JUDGMENT : (Tarlok Singh Chauhan, J.) Aggrieved by the dismissal of the appeal against the levy of VAT @ 13.75%, as against the claim of 5%, the petitioner has filed the instant petition. 2. The revision petition came to be admitted by this Court on 19.07.2017, on the following substantial questions of law:- “(a) Whether the H.P. Tax Tribunal, Dharamshala, camp at Shimla, has erred in law in not appreciating thatmechanical bodies and pre-fab shelters, sheets, metals, parts etc. is capital goods and taxable @ 5%? (b) Whether the H.P. Tax Tribunal, Dharamshala, camp at Shimla, has erred in law in not appreciating that once good falls under any of Harmonized System of Nomenclature (HSN) classification, the residuary entry is not applicable ? (c) Whether the H.P. Tax Tribunal, Dharamshala, camp at Shimla has erred in law in not appreciating that the order passed by the Authorities regarding levy of penalty is totally against the basic principles of interpretation of provision of Act and law as the taxability is totally based on issue of interpretation.” 3. Since all the aforesaid substantial questions of law are intrinsically inter-connected and inter related, therefore, they are taken up together for consideration and are being answered by a common reasoning. 4. The facts are not in dispute. The petitioner is registered both under the Himachal Pradesh Value Added Tax Act, 2005 (for short ‘VAT Act’) as well as the Central Sales Tax Act, 1956 and engaged in the business of manufacture of mechanical bodies, pre fab shelters, sheets/powder/chemicals/plyboard/hardware goods etc. 5. It was during routine checking, the ETO-cum-the Assessing Authority, Flying Squad (South Zone), Parwanoo (for short ‘the Assessing Authority) had detained the vehicle, which was transporting the goods consigned by the petitioner to M/s Cheil India Pvt. Ltd., Gurgaon and found that the respondent had charged VAT @5%, whereas, it was to be charged at the rate of 13.75%. 6. During the course of inquiry, it was found that during the financial years 2012-13 and 2013-14, the petitioner had sold smart tables, table top cubes, leaflet holders, spec card holders with print, glass counters with product base, experience counters, SIS black walls with translates, sign boards and display counters etc. to M/s Samsung India Ltd., Gurgaon through its vendor M/s Cheil India Pvt. Ltd., Gurgaon on which the respondent had charged VAT @5% against the applicable rate of 13.75%. 7. to M/s Samsung India Ltd., Gurgaon through its vendor M/s Cheil India Pvt. Ltd., Gurgaon on which the respondent had charged VAT @5% against the applicable rate of 13.75%. 7. Consequently, the Assessing Authority vide its order dated 31.08.2013, had held that the goods sold by the petitioner were not covered under item No.57-IT products (Now Entry No.60), mentioned in ‘Part-II-A’ of Schedule ‘A’ notified under Section 6 of the VAT Act and hence they were not taxable @5% and were to be charged @13.75%. He further held that the above goods as well as the raw material used in them was not included in the Registration Certificate (RC) of the petitioner and hence they were further to be taxed @13.75%. 8. Prior to passing the aforesaid orders, the Assessing Officer had issued notice to the petitioner under Section 16(8) of the Vat Act and created an additional demand of VAT of Rs.26,89,559/- along-with penalty of Rs.26,89,559/- (total Rs.53,79,118/-) for the year 2012-13 and VAT of Rs.20,23,230/- and penalty of the same amount (total Rs.40,46,460/-) for the year 2013-14 upto 30.06.2013, after adjusting the amount of already paid VAT @5%, meaning thereby a total demand of Rs.94,25,578/- was created for the balance amount of tax for the aforesaid two years. 9. The order passed by the Assessing Officer was assailed by the petitioner before the Additional Excise and Taxation Commissioner, who dismissed the appeal vide its order dated 30.09.2015, constraining the petitioner to approach the Tax Tribunal, who too vide its order dated 29.12.2016 dismissed the appeal, constraining the petitioner to file the instant revision petition. 10. It is vehemently argued by Mr. 10. It is vehemently argued by Mr. K.D. Sood, learned Senior Advocate assisted by Mr.Het Ram Thakur, Advocate that the assessment order made by the Assessing Officer as affirmed upto the Tribunal is unjust and unlawful and the notice under Section 16(8) of the VAT Act was illegal and incorrect and did not satisfy the criteria prescribed under Section 16(8) which provides as under:- “16(8) If a dealer has maintained false or incorrect accounts with a view to suppressing his sales, purchases or stocks of goods, or has concealed any particulars of his sales or his furnished to, or produced before, any Authority under this Act or the rules made there under any account, return or information which is false or incorrect in any material particular, the Commissioner or any person appointed to assist him under sub Section (1) of Section 3 may, after affording such dealer a reasonable opportunity of being heard, direct him to pay by way of penalty in addition to the tax to which he is assessed or is liable to be assessed, an amount equal to twice the amount of tax to which he is assessed or is liable to be assessed.” 11. Sh. Sood argued that the petitioner had not maintained any false accounts nor suppressed any material, more particularly, with regard to sales and purchases and had been filing his regular returns and had at no point of time been issued notice under Section 21(1) of the VAT Act, calling upon him to file complete and correct returns. 