2010 (3) TMI 1003 - HC - VAT and Sales Tax

Classification of Ammonium Nitrate as Residuary Item under VAT Act

The court upheld the Commissioner of Commercial Taxes' decision to classify ammonium nitrate under a residuary clause rather than as a chemical fertilizer ... - Issues: Classification of ammonium nitrate under the Karnataka Value Added Tax Act, 2003.Analysis:The appellant, a registered dealer under the Karnataka Value Added Tax Act, 2003, sought clarification on the tax rate for ammonium nitrate under section 60 of the Act. The Advance Rulings Authority classified it as a chemical fertilizer, subject to a four percent tax rate. However, the Commissioner of Commercial Taxes disagreed, noting its multiple uses beyond agriculture, including in explosives, petroleum industry, military, and other chemical products. The Commissioner set aside the ruling of the Advance Rulings Authority, classifying ammonium nitrate under a residuary clause rather than entry 23 of the Third Schedule. The appellant contended that as per the Customs Tariff Act, 1975, and Central Excise Tariff Act, 1985, ammonium nitrate is considered a chemical fertilizer, urging the court to set aside the Commissioner's order.The court, after considering the arguments, upheld the Commissioner's decision. The court agreed with the Commissioner that since ammonium nitrate is used in various fields beyond agriculture, including explosives and petroleum products, it cannot be solely classified under entry 23 of the Third Schedule. Therefore, the court dismissed the appeal, ruling that no substantial questions of law arose in the case.