Case Law Details
Robo Silicon Pvt. Ltd. Vs State of Karnataka (Karnataka High Court)
Conclusion: ‘Common Parlance Test, ‘Marketability Test; ‘Popular Meaning Test’ were tools for interpretation to arrive at a decision on the proper classification of tariff entry. Therefore, ‘manufactured sand’ would certainly fall under the entry ‘sand’, as it stood during the relevant period. The Notification dated 31.03.2015 was only clarificatory and that would not disentitle assessee to claim the reduced rate of tax at 5/5.5% under Entry 83 of the Third Schedule of the KVAT Act.
Held: Assessee was a registered dealer under the provisions of the KVAT Act and was engaged in the manufacture and sale of sand which was marketed as ‘Robo Sand’ during the tax period April 2014- March 2015. It was collecting and discharging the VAT on the sales of ‘manufactured sand’ (M-sand) at the rate of 5.5% by classifying it under Entry 83 of the Third Schedule of the KVAT Act. The reassessment proceedings for the tax periods under consideration were concluded classifying the M sand under Entry 83 of the Third Schedule of the KVAT Act. Additional Commissioner of Commercial taxes exercising the powers under Section 63A of the KVAT Act initiated the proceedings and rejected the claim of assessee and raised additional demand. Being aggrieved, assessee preferred appeal before the Tribunal which was thereby dismissed. The issue arose for consideration was whether Tribunal was right in holding that Manufactured Sand (M-Sand) was not covered under Entry 83 of Schedule III to the Karnataka Value Added Tax Act, 2003?. It was held that the common parlance test’, ‘marketability test’, popular meaning test’ were all tools for interpretation to arrive at a decision on proper classification of a tariff entry. The test, as to what a common man viewing or dealing with the article would understand it to be, would be relevant. The Hon’ble Apex Court has held that while interpreting the entry for purpose of taxation recourse should not be made to the scientific meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. Either viewed from common parlance/trade parlance/popular meaning test, applying the user theory, ‘manufactured sand’ would certainly fall under the entry ‘sand’, as it stood during the relevant period. The Notification dated 31.03.2015 was only clarificatory and that would not disentitle assessee to claim the reduced rate of tax at 5/5.5% under Entry 83 of the Third Schedule of the KVAT Act. On the other hand, to classify it under the residuary entry different from the claim by assessee, the department had to discharge the burden of proof. Except relying on the Notification dated 31.03.2015, no further material was relied on by the revenue to bring the ‘manufactured sand’ under the residuary entry. Thus, the question of law was decided in favour of the assessee and against the revenue.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
This revision petition is filed by the assessee under Section 65(1) of the Karnataka Value Added Tax Act, 2003 (‘KVAT Act’ for short) challenging the judgment dated 03.01.2019 passed in STA No.313/2017 by the Karnataka Appellate Tribunal at Bengaluru (‘Tribunal’ for short) relating to the tax periods April 2014 to March 2015.
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