2010 (9) TMI 992 - AT - VAT and Sales Tax

Private company wins tax dispute, equipment classified as machinery, tax rate reduced

The Tribunal ruled in favor of the petitioner, a private limited company manufacturing industrial equipment, in a tax dispute. The goods produced by the ... - Issues:Determining whether goods like ID fan, heat exchanger, blower, and FD fan manufactured by the petitioner are considered plant and machinery under Sl. No. 54B of Schedule C, Part I for taxation at a rate of four per cent.Analysis:The petitioner, a private limited company manufacturing industrial equipment, received a notice for short-payment of tax. The petitioner argued that their goods fall under Sl. No. 54B of Schedule C of the VAT Act, taxable at four per cent, contrary to the 12.5 per cent intended by the tax authority. The petitioner contended that their products are plant and machinery, crucial for engineering industries, thus eligible for the lower tax rate. The petitioner emphasized that the goods are used for applying mechanical power and external energy to perform useful work, making them integral parts of plant and machinery in various industries.During the hearing, the State Representative opposed the petitioner's claims, asserting that the goods were distinct commercial commodities not qualifying as plant and machinery under Sl. No. 54B. The State Representative did not address the decision on the assessment order for the previous period. The Tribunal reviewed all relevant documents and arguments. It noted the petitioner's consistent classification of goods as plant and machinery for taxation at four per cent. The Tribunal found no evidence contradicting this classification for previous assessment periods, where the goods were taxed at 12.5 per cent.The Tribunal considered an appellate order supporting the petitioner's position, classifying the goods as integral parts of plant and machinery, warranting a four per cent tax rate. As this appellate order was unchallenged, the Tribunal accepted it, modifying the impugned order to tax the goods at four per cent under Sl. No. 54B. The Tribunal quashed the notice for short-payment of tax, ruling in favor of the petitioner. The application was disposed of without costs.