TMI Blog2022 (3) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... the same can not be ignored for the purposes of H.P. VAT Act. The question of law framed in these petitions finds its answer on all fronts from the aforesaid judgment passed by Hon ble Supreme Court in M/S. MP. AGENCIES VERSUS STATE OF KERALA [ 2015 (3) TMI 787 - SUPREME COURT ]. The product Ujala Supreme is thus held to be classifiable under Entry 55 (113) of Schedule-A, Part II-A of H.P. VAT Act, 2005 as Synthetic organic colouring matter and assessable to the rate of VAT applicable to such Entry of Schedule-A. The product Ujala Supreme is held liable for VAT under H.P. VAT Act at the rate which is applicable for items against Entry 54(113) of the Part-II of Schedule-A of H.P. VAT Act - Petition allowed. - CIVIL REVISION PETITION Nos. 190, 191 and 192 of 2015 - - - Dated:- 14-3-2022 - HON'BLE MS. JUSTICE SABINA, JUDGE And HON BLE MR. JUSTICE SATYEN VAIDYA, JUDGE FOR THE PETITIONER : SHRI V. LAKSHMI KUMARAN AND MR. GOVERDHAN LAL SHARMA, ADVOCATES FOR THE RESPONDENT : SHRI. AJAY VAIDYA, SENIOR ADDITIONAL ADVOCATE GENERAL ORDER All these three revision petitions are being decided by a common judgment as common questions of law and facts arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal dismissed the appeals of the petitioner vide common order dated 17.09.2014, and therefore, the petitioner is in Revision before this Court. 6. The matter in issue between the petitioner and respondent is with respect to the rate of VAT payable on the product. Whereas, according to the petitioner, the product is covered under Entry 54 (113) of Schedule-A, Part-II-A of H.P. VAT Act, 2005, and thus, is liable to pay tax @ 5%, the respondent denies the factum of coverage of product under aforesaid Entry and maintains it to be falling in Schedule-A, Part- III of H.P. VAT Act, under residuary category. 7. On the basis of the material on record, the following question of law has arisen in common in all the three revision petitions, for consideration of this Court in exercise of its revisional power under Section 48 of the H.P. VAT, Act:- Whether 'Ujala Supreme' is classifiable under Entry No. No.54 (113) of Schedule-A, Part II-A of H.P. VAT Act, 2005 as synthetic organic colouring matter . 8. We have heard Mr. V. Lakshmi Kumaran, learned counsel for the petitioner and also Mr. Ajay Vaidya, learned Senior Additional Advocate General for the respondent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified in Part-III of Schedule-A of H.P. VAT Act. This contention of the respondent has been upheld by the Appellate Authority as well as the Tribunal. The matter in issue in the instant petitions, has remained in contention on earlier occasions also before different High Courts. The Appellate Authority noticed the judgments passed by the Kerala and Guwahati High Courts as under:- 12. The Hon'ble Kerala High Court in its judgment in OT Rev. No. 13 of 2009 titled as State of Kerala Vs. M/s Jyothy Laboratories dated 12- 4-2011 had held that Ujala Supreme which is admittedly used as laundry whitener for clothes, cannot be treated as AVP falling under Entry 155(8)(d) under list of Third Schedule covering industrial inputs and packing materials because Ujala Supreme . the product made can no longer be identified with AVP in any manner and in the conversion process it has lost its property as an industrial input used for dying silk and woolen material. Moreover in the process of conversion, there is 99% erosion in the concentration of AVP leaving only an insignificant percentage of the item in water with different properties and different use. IN other words, what is done is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the Appellate Authority and upheld the same. 14. The judgment passed by Kerala High Court, as noticed by the Appellate Authority and the Tribunal has been set-aside by Hon ble Supreme Court in M.P. Agencies Vs. State of Kerala (2015) 7 SCC 102. On the strength of the judgment passed by Hon ble Supreme Court, the petitioner contends that the matter in issue has been answered in its favour and is accordingly covered by the aforesaid judgment. This contention has, however, been disputed by the respondent. 15. The facts, as noticed by the Hon ble Supreme Court in aforesaid judgment, are as under:- 1. The appellant, M/s M.P Agencies, is a registered dealer under the Kerala Value Added Tax Act, 2003 (for brevity the 2003 Act ) and is a wholesale distributor for Ujala Supreme and Ujala Stiff and Shine , which are manufactured by M/s Jyothy Laboratories Ltd. Ujala Supreme is a fabric whitener and Ujala Stiff and Shine is a liquid fabric stiffener. The product Ujala Supreme is described as fabric whitener for supreme whiteness of clothes, and Ujala Stiff and Shine is given the description, liquid fabric whitener for crisp and shining clothes. 2. As there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view the observations made by us in the course of the order. 