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2012 DIGILAW 993 (GAU)

Universal Pipes (P. ) Ltd. v. State of Assam

2012-08-22

ADARSH KUMAR GOEL, UJJAL BHUYAN

body2012
ORDER Adarsh Kumar Goel, C.J. 1. This order will dispose of W.P. (C) No. 3344 of 2011, W.P. (C) No. 2103 of 2011, W.P. (C) No. 3343 of 2011, W.P. (C) No. 807 of 2012, W.P. (C) No. 3208 of 2012, W.P. (C) No. 2213 of 2011, W.P. (C) No. 2280 of 2011 and W.P. (C) No. 3848 of 2012. These petitions seek quashing of orders dated December 8, 2009 and May 6, 2010, issued by the Commissioner of Taxes, Assam, Guwahati under section 105 of the Assam Value Added Tax Act, 2003 regarding taxability of PVC granules and PVC resins by treating the same as being covered by entry 51 of the Schedule to the Assam Entry Tax Act, 2008, i.e., "chemicals". 2. The case of the petitioner is that they are manufacturing PVC pipes, fittings, casting pipes, etc., by using PVC granules and PVC resins, apart from other raw materials. The raw material is brought to the State of Assam from outside thereby attracting the provisions of the Entry Tax Act. Under the said Act, the Schedule of taxable items includes "chemicals" under entry 51. According to the petitioners, the said expression did not cover the raw material items imported by the petitioners mentioned above. The issue came up for clarification under section 105 of the Act and it was held that PVC granules and PVC resins were covered by the expression "chemicals". The said view was reiterated by further order on review application. Following this view, assessment has been made in some cases. According to the petitioners, the view taken is not legally tenable. On application of common parlance test or the user test, which are applied for determining the scope of entry in a fiscal statute, the impugned orders are liable to be quashed. 3. We have heard learned counsel for the parties. 4. The Commissioner in the impugned order observed : .... In the present case, the plastic polymers or resins are processed from basic petro chemical and are used in further manufacture of plastic pipes, tanks, etc., by the disputant dealer or other such dealers. Therefore, indisputably, such items fall into description of 'chemicals' covered by clause (b) above. We may also advert to the following dictionary meanings of the term 'chemical'. .... Therefore, indisputably, such items fall into description of 'chemicals' covered by clause (b) above. We may also advert to the following dictionary meanings of the term 'chemical'. .... There is no dispute that the substances, namely, PVC granules, resins or LLDP forming the subject-matter of dispute are obtained from the chemical process applied to petrochemical. Even the trading of the item in question take place in markets recognized as chemical markets by the dealers manufacturers. As regard reference to the Central Excise Tariff Schedule, it is found that many items like bentonite powder, lime stone, etc., which have been judicially held to be 'chemical' are not enumerated in chapters 28 and 29 but in separate chapter 25. 5. The learned counsel for the petitioners submit that under section 2(2) of the Act, all expressions not defined under the Act will have the same meaning as in Assam Value Added Tax Act, 2003 and, therefore, expression "chemical" should be treated as per the definition in the Assam Value Added Tax Act. This contention cannot be accepted. Entry in the Schedule is not an expression used under the Act which may call for interpretation. Entry in the Schedule has to be interpreted as per established principles for interpretation of the same and is not normally subject-matter of "definition" clause in an Act. 6. It is next submitted that under the Central Excise Tariff Act, 1985, plastic material was not treated as "chemicals". This contention can also not be accepted. Under the different taxing statutes, there can be different scheme of taxing some goods. The fact that plastic material was not "chemical" under the Central Excise Act, cannot be a ground to follow the same pattern for the present statute. 7. It is lastly submitted that applying the common parlance test and the user test, PVC granules and PVC resin may not be covered by the entry "chemicals" as the expression "chemicals" may include such items as may be used for chemical reaction or chemical effect. Even though no evidence has been led to prove that chemicals in common parlance exclude PVC granules and PVC resins, it is submitted that it may be possible to lead such evidence. It is submitted that all products in which chemicals are used may not be classified as "chemicals". Even though no evidence has been led to prove that chemicals in common parlance exclude PVC granules and PVC resins, it is submitted that it may be possible to lead such evidence. It is submitted that all products in which chemicals are used may not be classified as "chemicals". In support of this submission, reliance has been placed on a judgment of the honourable Supreme Court in Mauri Yeast India Private Limited v. State of Uttar Pradesh [2008] 10 RC 607 : [2008] 5 SCC 680. Reliance has also been placed on a judgment of the honourable Supreme Court in Chemical and Fibres of India Ltd. v. Union of India [1997] 2 SCC 664, to the effect that distinction may be made between the material used in the production of plastic and the plastic and all goods in which plastics were used may not be treated as "plastics". Similarly, it is submitted that all goods in which chemicals is used may not be chemicals. 8. The learned counsel for the State does not dispute that the principles relied upon on behalf of the petitioners for interpretation of the expression "chemicals" by applying the common parlance test and the user test have not been applied in the impugned order presumably because this submission did not appear to have been made. In these circumstances, learned counsel for the Revenue submits that the view of the Commissioner may not be treated as conclusive and matter be independently gone into by the concerned authorities without being influenced by the view of the Commissioner. 9. Since the question whether the expression "chemicals" will include PVC granules and PVC resin is primarily a question of fact, without expressing any opinion on merits, on the contention raised on behalf of the petitioners, we consider it appropriate to direct that the said question may be gone into by the concerned authority in appropriate proceedings, independently of the view of the Commissioner. Since in some cases remedy of appeal/revision is available, the petitioners will be at liberty to take their remedies accordingly. It is made clear that if limitation for filing an appeal/revision has expired, the petitioners will be allowed to file such appeal or revision within one month from today. 10. Since in some cases remedy of appeal/revision is available, the petitioners will be at liberty to take their remedies accordingly. It is made clear that if limitation for filing an appeal/revision has expired, the petitioners will be allowed to file such appeal or revision within one month from today. 10. We are informed that during the pendency of these petitions, notification dated July 11, 2011, has been issued by the State of Assam exempting entry tax on entry of PVC resins, LLDPE and PVC granules for use as raw materials in manufacture of plastic items for the period from February 28, 2005 to December 8, 2009. We leave it open to the concerned petitioners to claim the benefit of the said notification for the period in question in appropriate proceedings. The writ petitions will stand disposed of accordingly.