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M/s Haryana Pump Manufacturers Association Versus The State of Haryana and another

2016 (11) TMI 1321 - PUNJAB AND HARYANA HIGH COURT

Taxability of submersible pumps upto 5 HP upto June 30, 2006 and thereafter - Classification of goods - classified under Entry 71A of Schedule 'C' or under Entry 1(D)(9) of Schedule 'B' - Whether submersible pumps are covered under entry 71-A of Schedule C of the Haryana Value Added Tax Act, 2003 amended on 20.6.2006 with effect from 01.07.2006 vide Notification No. S.O. 58/HA/6/2003/S.59/2006? - Held that: - agricultural pump sets were exempted from payment of tax in Haryana whereas other pump .....

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elow 5 HP capacity will fall in Entry 71-A in Schedule 'C', hence will be taxable irrespective of its end use. - Appeals disposed off. - VATAP No. 44 of 2012 (O&M) - Dated:- 23-11-2016 - MR. RAJESH BINDAL AND MR. HARINDER SINGH SIDHU, JJ. For The Appellant : Mr. Sandeep Goyal and Mr. Rishab Singla, Advocates For The Respondent : Ms. Mamta Singla Talwar, Deputy Advocate General, Haryana RAJESH BINDAL,J. 1. This order will dispose of VATAP Nos. 44, 45, 101, 102, 132, 133, 143, 165 and 166 of 2 .....

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refore taxable @ 4%? (ii) Whether on the facts and circumstances of the case, the Ld. Tribunal was justified in upholding the order of Financial Commissioner that submersible pumps are classified under residual entry for the period upto 30.6.2006 when there was no competing entry in Schedule 'C'? (iii) Whether on the facts and circumstances of the case, the Ld. Tribunal was justified in holding that the order of Financial Commissioner that submersible pumps are classified under Entry 71A .....

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as added providing for pumps set below 5 HP. As confusion arose regarding taxability of the pump sets, the same being mentioned even in Schedule 'B' providing for tax free goods, application was filed to the State Government under Section 56(3) of the Act for seeking clarification as to whether the submersible pumps would be covered under Entry No.71-A of Schedule 'C' of the Act, w.e.f. 01.07.2006. Though the issue raised was in the above terms, however, still the Government whil .....

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me. It is against the aforesaid order that the present appeal has been preferred by the Association. 4. In the other appeals, orders passed by the Tribunal have been challenged wherein for the period upto June 30, 2006 on submersible pumps upto 5 HP, tax has been levied. 5. Learned counsel for the appellant submitted that Schedule 'B' appended to the Act provides for description of goods which are tax free. Entry-1 in the aforesaid Schedule contains agricultural implements and irrigation .....

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implemented by the authorities under the Act. Amendment was carried out in Schedule 'C' appended to the Act. Item No.71-A was added regarding submersible pumps upto 5 HP. The issue arose at that stage for which the appellant sought clarification. Before addition of Entry 71-A in Schedule 'C', there was no distinction with reference to capacity of pumping sets for the purpose of exemption. The parts of the pumping sets as have been mentioned in Entry 1(D)(9) of Schedule 'B .....

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It was further submitted that when the goods can be covered in a specific entry, there is no need to go to the residual entry. Onus is on the Revenue to establish that the goods fall in a particular entry for the purpose of taxability. If there is any doubt, the benefit is to go to the assessee. There is no scope for any intendment in a taxing statute. 8. In support of the arguments, reliance was placed upon CWP No. 14869 of 2006 titled as Excise and Taxation Officer Vs. M/s T.R. Solvent Oil Pvt .....

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(45) E.L.T. 525 (S.C.); Commissioner of Central Excise, Calcutta Vs. Calcutta Springs Ltd., 2008 (229) E.L.T. 161 (S.C.); Civil Appeal No. 8656 of 2015, State of Madhya Pradesh Vs. Marico Industries Ltd., Decided on 22.7.2016 (SC); Union of India Vs. Garware Nylons Ltd. 1996 (87) E.L.T. 12 (S.C.); and Hindustan Ferodo Ltd. Vs. Collector of Central Excise, Bombay, 1997 (89) E.L.T., 16 (S.C.). 9. On the other hand learned counsel for the State submitted that Entry 1(D)(9) as contained in Schedule .....

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e 'C' was made only on receipt of the representation of the association as earlier the pumping sets were being taxed @ 12.5%. The onus is not on the State rather it is on the assessees as they are trying to claim that the goods manufactured by them fall in Schedule 'B'. 10. Heard learned counsel for the parties and perused the paper book. 11. Relevant entries in Schedules 'B' and 'C' are extracted below: Schedule 'B' Sr. No. Description of goods 1 Agricult .....

