2023 (3) TMI 229 - HC - CST, VAT & Sales Tax

Classification of goods - rate of tax - sale of Wheat Bran (Chokad) - Taxable @ 4% treating the same as industrial input coming under SI No.74 of Part-II of Schedule-B particularly when Wheat Bran (Chokad) is generally exempted under Entry 3 of Schedule-A? - HELD THAT:- The fact remains that an entry in a taxation statute admits only of strict interpretation. If the legislative intent was that there should be some conditionality attached to granting exemption from VAT on the sale of ‘Chokad’, then it should have been expressly stated as has been done in Column 3 in regard to Entries 24 and 38. That there being no such conditionality as far as Entry 3 is concerned, the only conclusion that can be drawn is that sales of ‘Chokad’ irrespective of the purpose for which such ‘Chokad’ has been purchased by the buyer, would be exempt from VAT.

It is not even the Department’s case that any notification has been issued by the State Government stating that ‘Chokad’ is an Industrial input for the purposes of Entry 74 of Schedule ‘B’. Without noticing this requirement in Entry 74, both the STO as well as the JCST fell into error in drawing an ‘inference’ that ‘Chokad’ sold to NALCO must ‘naturally’ have been used as an industrial input. This cannot be a matter of surmise or conjecture. If Entry 74 of Schedule ‘B’ had to be made applicable in order that the sale of ‘Chokad’ to NALCO is amenable to tax at 4%, then it was necessary for the Department to show that there was a notification issued by the State Government identifying ‘Chokad’ as an ‘industrial input’. In the absence of such notification, no inference could have been drawn that ‘Chokad’ sold to NALCO was in fact an ‘Industrial input’.

The Court is, therefore, satisfied that the STO, the JCST and the Tribunal erred in treating the sale of ‘Chokad’ by the Petitioner to NALCO as an ‘industrial input’ attracting VAT at 4%.

The question framed is answered in the negative, i.e., in favour of the Petitioner-dealer and against the Department.