafter, the Commissioner proceeded to state thus: "The commodity covered under HSN 3204.12.94 is specifically for acid violets. In view of the above findings, 'Ujala Whitener' can no longer be treated as an AVP in the original form for which the HSN has been assigned and so the specific Entry 155(8) for acid violets holding HSN 3204.12.94 will not encompass the product 'Ujala Whitener'. In the result the test to be applied is the 'common parlance' or 'commercial parlance' theory. If a consumer asks for AVP no dealer would give 'Ujala Whitener', so also when 'Ujala Whitener' is asked for no dealer would give the commodity 'AVP'. Instead, when a laundry brightener is asked for obviously the dealer would give 'Ujala Whitener' as a similar product. So in common parlance and commercial parlance 'Ujala Whitener' is known and treated as a 'laundry brightener'. In the Third Schedule there is no other entry for such products and so it cannot be classifiable under the Third Schedule. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision of the H.P. VAT Act and the Kerala VAT Act. However, the distinctive features of both the Acts, in our considered view, will not be material as far as drawing of precedence in instant petitions is concerned. The fact of the matter remains that under the Kerala Act, the schedule specified certain products/articles to be taxable at lesser rate and the products/articles outside schedule at higher rate under residuary category, as is in the case under H.P. VAT Act. The rules of interpretation provided in Kerala Act are not available in H.P. VAT Act, but that can not be used to the disadvantage of the petitioner for the reason that such rules have been used by the Hon'ble Supreme Court to interpret the real import of the relevant Entry of the Schedule. 17. The Entry in Column-II of notification issued by the respondent detailing Industrial input and packing material entry against Entry 55 (113) of Schedule-A, Part II-A of H.P. VAT Act, denotes the HSN number, i.e Harmonized System of Nomenclature developed by International Customs Organization and adopted in the Customs Tariff Act, 1975. Noticeably, the Entry against serial No. 113 of the notification issued by respondent detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no manufacturing. It is pertinent to state here that the question of manufacture is not relevant for the purposes of the 2003 Act. What is really relevant is the classification based upon the HSN number. The decisions rendered by Cestat have decided on the classification which is founded upon the HSN number. It has been laid down that after dilution with water the goods continue to remain classified under the same HSN number. This means that the goods remain in List A of the Third Schedule. It may be noted that the position would have been totally different had the goods in question been separately and specifically itemised in SRO No. 82 of 2006 dated 21-1- 2006. The goods which are specifically mentioned in any of the entries of the said SRO, would be chargeable to tax @ 12.5%. But that is not the lis here, for the Revenue has included the goods in the residuary Entry 103 and the said entry, by no stretch of reasoning, can be made applicable. 42. The High Court, we are disposed to think, has missed the issue in entirety and, therefore, we are obliged to dislodge the impugned judgment and orders. However, if any appellant assessee has paid the amount of VAT to the State G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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