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ube (vi) Built-in-Drip-in-Linear Low Density Polythylene Pipe (vii) Bi-pass tube (viii) Accessories like couplers, joints, bend sockets, pressure gauge, regulators etc. (ix) Valves (x) Prime movers i.e. Electric/diesel pump set of 5 horse power and above with fitting Schedule 'C' Sr. No. Description of goods 71 A Pump sets below 5 Horsepower. xx xx xx xx (Note 4: Goods of the description contained in this Schedule shall be deemed to have been excluded from Schedule B.) Inserted vide SO 1 .....

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at the clarification was sought by the appellant on the issue whether the submersible pumps are covered under Entry 71-A of Schedule 'C' as amended on June 20, 2006 effective from 1.7.2006 as prior to that submersible pumps were mentioned only in Entry 1(D)(9) of Schedule 'B' (tax free goods). The government opined that the submersible pumps below 5 HP are covered under Entry 71- A of Schedule 'C' and liable to be taxed @ 4% w.e.f. 01.07.2006. Though no clarification was .....

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iod upto June 30, 2006 is concerned there is only one entry containing submersible pumps, the same is Entry 1(D)(9) in Schedule 'B', which provides for tax free goods. A perusal of the aforesaid entry shows that it is quite wide in application. It encompasses within it pumping sets of all kinds including submersible pumps and sprinkler irrigation system equipments and drip irrigation system and their specified components. Upto June 30, 2006 there was no other entry containing submersible .....

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to be exhaustive in the sense that all different parts used for the complete set of agricultural equipments mentioned in the entry have not been provided. However, the exemption will be available to only those components as mentioned in the list if sold separately. 16. The case of the appellant is that the entry clearly includes pumping sets of all kinds including submersible pumps. Hence, even pumps upto 5 HP are included therein whereas the case set up by the State is that once item No. (x) i .....

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ng. It is not complete pumping set. It is only one of the component for pumping set. Intention of the legislature is clearly evident that while exempting pumping sets, there was no limit prescribed regarding its capacity, whereas while granting exemption to the components thereof, the limit was prescribed in the case of prime movers. The exemption was available only to the electric/diesel pump sets of 5 HP and above. The entry has to be given its true meaning. 17. In Commissioner of Commercial T .....

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for the reason that the Legislature has not thought it appropriate to use the prefix or suffix like ''all'', in all forms or of all kinds. Bitumen used in the entry is in generic form. It would be erroneous not to cover a product, which is only a type or form of bitumen and retains all its essential characteristics. The contention was rejected as the entry did not suggest as to what is included or excluded. Bitumen emulsion was opined to be part of the entry containing 'bitu .....

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tion. In this case, electronic cash registers were found to be covered in the entry providing for cash register as one of the goods. 18. As far as the contention raised by learned counsel for the appellant regarding submersible pumps of the capacity upto 5 HP being exempted even after 1.7.2006 despite addition of Entry 71-A in Schedule 'C' is concerned, the contention is misconceived as Note:4 appended to Schedule 'C' clearly provides that the goods of the description contained i .....

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e applied as the entries are mutually exclusive. No doubt submersible pumps are mentioned in Entry 1(D)(9) of Schedule 'B', however, with addition of Schedule 71-A in Schedule 'C' providing for taxability of pumping sets below 5 HP, these stood excluded from entry 1(D)(9) of Schedule 'B'. Hence, there cannot be any dispute regarding taxability thereof after 01.07.2006. 20. As far as the contention raised by learned counsel for the State regarding reduction of tax from 12. .....

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gested that the mono block and other pumping sets were tax free in Haryana while these were being taxed @ 4% in Punjab and Delhi as per E.C. approved rate. The exemption was available to agricultural pumping sets alone. The other pump sets were being taxed @ 12.5%. The proposal was to reduce the rate of tax on non-agricultural mono block and submersible pumps and parts thereof to bring it at par with the rates of taxes in the neighbouring States. 21. In the case in hand the dispute upto 30.6.200 .....

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types of pumping sets below 5 HP at uniform rate of 4%. The relevant part of the proposal is extracted below: ''As seen from the table above, mono block and other pump sets are tax free in Haryana while taxable @ 4% in Punjab and Delhi as per EC approved rate. However, in Haryana this exemption is available to agricultural pump sets alone. Thus while agricultural pump sets are exempt in Haryana, other pump sets are taxable @ 12.5% while these are taxable @ 4% in Punjab and Delhi. It is .....

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