Polyurethane foam classification under concessional tax entry led to reassessment in line with binding clarification.

Polyurethane foam was treated as a plastic product falling within the concessional tax entry under the Tamil Nadu VAT notification, so the reduced rate applied. Because the assessment orders did not give effect to the advance ruling clarification on classification, they could not be sustained and were set aside, with directions to redo the assessments in conformity with that clarification.

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Issues: Whether polyurethane foam is classifiable as a plastic product eligible for the reduced rate of tax under the relevant notification issued under the Tamil Nadu Value Added Tax Act, 2006, and whether the assessments were liable to be set aside and remanded for reconsideration in light of the clarification issued by the advance ruling authority.

Analysis: The clarification issued by the advance ruling authority stated that polyurethane foam is a plastic product and falls within the entry granting reduced tax at 5% for goods otherwise taxable at 14.5% under the relevant notification. The Court accepted that the earlier assessment orders did not give effect to that clarification and that the issue was covered by the earlier order relied upon by the parties. On that basis, the assessments could not be sustained and had to be reopened in accordance with the clarification.

Conclusion: Polyurethane foam was held eligible for taxation at the reduced rate applicable to plastic products, and the impugned assessment orders were set aside with a direction to redo the assessments by applying the clarification of the advance ruling authority.

Ratio Decidendi: Where a binding clarification classifies the commodity as falling within a concessional entry, the assessment must be made in conformity with that clarification and contrary assessments are liable to be set aside.

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