4. After the matter was remitted, the Commissioner considered all the materials furnished by the appellant and heard the matter at length. It was contended by the appellant that the scheme of VAT is materially different from that of KGST principally with respect to classification of goods for the purpose of levy of sales tax based on Harmonised System of Nomenclature (HSN), rate of tax applicable to different goods, etc. and resort to common parlance/commercial parlance test could be made only in respect of those goods, which have no reference to HSN. It was further urged that once a commodity is listed in the Third Schedule along with its HSN under List A, it has to be included in that entry only. 5. The crucial question, as the Commissioner perceived, was that the determination of classification of a particular commodity would be whether the same is listed in the Third Schedule with reference to HSN or not and if so listed there would be no scope to interpret the commodity differently relying on common parlance or commercial parlance. The Commissioner took note of the fact that the appellant had purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation can it be said that for the mere reason that a product has not been assigned any separate HSN it should be treated as a commodity holding HSN by virtue of its mere presence. In this case Ujala Whitener admittedly contains only a negligible portion (about 0.98%) of AVP. As stated above, definitions and classifications in the CET Act are exclusively for the purpose of levying excise duty. If a commodity comes outside the ambit of a classification made under the CET Act, then the interpretation that could be given under the KVAT Act would be based on the preamble and definitions under the statute. Thereafter, the Commissioner proceeded to state thus: The commodity covered under HSN 3204.12.94 is specifically for acid violets. In view of the above findings, Ujala Whitener can no longer be treated as an AVP in the original form for which the HSN has been assigned and so the specific Entry 155(8) for acid violets holding HSN 3204.12.94 will not encompass the product Ujala Whitener . In the result the test to be applied is the common parlance or commercial parlance theory. If a consumer asks for AVP no dealer would give Ujala Whitener , so also when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. In view of the aforesaid analysis, the Commissioner opined that the products Ujala Supreme and Ujala Stiff and Shine are classifiable under Entry 103 of SRO No. 82 of 2006 and would attract tax @ 12.5%. 16. The fact situation before the Hon ble Supreme Court was pari-materia identical to that in the petitions before this Court. Even the purpose and product was the same. The only distinction that can be drawn was in respect of certain provision of the H.P. VAT Act and the Kerala VAT Act. However, the distinctive features of both the Acts, in our considered view, will not be material as far as drawing of precedence in instant petitions is concerned. The fact of the matter remains that under the Kerala Act, the schedule specified certain products/articles to be taxable at lesser rate and the products/articles outside schedule at higher rate under residuary category, as is in the case under H.P. VAT Act. The rules of interpretation provided in Kerala Act are not available in H.P. VAT Act, but that can not be used to the disadvantage of the petitioner for the reason that such rules have been used by the Hon ble Supreme Court to interpret the real import of the relevant Entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, the goods/commodities that are included in List A of Third Schedule, Entry 103, which is residuary in nature, would not get attracted. 41. The submissions of the learned counsel for the State that the decisions under the Excise Act would have no play, for they deal with the issue of manufacture, does not commend acceptance. The High Court has elaborately dwelled upon the issue of manufacture. We have noticed the judgments rendered by Cestat where there is no manufacturing. It is pertinent to state here that the question of manufacture is not relevant for the purposes of the 2003 Act. What is really relevant is the classification based upon the HSN number. The decisions rendered by Cestat have decided on the classification which is founded upon the HSN number. It has been laid down that after dilution with water the goods continue to remain classified under the same HSN number. This means that the goods remain in List A of the Third Schedule. It may be noted that the position would have been totally different had the goods in question been separately and specifically itemised in SRO No. 82 of 2006 dated 21-1- 2006. The goods which are specifically mentioned in any of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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