2006 (10) TMI 415 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of "fit kit exerciser" under the U.P. Trade Tax Act, 1948.
2. Classification of "fit kit exerciser" under relevant notifications.
3. Interpretation of "goods for indoor and outdoor games or sports" in common parlance and commercial sense.
4. Applicability of subsequent notifications and their clarificatory nature.
5. Use of dictionary meanings and judicial precedents for classification.

Detailed Analysis:

1. Taxability of "fit kit exerciser" under the U.P. Trade Tax Act, 1948:
The primary issue is whether the "fit kit exerciser" is taxable under the specific entries of the U.P. Trade Tax Act, 1948. The Tribunal held that the "fit kit exerciser" is not covered under the entry "goods for indoor and outdoor games or sports" and should be taxed as an unclassified item at the rate of eight per cent. The first appellate authority had previously accepted the applicant's claim that it should be taxed under the aforementioned entry, but this was overturned by the Tribunal.

2. Classification of "fit kit exerciser" under relevant notifications:
The applicant claimed that the "fit kit exerciser" should be taxed at the rate of 3 per cent under Notification No. ST-2-1097/XI-2(3)-88-U.P. Act-XV/48-Order-91, dated July 29, 1991, and at the rate of 2 per cent under Notification No. TT-2-3403/XI-9(116)/94-U.P. Act-15/48-Order-94, dated October 1, 1994, within the entry "goods for indoor and outdoor games or sports." The Tribunal, however, held that the "fit kit exerciser" does not fit within this entry as it is not known in common parlance or commercial sense as goods for games or sports.

3. Interpretation of "goods for indoor and outdoor games or sports" in common parlance and commercial sense:
The Tribunal found that the "fit kit exerciser" is a device used for body exercise to maintain fitness and does not provide enjoyment, amusement, or recreation, nor does it involve contest or competition. The Tribunal's interpretation was supported by dictionary definitions of "sports," "games," and "exerciser," which emphasized enjoyment, recreation, and competition for sports and games, and physical health training for exercisers.

4. Applicability of subsequent notifications and their clarificatory nature:
The applicant argued that the subsequent Notification No. KA. NI-2-3368/XI-9(231)/94-U.P. Act-15-48-Order-2000(40), dated October 25, 2000, which included "physical exercise and fitness equipment" under "goods for indoor or outdoor games or sports," was clarificatory in nature. However, the court held that the inclusion of these items in the 2000 notification indicated that they were not previously included under the entry for "goods for indoor or outdoor games or sports." The court emphasized that legislative changes by subsequent notifications do not necessarily clarify but can expand the scope of the original entries.

5. Use of dictionary meanings and judicial precedents for classification:
The court referred to various dictionary definitions and judicial precedents to determine the common parlance meaning of "sports," "games," and "exerciser." It concluded that an exerciser is primarily for physical health and does not align with the recreational and competitive aspects of sports and games. The court cited several cases, including Ramavatar Budhaiprasad v. Assistant Sales Tax Officer and Commissioner of Sales Tax v. Sarin Chemical Laboratory, to support the principle that classification should be based on common parlance and commercial understanding.

Conclusion:
The court concluded that the "fit kit exerciser" is not classified under "goods for indoor or outdoor games or sports" in the relevant notifications and should be taxed as an unclassified item. The revision was dismissed, upholding the Tribunal's decision.