CRAFT POLYMERS Vs. COMMISSIONER DEPARTMENT OF COMMERCIAL TAXES

JUDGEMENT

(1.) This is the second round of litigation by the appellant, which pertains to the rate of tax payable under the Kerala Value Added Tax Act on the appellant's product, namely, Stainless steel fan hooks, manufactured and sold by them. We have heard Sri. M.K. Dileep Kumar, Advocate appearing for the appellant/assessee and the learned Government Pleader for the respondents. The appellant is an industrial unit engaged in manufacture and sale of fan hooks made of stainless steel rods. The stainless steel rods purchased are cut and made into 'U' shape fan hooks for fixing in the sealing as hooks for attaching fans. The appellant started remitting tax under 4% treating the item as falling under Entry 43 sub-entries 21 and 22 of the IIIrd Schedule to the KVAT Act. However, the Assessing Officer relying on circular issued by the Commissioner on 28/07/2006 assessed item at 12.5% treating the same as hooks and eyes. When the assessment was questioned in Writ Petition and later in Writ Appeal, this Court vide judgment in WA No. 2562/2009 held that stainless steel fan hooks manufactured and sold by the appellant are not covered as such by any of the Entries in the IIIrd Schedule and therefore, directed the appellant to file an application for clarification before the Commissioner under Section 94 of the Act. Pursuant to the application filed by the appellant, the Authority for clarification issued clarification under Section 94 of the Act clarifying that the product is not covered by any of the Entries in the IIIrd Schedule and therefore the rate of tax payable in respect of the item is 12.5% as provided under Section 6(1)(d) of the Act. It is against this clarification order, the appellant has filed this appeal.

(2.) Both sides produced before us samples of the products manufactured and sold in the market. It is a simple product made from stainless steel rod with three bends giving 'U' shape to it, so that, it can be tied to iron rods in the concrete roof slab for attaching fans. If the item does not fall under any of the entries of the Schedules 1 to 4, then by virtue of the operation of Section 6(1)(d) of the Act the rate of tax applicable is 12.5%. This section authorises Government to notify other items which are taxable at 12.5%. In fact, the State has issued notification SRO 82/2006 providing rate of tax at 12.5% for large number of items, wherein stainless steel fan hooks does not figure. However, it is a settled position that even if an item is not specifically covered under the notification issued under Section 6(1)(d) all such items will also attract tax at 12.5% but virtue of the residual entry contained in notification 82/2006 already issued by the State. Therefore, the only question is to be considered is whether the appellant's product, namely, fan hooks made of stainless steel rods, falls under any of the specific Entries of the IIIrd Schedule as claimed by the appellant. The counsel for the appellant relied on sub-entries 21 and 22 of Entry 43 of the IIIrd Schedule to the Act and contended that the item is shaped as iron rod falling under Entry 22. In order to consider this contention, we extract hereunder the said entries.