12. He also argued that the present case was in fact a case based on dispute of rate of tax which in no way could be dealt with under Section 16(8) of the Act by treating it as a case of suppression of sales or purchases with malafide intentions and hence the penalty imposed under Section 16(8) was void ab-initio. 13. He further contended that during the course of assessment, the petitioner had produced sample of the printed board on HDPE sheet, advertising the mobile phones of Samsung, which was affixed in the display counter and it was mentioned in the 5% tax slab under entry No.60 (supra). 14. 13. He further contended that during the course of assessment, the petitioner had produced sample of the printed board on HDPE sheet, advertising the mobile phones of Samsung, which was affixed in the display counter and it was mentioned in the 5% tax slab under entry No.60 (supra). 14. He lastly argued that the goods sold by him were not merely display counters or show cases, which could be classified as mobile phones but were specifically designed by Samsung itself and were known as Samsung Experience Zone (SEZ). Since the purchaser dealt in mobile phones, which were IT products, therefore, the counters and smart tables supplied by the petitioner should have been considered as the IT products. 15. On the other hand, Mr. Anup Rattan, learned Advocate General had argued that the goods sold by the petitioner had been manufactured on specific requirements and design supplied by M/s Samsung and hence were not mentioned in ‘Part-II A’ of Schedule ‘A’, and were had 5% rate of VAT and hence these goods were to be taxed at the residuary rate of VAT @13.75%. 16. He has further argued that the petitioner had deliberately declaring these goods as ‘sheet metal parts’ and not mentioning them with the names under which they were being mentioned in the invoices, which showed that the petitioner was trying to evade the payment of VAT at the correct rate of tax. 17. He also submitted that the above goods were not mentioned in the RC of the petitioner and hence he could not have manufactured them in violation of the terms of his RC. He has also argued that these goods were not capital or IT goods as they did not fulfill the definition of such goods. Hence, the orders passed by the authorities below need to be upheld. 18. He has also argued that these goods were not capital or IT goods as they did not fulfill the definition of such goods. Hence, the orders passed by the authorities below need to be upheld. 18. We have heard learned counsel for the parties and also gone through the records of the case and find from the record that the authorities after perusing the invoices issued by the petitioner to M/s Cheil India Private Limited., Gurgaon during the years 2012-13 and 2013-14, had, as a matter of fact, found the petitioner to have sold smart tables, table top cubes, leaflet holders, spec card holders with print, glass counters with product base, experience counters, SIS black walls with translates, sign boards and display counters etc., to M/s Samsung India Ltd., Gurgaon, through their agent M/s Cheil India Pvt. Ltd. in which @5% was charged on the ground that the above goods were covered under entry No.60 pertaining to the IT products, of ‘Part-II of Schedule ‘A’, notified under Section 6(1) of the VAT Act. 19. Now, whether the goods fell within the said entry, would have to be essentially be determined from the entry 60 itself, which reads as under:- 60. IT products including computers, telephones (including mobile handsets, DVDs & CDs and parts thereof, tele-printers and wireless equipments and part thereof) and other products as notified vide notification No.EXN-F(5)- 8/2005 dated 29.05.2009. “Telephone, cell phones, tele-printers, wireless equipment and part thereof, Digital Video Discs & Compact Discs and Information Technology products, that is to say:- Sr.No. Description (a) Word processing machines and Electronic typewriters, their parts and accessories. (b) Microphones, multimedia speakers and headphones. (c) Telephone answering machines, (d) Prepared unrecorded media for sound recording. “Telephone, cell phones, tele-printers, wireless equipment and part thereof, Digital Video Discs & Compact Discs and Information Technology products, that is to say:- Sr.No. Description (a) Word processing machines and Electronic typewriters, their parts and accessories. (b) Microphones, multimedia speakers and headphones. (c) Telephone answering machines, (d) Prepared unrecorded media for sound recording. (e) IT software on any media, that is to say,- Discs for laser reading system for reproducing (i) phenomena other than sound or image, Magnetic tapes for reproducing phenomena other than (ii) sound or image, Other software, on floppy disc or cartridge tape or on (iii) disk or on CD ROM or on other media, (f) Transmission apparatus other than apparatus for radio or TV broadcasting that is to say,- Walkie talkie set, (i) Cordless handset, (ii) Car telephone, (iii) Transportable telephone, (iv) Marine radio communication equipment, (v) Amateur radio equipment, and (vi) Cellular telephone, (vii) (g) Radio, Pagers and Demodulators (h) Aerials, Antennae and parts (i) (a) LCD Panels, LED panels and their parts (b) Electrical capacitors, fixed, variable and parts thereof. (j) Electronic Calculators, (k) Electrical resistors, (l) Switches, connectors, relays of up to 5 amperes, (m) DATA/Graphic Display tubes, other than Picture tubes and parts thereof, (n) Diodes, transistors and similar semi-conductor devices, (o) Electronic integrated Circuits and Micro-assemblies, (p) Signal Generators and parts thereof, (q) (i) Optical fiber cables made up of individually sheathed fibers, whether or not assembled with electric conductors or fitted with connectors, and (ii) Optical fiber, Optical fiber bundle and cables other than those specified in part (i) of this sub-item, (r) Liquid Crystal devices, flat panel display devices and parts, (s) Computer systems and peripherals and Electronic diaries, (t) Cathode ray oscilloscopes, spectrum analyzers and signal analyzers, (u) DC Micro motors and Stepper motor of 37.5 watts, (v) Uninterrupted power supply system, (w) Permanent magnets and articles, (x) Electrical apparatus for line telephony or line telegraphy. 