- (1.) Notice of motion. Mr. M.P. Devnath, Advocate accepts notice for the Respondent. We have heard learned Counsel and proceed to dispose of the appeal.
(2.) This appeal has been preferred by the revenue under Section 68(2) of the Punjab Value Added Tax Act, 2005 (for short, ''the Act'') against the order dated 16-5-2010, Annexure P-3, of the Punjab VAT Tribunal claiming following substantial questions of law: (a) Whether piston rings manufactured from iron by using carbon, silicon, chemicals and other material with specific quality, precision and dimension, for specific type of engines, of specific dia and for specific purposes would fall under Sub-clause (viii) of Clause (iv) of Section 14 of the Central Sales Tax Act, 1956 i.e. ''iron and steel'' and would be declared goods under this provision of law? (b) Whether piston rings manufactured from iron by using carbon, silicon, chemicals and other material with specific quality, precision and dimension, for specific type of engines, of specific dia and for specific purposes would be covered under the word 'declared goods' for the purpose of levy of tax under item (3) of Schedule 'B' appended to the Punjab Value Added Tax Act, 2005? (c) Whether the rings manufactured by the Respondent are taxable at the rate of 4% or at the rate of 12.5% as the primary function of the rings is its use for the functioning of pistons which are automobile parts?
(3.) The Assessee is a taxable person under the provisions of the Punjab VAT Act, 2005 and is manufacturing and selling pistons and piston rings used in automobiles. For the year in question, the Assessee calculated and paid tax @ 4% by treating the goods in question to be 'declared goods'. The Assessing Authority did not accept the classification claimed by the Assessee and held the goods to be 'automobile parts' falling in residue entry taxable @ 12.5%. This view was upheld by the Appellate Authority. But on appeal, the Tribunal upheld the plea of the Assessee, as under: There are 16 entries given in the details of the goods under head iron and steel. Discs, rings, forgings and steel casting have been specified to be the items under the head iron and steel as declared goods. Whether such items are used by the purchaser as automobiles parts or any purpose is not material. The material is as to whether concerned item manufactured by the Appellant, 90 to 92% iron is used and the other material used are chemical etc. just 8 to 10%. Even if this item is used as automobiles parts by the automobiles industry or as automobiles components, still the fact remains that the item piston rings manufactured by the Appellant shall be the item made out of iron and steel and shall be covered in entry (viii) of Section 14(iv) of the Central Sales Tax Act, 1956 especially when the word rings is there in that entry. From the above discussion, it is held that item piston rings is a declared goods chargeable to tax @ 4%. The appeal filed by the Appellant as such is accepted and orders of the authorities below treating this item as automobiles component and charging tax @ 12.5% is set aside.;