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TMI Blog2022 (3) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... gory. 3. On two occasions i.e. on 29.12.2012 and 01.02.2013, the Assessing Officer raised demands of Rs. 1,06,250/- and Rs. 11,090/- respectively, from the petitioner, on account of less payment of VAT after checking the consignment of the product at Barrier. Another demand of Rs. 15,29,300/- was raised by the Assessing Officer on 31.01.2013 from the petitioner on account of less tax paid for the year 2007-2008. 4. Petitioner assailed the aforesaid assessment by way of separate appeals under Section 45 of H.P. VAT Act, before Additional Excise and Taxation Commissioner-cum-Appellate Authority (South Zone), Himachal Pradesh, Shimla-09 (for short 'Appellate Authority'). The details of the appeals before the Appellate Authority are as under:- Sr. No. Date of demand Tax liability Appeal Number 1. 29.12.2012 1,06,250/- 194/2012-2013 2. 31.01.2013 15,29,300/- 222/2012-2013 3. 01.02.2013 11,090/- 1/2013-2014 All these appeals were decided by the Appellate Authority by a common order dated 24.07.2013 against the petitioner. The assessment made by the Assessing Officer was upheld. However, the Appellate Authority absolved the petitioner from paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied by respondent to categorize Entry 54 (supra). 54 Industrial Input and Packing Material as may be notified Sr. No. Heading Number Description 113 3204.00.00 Synthetic organic coloring matter, whether or not chemically defined; preparations based on synthetic organic coloring matter synthetic organic products of a kind used as fluorescent brightening agents or as luminophores, whether or not chemically defined. 11. The case of petitioner in short is that the petitioner is engaged in processing of "Acid Violet Paste" (for short 'AVP') by diluting it with water and selling the same in the market. The product is thus nothing but diluted AVP and is used for whitening the fabric in households. Petitioner categorically maintains that since AVP is covered under Entry 54(113) of Part II of Schedule-A of H.P. VAT Act and there being no further process being employed for manufacture of product, save and except its dilution with water, the product also is covered under the said Entry and hence chargeable to VAT @ 5%. 12. Per contra, the specific stand of the respondent is that Entry-54 (113) (supra) pertains to items covering Industrial Input. The diluted AVP, as claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nct and different from the user product product AVP, which is covered by Entry 114 of Schedule II-C to the Act. Therefore, we find no justifiable reason to accept the submission of the Appellant sale that the product emerges out of a manufacturing process and to the place the product in the residuary category in the firth schedule to the Act." It becomes evident from the aforesaid extractions of the order passed by the Appellate Authority that while the Kerela High Court held the issue against the petitioner, Division Bench of Guwahati High Court upheld the judgment passed by learned Single Judge of said Court upholding the issue in favour of the petitioner i.e. Jyoti Laboratories ltd.. The Appellate Authority, however, placed reliance upon the judgment of this Court in CWP No. 1506/2009 titled PEPSICO India holdings Pvt. Ltd. Vs. The Assessing Authority-I and Ors, decided on 24.09.2010, for the purposes of drawing distinction between the authorities of the H.P. VAT Act and the Assam VAT Act, and thus, held that the product Ujala Supreme, which was universally used as fabric/laundry whitener for clothes, could not be treated as AVP or Synthetic organic colouring material specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the said entry and the taxable rate would be 12.5%. 3. Being aggrieved by the aforesaid clarificatory order, the appellant filed an appeal being OTA No. 13 of 2006 which was disposed of on 7-6- 20071. The High Court remitted the matter by holding, inter alia: "In the instant case, the Commissioner without even adverting to any one of the evidence produced by the assessee, by merely relying upon how the commodity is understood in the commercial circles, has proceeded to observe that the sale of the products by the assessee requires to be taxed at 12.5%. This view of the Commissioner is contrary to sub-section (2) of Section 94 of the Act. The orders passed by the Commissioner under Section 94 of the Act is not only binding on the assessee, but also binding on the assessees who are similarly placed. Further, it is binding on the assessing authority. In cases of this nature, it is expected of the Commissioner to deal with the subject which is before him for clarification in detail and then offer his opinion by way of an order. In the instant case, the Commissioner has not done that exercise. This action of the Commissioner, in our opinion, is arbitrary, illegal and improper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d use of the products. AVP is basically an organic dye used in textile industry. By virtue of the process undertaken in the unit on the material it undergoes a basic change both in its content and character as well as in its application and use. In the new product evolved out of the process, admittedly there is only about 0.98%of AVP. According to the opinion furnished by Institute of Chemical Technology, University of Mumbai, the new product cannot any longer be used for any purpose for which AVP could have been used. These positions make it clear that the emergence of a new character for AVP is obviously due to change in content. Thus, the content, character and use of the commodity has been changed and as far as the market is concerned this is a commodity holding distinct identity as a 'fabric whitener'. It may be true that on account of the term 'manufacture' as defined in the CET Act for the purpose of levying 'excise duty' the activities leading to the emergence of the product may not amount to manufacture on microanalysis of the term for the purpose of levying 'excise duty'. But the basic fact remains that the product marketed by the unit is not AVP in its original for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied with distinct identities when compared to the raw materials used. In the instant case these requirements are satisfied and so the products in question can no longer be treated as the same product as 'imputed' by virtue of its mere presence in a negligible proportion. As per Section 6(1)(d) goods not covered under clauses (a) or (c) are taxable @ 12.5%and the Government is empowered to notify list of such goods. Accordingly, the Government had notified the list of such goods as per SRO No. 82 of 2006. Vide Entry 27 inter alia 'laundry brighteners' have been specifically picked out and placed in 12.5%category making the intention clear." And again "The next question to be considered is in what sub-entry the product in question is to be placed. The applicant had pointed out that in Entry 27 of SRO No. 82 of 2006, the product 'laundry whitener' is mentioned only in the heading and not mentioned in the sub-entries. By picking out the product 'laundry whitener' and including it specifically in the heading of the said entry, the intention is made specially clear. But since no specific HSN has been assigned to the products in question and the products are not specificall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge its character, is sufficient to reject the contention raised by the respondent. The product, therefore, remains AVP, having coverage under Entry 54 (113) of Part-II of Schedule-A of H.P. VAT Act. 18. By discussing the relevant Entry of Kerala Act corresponding to Entry 54 (113) of Part-II of Schedule-A of H.P. VAT Act with the help of rules of interpretation, Hon'ble Supreme Court has held as under:- "40. From the aforesaid discussion, it is clear as crystal that the two goods/products have been held to be covered under HSN Code 3905 and HSN Code 3204.12.94 and hence, there can be no shadow of doubt that the said entries fall under Schedule III List A Entries 155(8)(d) and 118(5) to the 2003 Act covering industrial inputs and packaging materials, but that would not be material and relevant regard being had to the Rules of Interpretation which are applicable. The subject-matter of the list will not fall under residuary Entry 103 in SRO No. 82 of 2006 dated 21-1-2006, if the goods in question fall in any entry of any of the Schedules. That is what is conveyed by the language employed in Entry 103. The said entry, as we find, does not stipulate or carve out any exception in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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