2025 (9) TMI 1265 - HC - VAT / Sales Tax

Review upholds original finding that product was correctly classified; revenue challenge rejected and reference disposed

The Commissioner of Sales Tax, Mumbai Versus M/s. Wockhardt Ltd.,

HC upheld the Tribunal's finding that the product was not misclassified and affirmed the Tribunal's conclusion favoring the assessee; the Court held the ... Classification of goods - Byozyme - Fertiliser covered under Entry C-I-4 of the Bombay sales Tax Act, 1959, or a ‘Plant Growth Promoter’ covered by Schedule Etry C-II-85 taxable at the rate of 8% as determined by the Commissioner of Sales Tax, Maharashtra State, Mumbai? - HELD THAT:- It cannot be said that the conclusion reached by the Tribunal in this case favouring the assessee was based on any inadmissible evidence or after excluding admissible and relevant evidence. This is also not a case where any legal evidence does not support the conclusion of fact drawn by the Tribunal or that such conclusion was not rationally possible or perverse. This is also not a case where the Tribunal has committed any error on primary questions of fact or has applied the relevant legal principles incorrectly - while exercising reference jurisdiction, this Court does not act as an appellate forum. Therefore, on the mere ground that upon reappreciation of evidence, some other view could have been taken by the fact-finding authorities, it cannot be, in the exercise of this limited jurisdiction, answered in favour of the Revenue. This reference is answered accordingly and is disposed of. ISSUES PRESENTED AND CONSIDERED 1. Whether the product in question is classifiable as a 'Fertiliser' under Schedule Entry C-I-4 or as a 'Plant Growth Promoter' under Schedule Entry C-II-85 for purposes of sales tax. 2. What is the evidentiary burden and standard applicable to classification disputes between competing tariff entries, and the limits of the Court's reference jurisdiction when the question turns on facts or mixed law and fact. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Classification: Fertiliser (C-I-4) v. Plant Growth Promoter (C-II-85) Legal framework: Classification under competing schedule entries requires application of statutory schedule language to the product's nature and use; the dispositive question is which schedule entry the product legitimately falls within for tax rate purposes. Precedent treatment: The Court relies on the principle that the party asserting a tariff classification (Revenue when it seeks higher rate) bears the onus of establishing its case - as articulated by the Supreme Court in prior authority emphasizing the Revenue's burden to lead evidence to support dutiability/classification. Interpretation and reasoning: The Revenue did not produce evidence to establish that the product was a 'plant growth promoter.' The assessee adduced expert evidence, trade/parlance letters and pointed to prior excise classification as a fertiliser. Even if the Tribunal's factual findings are open to critique, absent affirmative evidence from the Revenue the Court cannot reclassify the product in favour of the Revenue. The Tribunal's finding that the product was a fertiliser (including a biofertiliser) was supported by evidence produced by the assessee and was not shown to be based on inadmissible evidence, exclusion of relevant evidence, irrationality or perversity. Ratio vs. Obiter: Ratio - where a party (Revenue) asserts a tariff classification, the onus of proof lies on that party and failure to lead evidence to discharge that onus precludes a reclassification against the respondent; adjudicative authorities must not speculate or substitute their own unproved suppositions for evidence. Obiter - observations regarding the chemical composition of fertilisers (inorganic v. organic) are noted but treated as unproven in absence of Revenue evidence. Conclusions: The referred question must be answered against the Revenue because it failed to discharge the onus of proving the product was a plant growth promoter under C-II-85. The Tribunal's factual conclusion favouring classification under C-I-4 is upheld within the Court's limited reference jurisdiction. Issue 2 - Evidentiary Burden and Scope of Reference Jurisdiction (fact, law, mixed questions) Legal framework: The Court's power on reference is confined to questions of law; findings of pure fact by the Tribunal are generally conclusive in reference proceedings. Findings of mixed law and fact are reviewable within narrow limits - i.e., the Court may examine whether the Tribunal applied legal principles correctly, or whether a fact-finding is based on inadmissible evidence, exclusion of relevant evidence, lack of any legal evidence, irrationality or perversity. Precedent treatment: The Court applies established tests from Supreme Court authority delineating the High Court's limited scope when entertaining references involving facts or mixed questions - accepting primary factual findings unless one of the narrow exceptions is established. Interpretation and reasoning: The question in this reference is largely factual or mixed; the Tribunal's conclusion stemmed from admissible expert and trade evidence sought to be criticized by the Revenue. The Revenue's failure to adduce any affirmative evidence to counter the assessee's proof removes the basis for invoking the narrow exceptions (inadmissibility, exclusion, lack of legal evidence, irrationality). The Court emphasizes that it does not sit as an appellate fact-finder to re-weigh evidence where the Tribunal's conclusion is rationally possible and supported by evidence. Ratio vs. Obiter: Ratio - in reference proceedings the Court will not disturb a tribunal's factual or mixed findings unless they fall within the narrow, established grounds for interference; absent such grounds and absent the Revenue discharging its evidentiary onus, the Court will not reappraise evidence to reach an alternative conclusion. Obiter - commentary that the Court's jurisdiction is akin to judicial review rather than appellate review, although this is consistent with precedent and applied as a binding principle in the case. Conclusions: The reference jurisdiction did not justify substituting the Court's view for the Tribunal's fact-based conclusion. Because the Revenue failed to meet its evidentiary burden and none of the narrow bases for interfering with the Tribunal's factual findings were established, the Court declines to answer the reference in the Revenue's favour. Cross-References and Final Legal Position The conclusion on Issue 1 is supported by the analysis in Issue 2: the Revenue's failure to lead evidence is decisive both on the substantive classification question and as a jurisdictional limit on the Court's willingness to disturb the Tribunal's findings. The Court's answer is founded on (a) the Revenue's evidentiary burden, (b) the admissible evidence before the Tribunal favouring classification as a fertiliser, and (c) the narrow scope for upsetting factual or mixed findings on reference.