Classification by essential identity: diluted Ujala Supreme remained covered by the specific VAT entry, not the residuary rate.

Ujala Supreme was held to fall within the HSN-linked entry for synthetic organic colouring matter because dilution with water did not alter its essential identity as derived from acid violet paste. The Court treated the specific notified description as controlling for classification purposes and applied the principle that a commodity covered by a specific entry cannot be shifted to the residuary category. As a result, the product was taxable at 5% under the specific VAT entry, and not at the higher residuary rate. The revisional petitions succeeded and the lower authorities' concurrent orders were set aside.

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Issues: (i) Whether 'Ujala Supreme' is classifiable under Entry 54(113) of Schedule-A, Part II-A of the Himachal Pradesh Value Added Tax Act, 2005 as synthetic organic colouring matter; (ii) whether the product was liable to tax at 5% under the specific entry or at the higher residuary rate.

Issue (i): Whether 'Ujala Supreme' is classifiable under Entry 54(113) of Schedule-A, Part II-A of the Himachal Pradesh Value Added Tax Act, 2005 as synthetic organic colouring matter.

Analysis: The product was examined in the light of the notified HSN-based description for synthetic organic colouring matter. The decisive consideration was that 'Ujala Supreme' is derived from acid violet paste and only diluted with water, without any material change destroying its essential identity. The Court relied on the Supreme Court's ruling that dilution alone does not alter the character of the commodity for classification where the relevant entry refers to the same HSN-linked product. The product therefore retained its identity as the commodity covered by the specific entry rather than falling into the general residuary category.

Conclusion: Yes. 'Ujala Supreme' is classifiable under Entry 54(113) of Schedule-A, Part II-A as synthetic organic colouring matter.

Issue (ii): Whether the product was liable to tax at 5% under the specific entry or at the higher residuary rate.

Analysis: Once the product was held to fall within the specific notified entry, the residuary classification could not apply. The presence of the HSN reference in the notification was treated as significant and meant for identifying the product by reference to the Customs Tariff classification. The residuary entry was excluded because a specific entry governed the commodity.

Conclusion: The product was liable to tax at 5% under the specific entry and not under the residuary rate.

Final Conclusion: The revisional petitions succeeded, the concurrent orders of the lower authorities were set aside, and the petitioner's product was held to fall under the specific VAT entry attracting the lower tax rate.

Ratio Decidendi: Where a commodity retains its essential identity after dilution and is specifically covered by an HSN-linked entry, it must be classified under that specific entry and cannot be shifted to the residuary category.

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