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2015 (3) TMI 1048 - KARNATAKA HIGH COURTClassification of goods - Applicable rate of tax - Electrical Insulated Press Board - Whether Electrical Insulated Press Board commonly known as High Density Board is not paper and do not fall within the third schedule of serial No.69 of KVAT, 2003 - Whether the goods falls under Serial No.69 or in the residuary Clause of 'other goods' or in other words, whether the tax payable is 4% or 12.5%? - Held that:- it is seen the goods which do not fall in any of the schedules of the KVAT, 2003 were covered u/s 4(1)(b)(ii) under the heading 'other goods' and the rate of tax payable was 12.5%. In the instant case, the goods which is the subject matter of dispute is Electrical Insulated Press Board commonly known as High Density Board. It is also seen that Serial No.69 (i) of the KVAT Act, 2003, deals with 'Paper of all kinds' and 69(ii) deals with 'Waste paper, paper waste and Newsprint'. However, the word 'paper' has not been defined under the KVAT Act, 2003. The word 'paper' in the common parlance or in the commercial sense means paper which is used for printing, writing or packing purposes. From the said various definitions, it is clear that in popular parlance the word "paper" is understood as 'a substance which is used for bearing, writing or printing, or for packing or for drawing on, or for decorating, or covering the walls'. Thus, the word 'paper' in the common parlance or in the commercial sense means 'paper' which is used for writing, printing, packing purposes or drawing or decorating or covering the walls. The legislative history of 'paper' indicates that the expression "paper" has been understood to include all kinds of paper including carbon paper, blotting paper, water proof paper, PVC coated paper, ferro paper, ammonia paper, stencil paper and the like. Therefore, the court should not merely be guided either by taking a narrow or common parlance meaning to the expression "paper" as it is used only for the purposes of writing or printing, when there is such legislative history or practice. There are a number of factors which have to be taken into consideration for determining the classification of a product. For the purposes of classification, the relevant factors, inter alia are, statutory fiscal entry, the basic character, function and use of the goods. When a commodity falls within a tariff entry by virtue of the purpose for which it is put to, the end use to which the product is put to, cannot determine the classification of that product. It is well-established that in a taxing statute, there is no room for any intendment and regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the enactment. If the tax-payer is within the plain terms of the exemption, he cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. The item about which there is no scope for doubt or there is comparatively less scope for doubt would accordingly stand automatically covered by the main items in the entry. In the absence of any inclusion or exclusion of words in the expression "paper", it must be held that it includes 'all kinds of paper'. In this background, when we look at serial No.69, 'papers of all kinds' should include all types of paper. In various judgments, the Courts have held that waste paper, paper waste or newspaper are not included in the word 'paper'. The legislature now has consciously included this paper in Serial No.69. However, after using the words 'paper of all kinds', they have used the word 'including', it means, the types of papers set out after the word including was not included in the word 'paper of all kinds'. Therefore, when a particular item falls within the word, description of paper is not in doubt, it is the word 'included' in the phrase 'paper of all kinds'. Goods is excessively used in an electrical industry and not used in common parlance for the purpose of writing, printing, packing, drawing, decorating or covering walls. The process of manufacture of this item indicates that this product is manufactured by imported wood pulp. It is tested for fiber length, moisture content, mechanical and chemical properties. Going through this process, one thing is clear that though the raw material used is a wood pulp or sulphate pulp, the process it undergoes and the purposes for which it is manufactured, clearly demonstrates that it is not used as a paper. Looking at the relevant factors, such as a basic character, function and the use of the goods and the statutory fiscal entry, it is clear that the intention was not to treat it as paper. In the trade parlance, it is understood as electrical goods. Therefore, that may be the reason why the legislature took the pain to expressly state as to what are the types of paper included in the expression 'paper of all kinds'. They have excluded this particular type of paper. Therefore, the paper of all kinds is a comprehensive and an inclusive definition. It is not possible to treat the Electrical Insulated Press Board/High Density Board as a paper, so as to fall within the third schedule of the KVAT Act, 2003. Insofar as the goods mentioned in the third schedule is concerned, the rate of tax is 4%. Therefore, the authorities are justified in levying tax under the heading 'all other goods' and the rate of tax at 12.5%. It is the finding which the Tribunal and suo motu revision authorities have concurrently recorded and therefore, there seems no justification to interfere with the well considered order of the authorities. - Decided against assessee.
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