9911796707
TMI Blog2015 (2) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue, the good in question, viz, pressure cooker, is not covered under Entry No.6 of Part-A of Second Schedule and since it is not covered by any of the entries in First, Second, Third and Fourth Schedules, it would come in the residuary list of Fifth Schedule as Entry No. 1 warranting tax at the rate of 12.5%. This has led to filing of the four writ petitions. An additional issue has arisen in one of the writ petitions which is the consequential assessment made levying higher rate of tax at 12.5% and imposition of penalty for default in payment of due tax. 3. A brief recital of the facts, case wise, is considered necessary. WPC No. 5766/2007 4. In this case, M/s. Hawkins Cookers Ltd. is the petitioner. Petitioner is a public limited company having its registered office at Mumbai and a branch office at Guwahati. It is engaged in the business of manufacturing and marketing of pressure cookers under the brand name of "Hawkins". It is also engaged in marketing of various kitchen ware items, such as frying pan, tava etc. The above goods are made of aluminium. Petitioner is a registered dealer under the Assam Value Added Tax Act, 2003 (VAT Act). Respondent No. 2 is the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Commissioner of Taxes. It is stated that in common parlance, pressure cookers are not understood as utensils, but as contrived appliances meant for domestic use. It is further stated that pressure cookers have valves made of steel, rubber gasket and also have rubber insulating materials. The product is not made solely of aluminium so as to qualify for inclusion in Entry No.6 of Part-A General of Second Schedule to the VAT Act. Therefore, rate of tax cannot be 4%. Since pressure cooker is not included in any of the entries under First, Second, Third & Fourth Schedules, it would be covered by Entry No.1 to the Fifth Schedule, which is a residuary list attracting tax at the rate of 12.5% as prescribed. Therefore, view taken by the Commissioner is correct and requires no interference. WPC No. 173/2008 7. In this case M/s. Nirlep Appliances Ltd. is the petitioner, which is engaged in the business of manufacturing and marketing of various kitchen items and pressure cooker under the brand name of "Nirlep". It is stated that the above goods are made of aluminium. Petitioner is a registered dealer under the VAT Act and has been submitting its tax returns showing the turnover of sales of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner under section 74(1) of the VAT Act to produce all relevant documents and books of accounts relating to the periods 2005-06, 2006-07 and 2007-08 i.e. from 01.04.2007 to 29.11.2007. Under section 74 (3) (a) of the VAT Act, certain documents etc. were seized from the business premises of the petitioner on the ground of non-payment of tax as per prescribed rate. Petitioner was issued show cause notice dated 24.12.2007 as to why penalty should not be imposed under section 90 of the VAT Act for default in the payment of tax to the extent of Rs. 6,50,619.00. It appears that petitioner had submitted reply dated 27.12.2007 requesting the authority to drop the proceeding for realisation of additional tax as well as for imposition of penalty. Ultimately, order dated 31.12.2007 was passed by the assessing authority, whereby, it was stated that petitioner had paid 4% tax on sales turnover on pressure cooker instead of 12.5% and the differential amount of tax due came to Rs. 6,50,619.00. Penalty was also levied for such default. The breakup of the additional tax and the penalty imposed are as follows:- 2005-06 2006-07 2007-08 (upto Nov/07) Total Evaded Tax:- Rs.3,06,849/- Rs.2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the VAT Act. According to the petitioners, pressure cooker is made of aluminium and therefore, would come within the meaning of aluminium utensils and enamelled utensils as per Entry No.6 of Part-A General of Second Schedule to the VAT Act. On the other hand, according to the Revenue, pressure cooker is not an aluminium utensil as is commonly understood and, therefore, is not covered by Entry No. 6 of Part-A General of the Second Schedule. Since it is not covered by any of the entries in the First, Second, Third and Fourth Schedules, it would come under the Fifth Schedule as a residuary item under Entry No. 1 in which case tax is leviable at the rate of 12.5%. A connected issue of levy of additional tax by application of the higher rate of tax and imposition of penalty for default in the payment of the differential tax amount has arisen in one of the petitions. 12. We have heard Mr. GK Joshi, learned Senior Counsel for the petitioners and learned Standing Counsel, Finance (Taxation) Department, Assam. 13. Mr. Joshi, learned Senior Counsel for the petitioners submits that pressure cooker is made of aluminium. Use of other materials in minor quantities would not make it a non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um is about 71%. It is also made up of other components, such as stainless steel bracket, weight set, bakelite handle set, side handle, gaskets etc, which are not pure aluminium. Therefore, according to the Commissioner, since pressure cooker is different from aluminium utensils as is commonly understood, pressure cooker will not come within the category of aluminium utensils mentioned in Entry No. 6 of Part-A General of the Second Schedule. Since there is no specific entry for pressure cooker, it will be covered by Entry-1 of the Fifth Schedule, which is the residuary Schedule and will be taxable at the prescribed rate of 12.5%. 17. The reasoning given by the Commissioner is a plausible one and appeals to the Court. This position has been further explained in the affidavit filed by the Commissioner on 19.05.2011 in WP(C) No. 5766/2007. It is stated that pressure cookers have valves made of steel, rubber gasket and also have rubber insulating materials. Pressure cooker is not made solely of aluminium so as to qualify for inclusion in Entry No. 6 of Part-A General of the Second Schedule. In common parlance, pressure cookers are not understood as mere utensils, but contrived applian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Part-A General of the Second Schedule to the VAT Act appears to be the correct view and we see no reason to interfere with the decision taken by the revenue authorities in this regard. However, against the assessment orders, the concerned dealers will have their remedy of appeal and revision under the VAT Act. Subject to the observation as above, the aforesaid challenge is rejected. 20. Coming to the challenge to imposition of penalty, this Court has already held in WP(C) No.4112/2007 (Vishal Retail Ltd. Vs. State of Assam & Ors.) disposed of today that imposition of penalty is not automatic on default. That was also a case relating to imposition of penalty under section 90 of the VAT Act. It has been held that discretion is vested on the authority empowered to impose penalty; whether to impose penalty at all or not and in the event it is decided to impose penalty, what should be the quantum. The order of penalty must reflect application of mind indicating exercise of discretion. It must be a speaking order. Relevant portion of the said order reads as under:- "14. A careful reading of the aforesaid provision would indicate that in case of contravention or failure to comply wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
