Judgment:
WP No.10942 of 2012.
WP NO.7075 OF 201.WP NO.10941 OF 201.WP NO.10942 OF 201.14.3.2013.
Shri Sumit Nema with Shri Mukesh Agrawal for the petitioneRs.Shri P.K.Kaurav, Addl.AG with Shri Jaideep Singh, for the respondents.
This order shall decide W.P.No.7075/10 (M/sTexmo Pipes and Products Limited v.
Assistant Commissioner of Commercial Tax, Khandwa & ors.).W.P.No.10941/2012 (M/s Shree Padmavati Irrigation PVT.Limited, Burhanpur & ors.) and W.P.No.10942/2012 (M/s Shree Venkatesh Industries v.
The commercial Tax Officer, Khandwa and ors.) involving similar question for consideration of this Court.
As the detailed return has been filed in W.P.No.7075/2010, for the convenience, we have taken facts from the aforesaid petition.
The dispute in all the cases is whether the PVC Resin or HDPE Resin falls within the purview of chemical or chemical products.
The Commissioner, Commercial Tax, Madhya Pradesh, Indore by order dt.20.4.2010 has held that it is a chemical product and not a chemical, but, from the perusal of the aforesaid, we find that no departmental or independent expert opinion was sought to arrive the aforesaid finding, that the item in question falls within the purview of chemical or chemical products.
Respondents in the reply, in para 10 and 11, have raised the following pleas : “10.
Even in terms of chemical properties, there is a clear distinction between chemical substance and 'chemical products'.
As per technical opinion being relied upon by the petitioner itself, copy of which is placed on record at page 50 of the petition, the definition of 'chemical' clearly conveys that a chemical means a chemical substance with a specific chemical composition and with distinct molecular composition that is produced by a chemical process and a substance composed of chemical element or obtained by chemical process.
The definition of 'petrochemical' is distinctly given in the said opinion WP No.10942 of 2012.
that petrochemicals are 'chemical products' made from raw material of petroleum or other hydrocarbon resins.
Although some of chemical compounds that originate from the petroleum may also be derived from other sources (such as coal or natural gas).petroleum is major source.
Thus the petrochemicals are chemical product not being included specifically in Schedule II, the entry tax on the raw materials being used by the petitioner have rightly been assessed to be taxed under Schedule III.
The petitioner is trying to unnecessarily confuse itself by giving chemical composition of the raw material used by it, although admitting that raw materials used by it are petrochemicals.”
11. Looking into all the aforementioned facts and circumstances the claim of the petitioner regarding the classification of PVC granules and resins as chemicals the matter was decided that these goods can not be classified as chemicals.
The petitioner cited one judgment of the Hon'ble Gujrat High Court wherein resins were classified within the polymer family of the chemicals.
The petitioners also produced a report from the MSME, an organization dealing with small industries, which classified resins as chemicals.
It is stated in the aforesaid report that petrochemicals are 'chemical products' made from raw material of petroleum or other hydrocarbon origin.
Thus, the report itself speaks of 'chemical product' and No.'chemical'.
The two terMs.chemical and chemical products are not one and the same, they convey different meanings.
The classification of goods as made by the Central Excise Department of the GOI in Central Excise Tariff Act, 1985 has one chapter which includes organic chemicals (Chapter
28) and other chapter including inorganic chemicals (Chapter 29).PVC resins and granules do not find place in either of these two chapters but have been included in chapter 39 having the heading 'plastics and articles thereof.
Thus the heading of the chapter itself suggests that the goods included in the chapter are plastic goods and not chemicals.
PVC resins/granules being included in this chapter are therefore plastic goods and not chemical.
With this interpretation the representation of the petitioner was decided and his claim was rightly rejected by Commissioner of Commercial Tax.”
But, from perusal of the aforesaid, it is apparent that no expert opinion either of the department or some independent was obtained by the department and the aforesaid reply has been filed merely on the basis of general observation.
The Apex Court in Commissioner, WP No.10942 of 2012.
Sales Tax, U.P.v.
Bharat Bone Mill, (2007) 4 SCC 136.considering the similar controveRs.held that the question as to whether a commodity would be exigible to sales tax or not must be considered having regard to its identity in common law parlance.
If one commodity is not ordinarily known as another commodity, normally, the provisions of taxing statute in respect of former commodity which comes within the purview of the taxing statute would be allowed to operate.
In any event, such a question must be determined having regard to the expert opinion in the field.
Similar view has been taken in the following judgments : (1) Commissioner of Income Tax versus Oracle Software India LTD.(2010)_320 ITR 546.
(2) Commissioner of Income Tax versus Emptee Poly-Yarn P.LTD.(2010) 320 ITR 665.
(3) Morinda Co-operative Sugar Mills LTD.versus Commissioner of Income-Tax, Chandigarh (2012) 210 Taxman 237.
In this case, it is not in dispute that no expert opinion was obtained by the department before deciding the question involved in the matter and the authority merely on the basis of their own interpretation has determined that the aforesaid both the commodities are chemical products.
Before arriving such a finding the authority ought to have obtained an expert opinion in this regard.
Though it is submitted by the petitioner that an opinion of expert was filed before the Commissioner, Commercial Tax, Madhya Pradesh, Indore, but, it was not accepted while in view of the expert opinion, the commodities were chemicals.
At present, as we are proposing to remand the matter so, we are not expressing any opinion in this regard.
It is for the authority to seek an opinion of expert in the field and in case no such departmental expert is available for the respondents then they may seek opinion of some independent expert in this regard, as has been held by the Apex Court in Bharat Bone Mill (supra).WP No.10942 of 2012.
In view of the aforesaid, we set aside the impugned order holding that the PVC Resin and HDPE Resin are chemical products with a direction to the Commissioner, Commercial Tax, Madhya Pradesh, Indore to re-determine the question after obtaining an opinion of departmental expert if any or of independent expert in the subject.
Parties shall appear before the Commissioner, Commercial Tax, in this regard on 15.4.2013, for which date no fresh notice shall be required.
On the aforesaid date, the Commissioner, Commercial Tax shall restore all the files and to decide the matter in accordance with the directions issued hereinabove.
Considering the facts of the case, there shall be no order as to costs.
(Krishn Kumar Lahoti) (M.A.Siddiqui) Judge Judge Khan*