2018 (7) TMI 2303 - HC - VAT and Sales Tax

Classification of goods - purchase and sale of crockery and tray made from melamine - whether melamine tray treated as a crockery item or not - HELD THAT - Crockery can include all forms of dishes such as plates as well as serving platters bowls and dishes that are used to hold condiments such as a gravy bowl. Traditionally crockery is applied to any type of dinnerware that is made from natural materials. This could include plates cups and serving dishes that are composed of clay that has been fired and prepared for use on a recurring basis. While technically this would also include fine china and porcelain dinnerware. Crockery was usually a term applied to dishes that were intended for use for more casual situations such as a simple family meal - Purists tend to also omit some of the modern types of dinnerware from the definition of crockery. Plastic dishes or dinnerware that is manufactured using other synthetic materials that make the dishes difficult to break may not be considered proper crockery even though they are usually intended for regular use in a casual setting. However as these forms of dishware have become more common in many households their acceptance as meeting the basic definition of crockery has become more common. So far as melamine is concerned it is a white crystalline compound made by heating cyanamide and used in making plastics - Further a plastic used chiefly for laminated coatings made by copolymerizing melamine with formaldehyde. There is no reason to interfere in the matter hence the revision filed by the Commissioner has no legs and is accordingly dismissed.

Summary

Issues Involved:
1. Classification of melamine tray for tax purposes - whether it falls under crockery or plastic goods category.

Analysis:
The case involved a dispute over the classification of a melamine tray for tax purposes. The dealer treated the sales of melamine tray as plastic goods and paid tax at 8%, while the assessing authority classified it as crockery and taxed it at 12% plus State Development Tax at 1%. The First Appellate Authority ruled in favor of the dealer, considering the melamine tray as plastic goods based on a specific notification. The authority highlighted that the nature and use of the melamine tray differed from traditional crockery items like cups, plates, and dishes. The authority also noted that the assessing authority had previously treated the melamine tray as plastic goods in a prior assessment year.

The definition and characteristics of crockery were extensively discussed in the judgment. Crockery was defined as various types of tableware used during mealtime, including dishes, plates, serving platters, and bowls. Traditionally, crockery referred to dinnerware made from natural materials like clay, intended for casual dining. The judgment emphasized that crockery typically had a simple and utilitarian design, with little to no decoration, focusing on durability for repeated use. The judgment also mentioned the exclusion of modern synthetic materials like plastic from the purist definition of crockery, although their acceptance had increased over time.

The judgment delved into the definition and properties of melamine, describing it as a white crystalline compound used in making plastics and laminated coatings. It highlighted the distinct characteristics and uses of crockery and melamine, indicating that they served different purposes and were utilized differently by consumers. The Tribunal upheld the First Appellate Authority's decision to tax the melamine tray at 8% as plastic goods, based on factual findings and the dealer's historical treatment of the item. The revision filed by the Commissioner challenging this decision was dismissed, as there was no justification for interference based on the established facts and classifications presented in the case.