TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 56
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.... assessment notices issued thereafter by the respondent authorities for recovery of differential tax. FACTS OF THE CASE IN BRIEF 02. The petitioner is a public limited company incorporated under the provisions of the Companies Act, 1956 engaged in the business of manufacture and sale of a variety of consumer products and speciality chemicals. It operates multiple manufacturing units in the States of Maharashtra, Gujarat, Daman and Himachal Pradesh. 2.1. For the purposes of sales within the State of Madhya Pradesh, the petitioner has been maintaining a sale depot at Indore since 1992 and is also registered under the under the M.P. VAT Act. The goods manufactured in the petitioner's factories outside the State are dispatched to this depot, from where sales are made within Madhya Pradesh. 2.2. The petitioner was facing difficulty in classification of its product Steel Grip Insulating Tape, hence, moved an application dated 06.03.2010 under Section 70 of the M.P. VAT Act before the Commissioner of Commercial Tax, M.P. seeking determination of the correct rate of tax applicable by contending that the product is an "insulator" covered by Entry No. 50 of Part - II of Sched....
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....e impugned determination order is unsustainable as it is based on an erroneous understanding of the nature and use of the commodity in question i.e. Steel Grip Insulating Tape. The product is solely designed and used as an insulator to prevent the flow of electrical current and to protect against electric shock, and thus ought to have been classified under the specific entry applicable to "insulators" carrying a lower rate of tax rather than under the residuary entry attracting a higher rate. 04. Learned Senior Counsel submitted that the learned Commissioner had failed to appreciate the functional character of the product, which is well recognized by consumers and traders alike, and instead relied merely on the fact that it is sold by dealers in electrical goods or used by electricians. In the present case though the product was sold by the dealers and used by electricians as electric goods, but the dealers had sold it for use as insulators only and electricians also used it as insulators only thus the learned Commissioner should have classified on the basis of this inherent properties and purpose of the product and not the trade channel through which it was being sold. 05. L....
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....C), Indo International Industries v/s CST reported in [1981] 2 SCC 528 and Mauri Yeast India Pvt. Ltd. v/s State of U.P. reported in [2008] 14 VST 259 (SC). Reliance has further been placed on the judgments of various High Courts in Castrol India Ltd. v/s CCT reported in [2018] 51 GSTR 40 (MP), Mega Enterprises v/s State of M.P. reported in [2012] 53 VST 422 (MP), Ruchi Soya Industries Ltd. v/s State of M.P. reported in [2025] 140 GSTR 520 (MP), Excise & Taxation Officer v/s T.R. Solvent Oil Pvt. Ltd. reported in [2011] 39 VST 387 (P&H) and Lazarus Alosious v/s State of Kerala reported in [2006] 144 STC 210 (FB) (Ker). 10. Learned Senior Counsel has also relied upon various determinations of different authorities which have held products of similar description to be classifiable as "insulators" rather than under any residuary or general entry in following cases the Advance Ruling by Karnataka AAR reported in [2019] SCC Online Kar AAR -GST 61; and DDQ orders passed by the Commissioners of Assam and Delhi in the cases of M/s Anchor Electricals Pvt. Ltd; by the Commissioner of Delhi in the case of M/s Gupta Plastic Works; by the Commissioner of Karnataka in the case of M/s Alankar ....
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....y serve as accessories or covering material and do not fall within the primary meaning of an "insulator". Learned Deputy A.G. thus submitted that the Commissioner of Commercial Tax has rightly classified the product under the residuary entry in Part - IV of Schedule - II taxable @ 12.5% or 13% and prayed for dismissal of the petition. 16. In support of the above submissions Learned Deputy Advocate General placed reliance on several judgments of the Apex Court and various High Courts in the cases of Commissioner of Trade Tax, U.P. v/s S/S Parikh Gramodyog Sansthan in Civil Appeal No. 651/2005, Ministry of Finance v/s W.S. Insulators of India reported in 1983 ELT 2184 (Mad), Indo International Industries v/s CST reported in [1981] 2 SCC 528, Ramavatar Bhudhaiprasad v/s Assistant Sales Tax Officer, Akola reported in (1961) 1 SCR 1325 and Commissioner of Sales Tax, M.P. v/s Jaswant Singh Charan Singh reported in (1967) 2 SCR 720. APPRECIATION & CONCLUSION 17. Insulation tape is both an insulator and an adhesive tape. Its primary purpose is to insulate electrical wires and other conductive materials to prevent electrical current from escaping. While it functions as a regular ad....
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....ned Deputy Advocate General argued that as per Entry 50 Part - II Schedule - II of the M.P. VAT Act, the insulator is taxable @ 5% which will not include insulating material. The insulators are sold by the specific category of dealers while the insulating material, which includes the insulating tape is sold by most of the dealers selling the electrical goods, hence, they are liable to be taxed as per Entry - 1, Part - IV, Schedule - II @ 12.5%. 21. As per the definition, an insulator is a material that resists the flow of electric charge. These materials are used in electrical equipment as an insulator. Its function is to support or separate electrical conductors without allowing current through themselves. Some materials, such as glass, paper or Teflon are very good electrical conductors. Rubber-like polymers and most plastics can serve as a safe insulator for low to moderate voltages. 22. Insulators are commonly used as a flexible coating on electric wire and cable. The wires which touch each other will produce cross connections, short circuits and fire hazards. Any wires which present voltages higher than 60V can cause human shock and electrocution hazards, which is why in....