Classification of metal polishing soap as an abrasive required taxation at the lower rate under the applicable schedule entry.

Metal polishing soap sold as a metal polishing agent was treated as an abrasive covered by Entry 67-A(a) of Part-B of the First Schedule to the Tamil Nadu VAT Act, attracting tax at 5%. The assessment had instead applied 14.5% under Entry 67, but that classification could not stand in view of the Advance Ruling Committee's clarification. The impugned assessment order was quashed and the assessing authority was directed to pass a fresh order consistent with the clarification.

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Issues: Whether metal polishing soap, when sold as a metal polishing agent, is liable to tax at 5% under Entry 67-A(a) of Part-B of the First Schedule to the Tamil Nadu Value Added Tax Act, 2006, and whether the assessment order levying tax at 14.5% under Entry 67 was liable to be set aside.

Analysis: The assessment had classified the product under Entry 67 and applied tax at 14.5%, whereas the petitioner claimed classification under Entry 67-A for abrasives. The clarification issued by the Advance Ruling Committee stated that metal polish soap, if sold as a metal polishing agent, would fall under Entry 67-A(a) as abrasive of all types and attract tax at 5%. In light of that clarification, the assessment order could not be sustained.

Conclusion: The product was held taxable at 5% under Entry 67-A(a), and the impugned assessment order was quashed. The assessing authority was directed to pass a fresh order in accordance with the clarification.

Ratio Decidendi: Where an authoritative clarification under the applicable tax schedule classifies a product under a specific entry, the assessment must conform to that classification and cannot continue under a contrary rate entry.

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