Recently, the Supreme Court has held that "Tinted Glass Sheets" are different from "Plain Glass Sheets" and categorizes them as taxable items falling under "goods or wares made of glass" as specified in Entry 4, issued by the State Government. Consequently, manufacturers of Tinted Glass are obligated to pay a 15% tax on these products.
The division bench comprising Justice S. Ravindra Bhat and Justice Aravind Kumar, observed that, “There is no vagueness in the notification dated 07.09.1981 and the entry No. 4 is clear and unambiguous namely it has brought within the sweep “all goods and wares made of glass” eligible to tax but not including “plain glass panes” and the exemption being the creation of the statute itself, it has to be construed strictly and even if there is any vagueness in the exemption clause must go to the benefit of the revenue.”
Case Brief -
The State Government of Uttar Pradesh released Notification No. ST-2-5784/X-10(1)-80 on September 7, 1981, in accordance with the authority vested in it by Section 3 of the U.P. Trade Tax Act, 1948. The Entry no. 4 in the Notification is as under:
Entry 4: “4. All goods and glass wares made of glass but not including plain glass panes optical lenses, hurricane lantern, chimneys bottles and phials, glass beads, clinical syringes, Therma Meters and scientific apparatus and instruments made of glass.”
The Notification explicitly states that any goods and wares manufactured from glass are categorized under Entry No. 4 and are subject to a 15% tax rate. However, items such as plain glass panes and optical lenses, as expressly mentioned, are exceptions to this rule and are instead subject to a 10% tax under the residuary clause.
M/S Triveni Glass Limited, the appellant, is engaged in the production of various types of glass, including sheet glass, tinted glass, and colored glass. In the course of income tax assessment proceedings, the Assessing Officer concluded that tinted glass differs from sheet glass in several critical aspects, including the manufacturing process, raw materials used, transparency, density, and absorption capacity. Therefore, it is considered, in ordinary language, that tinted glass should not be categorized as sheet glass or plain glass panes.
Accordingly, the Assessing Officer imposed tax @15% on the sale of the goods by holding that tinted glass is not plain glass but falls under the category of “all goods and wares made of glass” as reflected in the Notification.
The Appellate Authority affirmed the imposition of 15% tax. The notices demanding tax @15% for the tax assessment years 1992-93 to 1996-97 were challenged before the High Court by the Appellant.
The High Court, in its ruling, determined that the manufacturing process used for producing tinted glass sheets was fundamentally different from that of plain glass sheets. Additionally, the High Court observed that tinted glass sheets were manufactured in a separate production unit. Notably, the High Court took into consideration the arguments put forth by the authorities. These arguments highlighted the distinctions between tinted colored glass sheets and ordinary sheet glass, such as differences in density, transparency, and solar absorption capabilities. Furthermore, it was noted that in the market and common understanding, "tinted glass sheets" are not considered equivalent to "plain sheet glass."
Accordingly, the High Court ruled that tinted glass sheet is taxable @15% and writ petition was dismissed.
The Appellant filed an appeal before the Supreme Court against the High Court’s decision.
The central issue brought before the Apex Court was whether "tinted glass sheets" should be subject to taxation as "goods or wares made of glass" under Entry No. IV in Notification No. 5784, dated 07.09.1981, or if they should be treated as an unclassified item for tax purposes.
The Bench observed that the arguments pertaining to flat transparent sheet glass as indicated in the Indian Standards Specification has been dealt by the High Court.
The Bench confirmed that "Tinted Glass" is distinct from "Plain Glass" and, as a result, should be subject to taxation as "goods or wares made of glass" under Entry 4 of the Notification, which carries a 15% tax rate. The ruling was as follows:
“There is no vagueness in the notification dated 07.09.1981 and the entry No. 4 is clear and unambiguous namely it has brought within the sweep “all goods and wares made of glass” eligible to tax but not including “plain glass panes” and the exemption being the creation of the statute itself, it has to be construed strictly and even if there is any vagueness in the exemption clause must go to the benefit of the revenue.”
The appeal has been dismissed.
Case Title: M/S Triveni Glass Limited v COMMISSIONER OF TRADE TAX, U.P.
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