‘Bitumen Emulsion’ is 5% Taxable under TNVAT Act, 2006: Madras High Court [Read Judgment]

The Madras High Court has held that the “Bitumen Emulsion” is to be classified as “Bitumen” falling under c and is liable to be taxed at the rate of five percentage prescribed therein for “Bitumen” under Tamil Nadu Value Added Tax (TNVAT) Act, 2006.

The ruling was made by the single bench comprising of Justice C.Saravanan in the case of Bharat Petroleum Corporation Ltd. Vs. The Deputy Commissioner (CT-I) LTU. The point in consideration in this writ petition is whether the “Bitumen Emulsion” traded by the Petitioner was classifiable as a product under S.No. 18 of Part (B) of the First Schedule to the Tamil Nadu Value Added Tax (TNVAT) Act, 2006 or under the residuary heading at S.No. 69 of Part (C) of the First Schedule under the TNVAT Act attracting 14% of Value Added Tax (VAT).

The Petitioner had invoked the jurisdiction of the State Level Authority for Clarification and Advance Ruling under 48 (A) of the TNVAT Act, 2006.  The Advance Ruling Authority, by the impugned order, clarified that “Bitumen Emulsion” was to be classified under S.No.16 of Part (C) of the First Schedule under the TNVAT Act attracting 14.5% VAT.

The trigger for approaching the Advance Ruling Authority appears to be pre-assessment notice issued by the Deputy Commissioner, Chennai. The pre-revision notice sought to be classified Bitumen Emulsion traded by the Petitioner under Entry Tax S.No.50, Part (C) of the First Schedule to the TNVAT Act, attracting 12.5% VAT.

The court held that both “Bitumen” and “Bitumen Emulsion” are one and same and the “Bitumen Emulsion” matches the entry as it is only one of the varieties of “Bitumen”. “Bitumen Emulsion” is processed “Bitumen”, but the process does not change its composition, commercial identity or its use. The Court further held that the “Bitumen Emulsion” is regarded and performs the same function as “Bitumen” and as a result of the processing; neither the primary character nor the composition is lost. Thus “Bitumen Emulsion” is to be classified as “Bitumen” falling under Serial 18 of Part B of the First Schedule to the TNVAT Act, 2006 and is liable to be taxed at the rate prescribed therein for “Bitumen”. The Writ Petition stands allowed with consequential relief.