2012 (8) TMI 438 - HC - VAT and Sales Tax

Classification of Protective Sunglasses as Medical Devices Upheld

The High Court held that protective sunglasses were correctly classified as medical devices under Schedule Entry C-107(8) until the 2011 amendment, ... Classification as Medical Devices and Implants - Interpretation of Government Notification dated 23rd November, 2005 - Application of Schedule Entry C-107(8) - Scope of residuary entry E-1 - Effect of subsequent legislative amendment on tax classificationClassification as Medical Devices and Implants - Interpretation of Government Notification dated 23rd November, 2005 - Application of Schedule Entry C-107(8) - Scope of residuary entry E-1 - Non prescriptive/protective sunglasses covered by the Notification dated 23rd November, 2005 are exigible to tax at 4% under Schedule Entry C-107(8) and not leviable under residuary entry E 1 for the period prior to amendment. - HELD THAT: - The Tribunal and this Court accepted that item (5) of the Notification describes 'Spectacles, Correctives, Protective or other' and therefore protective spectacles such as sunglasses are included within the goods notified as 'Medical Devices and Implants'. The Commissioner's view that ordinary non prescription sunglasses cannot be treated as medical devices cannot prevail where the State, by notification, has included such protective spectacles within Entry C 107(8). The separate classification or sub heading distinction in the Central Excise Tariff between spectacles and goggles is not determinative once the Notification is held to cover protective sunglasses. The Court further noted that the Notification was subsequently amended effective 1st May, 2011 to substitute 'corrective spectacles' in place of the broader wording, and accordingly the Tribunal's conclusion that the items in question were liable as medical devices under the Notification up to the date of that amendment is sustainable. [Paras 7, 8, 9, 10, 11]Protective non prescription sunglasses notified on 23rd November, 2005 are taxable at 4% under Schedule Entry C 107(8) until the Notification was amended effective 1st May, 2011; they are not exigible to tax at 12.5% under residuary entry E 1 for that period.Final Conclusion: The appeal is dismissed; the Tribunal's decision that protective non prescription sunglasses covered by the Notification dated 23rd November, 2005 are taxable at 4% under Schedule Entry C 107(8) is affirmed for the period prior to the Notification's amendment effective 1st May, 2011. Issues:1) Interpretation of the Maharashtra Sales Tax Tribunal's decision on the classification of non-prescription sunglasses as medical devices under Schedule Entry C-107(8).2) Determination of the tax rate applicable to non-prescription sunglasses - 4% under Schedule Entry C-107(8) or 12.5% under residuary entry E-1.Analysis:1) The respondent-assessee, a registered dealer under the Maharashtra Value Added Tax Act, 2002, sought clarification on the taxability of non-prescription sunglasses. The Commissioner of Sales Tax determined that non-prescriptive sunglasses would be taxed at 12.5% under the residuary entry E-1, not as medical devices under Entry 107(8) of Schedule 'C'. However, the Joint Commissioner had previously clarified that sunglasses fall under 'Medical Devices and Implants.'2) The Maharashtra Sales Tax Tribunal held that if the Commissioner concluded that the sunglasses are covered by the Notification, they would be taxed at 4% under Schedule Entry C-107(8). The revenue challenged this decision, arguing that sunglasses were deliberately excluded from the Notification, making them taxable at 12.5% under the residuary entry E-1.3) The High Court rejected the revenue's argument, stating that the notification did not require protective sunglasses to be sold under prescription to be considered medical devices. The Court emphasized that if the legislature included sunglasses as medical devices, the Commissioner could not hold otherwise. The Court highlighted that subsequent amendments excluded protective sunglasses from the medical device category.4) The Court noted that the Tribunal's decision, considering protective sunglasses as medical devices until the amendment, was correct. Consequently, the appeal was decided in favor of the assessee, upholding the classification of protective sunglasses as medical devices under Schedule Entry C-107(8) until the amendment in 2011.5) The judgment clarified that the protective sunglasses were correctly classified as medical devices under the relevant notification until the subsequent amendment. The appeal was disposed of in favor of the assessee, with no costs awarded.