20. It would be evidently clear from the aforesaid entry that the goods sold by the petitioner, which find mentioned above, are not included in the list of the IT products on which VAT is chargeable @5%. 21. In this background, no fault can be found with the findings of the learned authorities below when they observe that these goods do not resemble the products listed in the above entry even remotely. 21. In this background, no fault can be found with the findings of the learned authorities below when they observe that these goods do not resemble the products listed in the above entry even remotely. The ‘printed board on HDPE sheet’ does not find mentioned in this tax slab as has been claimed by the petitioner. 22. Learned counsel for the petitioner produced before us the photographs and the description of the goods supplied by the petitioner to claim that these goods are high tech and have been manufactured on special order of M/s Samsung on the design supplied by it for performing specific functions. He would emphatically stress that the goods have sophisticated electrical and electronic circuits and are extremely expensive. Therefore, these goods should be deemed to be falling within entry No.60 and, therefore, taxable @5%. 23. We are not at all impressed by such argument, as the goods manufactured by the petitioner firstly do not find mention under entry No.60 of the above schedule and furthermore just because these tables has sophisticated electrical and electronic circuits and are extremely expensive, would not make the tables an electric or electronic goods so as to fall within entry No.60, attracting tax @5%. 24. As regards the contention that the goods be treated as “capital goods”. Section 2(d) of the Act, defines the capital goods and reads as under:- d) "capital goods" means plant, machinery or equipment [including hydraulic mobile pick and cranes] [Clause (d) of section 2 amended vide Ordinance No.10 of 2010 of the Himachal Pradesh Value Added Tax (Amendment) Ordinance, 2010 w.e.f. 16-11-2010.] used in the process of manufacturing, processing and packing of goods for sale excluding civil structures as may be prescribed;” 25. It would be noticed that the goods manufactured by the petitioner do not fall within the definition of capital goods, therefore, these goods cannot be charged @5% under ‘Part-II-‘A’ of Schedule ‘A’ and are required to be charged @13.75% of ‘Part- III of the above schedule. Therefore, the authorities below have rightly held the petitioner to be liable to pay an additional demand in respect of the differential amount of VAT @8.75% for the year 2012-13 and 2013-14 upto 30.06.2013. 26. Therefore, the authorities below have rightly held the petitioner to be liable to pay an additional demand in respect of the differential amount of VAT @8.75% for the year 2012-13 and 2013-14 upto 30.06.2013. 26. Additionally, we find that the petitioner while making a declaration in form VAT-XXVI-A had described the goods as ‘sheet metal parts’ and was thus rightly assessed under the residuary articles as it was the petitioner’s case itself that goods supplied by him were highly specialized goods made to order and, therefore, in this manner, while not mentioning the same in the invoice and giving it a different nomenclature, the petitioner obviously has concealed the particulars of sale of these goods and had also furnished false and incorrect information in his returns as well as in the declarations submitted by him in form VAT-XXVI-A. 27. As regards the issuance of notice under Section 21(1) of the VAT Act for correction of returns, the said provision was not at all attracted as the petitioner had committed breach of the provisions of Section 16(8) of the Act and, therefore, had been rightly imposed the penalty. 28. It needs to be noticed that the RC issued to the petitioner under both the above Acts shows that it was neither authorized to manufacture or re-sell the above goods as they are not entered in its RC nor the raw material required to manufacture them was mentioned. Therefore, also the petitioner is liable to penalty due to contravention of the provisions of Section 16(8). 29. Lastly and more importantly, the record reveals that the petitioner was duly served with the notice dated 24.08.2013 under Section 16(8) by the Assessing Officer before imposition of penalty and, therefore, the petitioner cannot be heard of complaining of violation of principles of natural justice. 30. In view of the aforesaid discussion, all the substantial questions of law are answered accordingly by holding that the goods manufactured by the petitioner do not fall under the capital goods so as to attract tax @5% and were rightly taxed under the residuary entry. The authorities below have correctly interpreted the provisions of the Act and law and thereby rightly imposed not only the tax liability, but also the penalty upon the petitioner. 31. The authorities below have correctly interpreted the provisions of the Act and law and thereby rightly imposed not only the tax liability, but also the penalty upon the petitioner. 31. In view of the discussion made above and the reasons stated, we find no merit in the instant petition and the same accordingly dismissed, so also the pending applications, if any.