1991 (8) TMI 326 - HC - VAT and Sales Tax

Gas stoves taxed at 4% multi-point, not 8% single point - Court ruling

VAM Industries Versus State of Tamil Nadu

VAM Industries Versus State of Tamil Nadu - [1999] 116 STC 303 (Mad) Issues:Interpretation of entry 123 of the First Schedule for taxation of gas stoves at a single point at 8 per cent or multi-point at 4 per cent.Analysis:The case revolved around determining the correct tax rate applicable to gas stoves sold by the assessee. Initially, the Deputy Commercial Tax Officer assessed the turnover at 8 per cent under entry 123 of the First Schedule. However, the Appellate Assistant Commissioner ruled in favor of the assessee, stating that the goods were taxable at 4 per cent multi-point. Subsequently, the Joint Commissioner, through suo motu powers of revision, set aside the Appellate Assistant Commissioner's order and reverted to the initial assessment. The crux of the matter was whether gas stoves should be taxed at 8 per cent single point or 4 per cent multi-point.The assessee contended that gas stoves did not fall under entry 123 as interpreted by the Joint Commissioner. The assessee argued that gas stoves should not be considered synonymous with gas ovens mentioned in entry 123. The counsel emphasized that the Appellate Assistant Commissioner correctly understood the nature of the goods, and thus, the Joint Commissioner's order was unsustainable.The Court analyzed the relevant legislative provisions. It noted that prior to April 1, 1987, gas stoves were not explicitly included in entry 123. However, an amendment in 1987 incorporated gas stoves in the entry for single-point taxation at 8 per cent. The Court referred to a previous case to establish that subsequent legislation could shed light on legislative intent. The judges concluded that gas stoves were subject to single-point taxation at 8 per cent only from April 1, 1987, and before that, they were taxed at multi-point at 4 per cent. Consequently, the Joint Commissioner erred in overturning the Appellate Assistant Commissioner's decision.In the final judgment, the Court allowed the appeal, setting aside the Joint Commissioner's order and reinstating the Appellate Assistant Commissioner's decision. No costs were awarded in this matter.