1976 (7) TMI 162 - HC - VAT and Sales Tax

Court classifies Vim as washing material for tax, not unclassified item. Single point tax applies. Assessee wins.

Harichand Rattan Chand & Co. Versus Commissioner of Sales Tax, UP.

Harichand Rattan Chand & Co. Versus Commissioner of Sales Tax, UP. - [1978] 42 STC 361 (All) Issues:Interpretation of whether Vim falls under the category of 'washing soaps and other materials used for washing purposes' for tax purposes.Justification of levying tax on Vim purchased from manufacturers in U.P.Analysis:The case involved the interpretation of the U.P. Sales Tax Act regarding the classification of Vim under the notification 'washing soaps and other materials used for washing purposes.' The Sales Tax Officer disallowed the claim for tax exemption on Vim sales by the assessee, treating Vim as an unclassified item taxable at a general rate of 2 per cent. The Assistant Commissioner and the Judge (Revisions) both opined that Vim did not qualify as a washing material due to its cleansing nature, distinguishing between washing and cleansing processes. However, the Court analyzed the usage and application process of Vim, noting that water was an essential component in applying and rinsing Vim, thus falling within the purview of the notification.The Court scrutinized the wording of the notification, emphasizing that while the first part mentioned only washing soaps for concessional tax rates, the second part encompassed all materials used for washing purposes. The Court highlighted that the application process of Vim involved sprinkling on a damp cloth, rubbing, rinsing, and drying, all requiring water. The Court rejected the argument that only materials akin to washing soaps were covered, asserting that the notification's broad language encompassed any material used for washing purposes, as evidenced by the Hindi version of the notification.Ultimately, the Court answered the first issue affirmatively, stating that Vim fell under the category of 'other materials used for washing purposes.' Consequently, the second issue, regarding the justification of levying tax on Vim purchased from U.P. manufacturers, was answered in the negative. The Court ruled that Vim, falling within the specified category and being purchased from U.P. manufacturers, was subject to a single point tax, not multiple points as imposed by the Sales Tax Officer. The Court awarded costs to the assessee-dealer, concluding that the reference was answered accordingly.