2010 (5) TMI 763 - HC - VAT and Sales Tax

Whether the chemicals and enzyme chemicals used in softening the ready-made garments fall under the ambit of entry 49 of the notification dated June 5 1992 issued under section 18 of the Haryana General Sales Tax Act? Held that - It is held that as per existing provision all types of dyes and chemicals as contemplated under entry 49 are excisable/leviable to tax at the first stage of sale for all purposes irrespective of their use in any manner. Thus the question raised in the present reference petition is accordingly answered against the assessee and in favour of the Revenue.

Summary

Issues:
Interpretation of entry 49 of the Haryana General Sales Tax Act, 1973 regarding taxation of chemicals sold by an assessee.

Analysis:
The judgment concerns a dispute over the taxation of chemicals sold by an assessee under entry No. 49 of the Haryana General Sales Tax Act, 1973. The assessee claimed deduction on the sales of chemicals to registered dealers, but the revisional authority disagreed, directing the assessee to pay tax at the rate of eight per cent on the turnover. The Tribunal referred the question of whether the chemicals used in softening ready-made garments fall under entry 49 for the court's opinion. The court analyzed various legal precedents, emphasizing that all dyes and chemicals are excisable/leviable to tax at the first stage of sale, irrespective of their use. The court highlighted the principle of noscitur a sociis in interpreting tax entries and cited judgments supporting the broad interpretation of chemical taxation. The court rejected the argument that only chemicals used in specific processes are taxable at the first stage, emphasizing the clear language of entry 49 post-amendment. The judgment emphasized the literal interpretation of tax provisions and upheld the taxation of all types of dyes and chemicals at the first stage of sale under entry 49, concluding the reference petition in favor of the Revenue and against the assessee.