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2021 (11) TMI 3 - HC - VAT and Sales TaxClassification of goods - Manufactured Sand (M-Sand) - covered under Entry 83 of Schedule III to the Karnataka Value Added Tax Act, 2003 or not? - revisional authority as well as the Tribunal proceeded to levy higher rate of tax bringing the M-sand under residuary entry under Section 4(1)(b)(iii) of the KVAT Act primarily for the reason that the Government of Karnataka has issued a Notification dated 31.03.2015 reducing the rate of tax on M-sand at 5.5% - HELD THAT:- It is trite that the commodity could be classified based on how ordinarily or commonly it is known and its purpose and use. It is not disputed by the revisional authority and the Tribunal that the ‘manufactured sand’ is used for construction activity. The ‘Robo Sand’ i.e., ‘manufactured sand’ and the ‘river/natural sand’ is found to be having similar physical properties as per the report of a project sponsored by the Department of Mines and Geology, Government of Karnataka and conducted by the Department of Civil Engineering of the Indian Institute of Science placed on record by the assessee. As could be seen from the material on record, the M-sand cannot be considered as excluded from Entry 83 of Third Schedule of the KVAT Act. The Hon’ble Apex Court in the case of RAMAVATAR BUDHAIPRASAD VERSUS THE ASSISTANT SALES TAX OFFICER, AKOLA AND ANOTHER [1961 (3) TMI 55 - SUPREME COURT] held that the word “vegetables” must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. Everyday use it must be construed in its popular sense meaning “that sense which people conversant with the subject matter with which the Statute is dealing would attribute to it”. Consequently, it has been held that “betel leaves” are not vegetables under the Berar Sales Tax Act, 1947 - applying the principle of common parlance, ‘sand’ includes ‘manufactured sand’ in whatever name it would be called. The Notification dated 31.03.2015 is only clarificatory and that would not disentitle the assessee to claim the reduced rate of tax at 5/5.5% under Entry 83 of the Third Schedule of the KVAT Act. On the other hand, to classify it under the residuary entry different from the claim by the assessee, the department has to discharge the burden of proof. Except relying on the Notification dated 31.03.2015, no further material was relied on by the revenue to bring the ‘manufactured sand’ under the residuary entry. The question of law is answered in favour of the assessee and against the revenue.
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