U.P. Trade Tax Act | 'Tinted Glass' To Be Taxed As “Goods Or Wares Made Of Glass”, As it is Different from 'Plain Glass': Supreme Court

The Supreme Court has held that 'Tinted Glass Sheet' is different from 'Plain Glass sheet' and is thus liable to be taxed as “goods or wares made of glass” under Entry 4 of Notification No.5784 dated 07.09.1981, issued by State Government. Accordingly, the manufacturer of Tinted Glass is liable to pay tax @15% on such goods.

The 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.”

BACKGROUND FACTS

The State Government of Uttar Pradesh issued a Notification No. ST-2-5784/X-10(1)-80 dated 07.09.1981 (“Notification”), in exercise of powers conferred under Section 3 of 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 specifies that all goods and wares made of glass would fall within Entry No. 4 of the notification and attract a tax @15%. The exclusion of plain glass panes, optical lens as indicated therein would fall within the residuary clause attracting 10% tax.

M/S Triveni Glass Limited (“Appellant”) is a manufacturer of sheet glass, tinted glass, coloured glass, etc. During income tax assessment proceedings, the Assessing Officer opined that the tinted glass is differed from the sheet glass in the aspect of manufacturing process, raw materials, transparency, density, absorption capacity. Hence, in common parlance the tinted glass cannot be recognized as sheet glass/plain glass pane.

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 Appellant argued that tinted glass is also sheet glass, thus attracting imposition of 10% tax and not 15% as claimed by the revenue. The only difference between both the glasses is the colour.

Reliance was placed upon the description of the expression “glass” and “glass sheet” given in Indian Standard Specification for Flat Transparent Sheet Glass (Third Revision) March, 1988 to substantiate the contention.

The High Court held that manufacturing process adopted for manufacturing of tinted glass sheet was distinct from that of glass sheet. Also, the tinted glass sheet was manufactured in a separate unit. The High Court noted the contention of authorities that density and transparency of the tinted colour sheet glass differs from that of ordinary sheet glass; the solar absorption power of tinted coloured glass sheet is much more than plain sheet glass; and in the market or in the common parlance 'tinted glass sheet' is not treated as 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.

SUPREME COURT VERDICT

The issue before the Court was whether “tinted glass sheets” is liable to be taxed as “goods or wares made of glass” under the Notification No. 5784 dated 07.09.1981 being Entry No. IV or as unclassified item.

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 High Court has rightly distinguished the case on facts in favour of the revenue in view of settled principles of law. Thus, the Order does not require any interference.

The Bench affirmed that 'Tinted Glass' is different from 'Plain Glass' and thus liable to be taxed as “goods or wares made of glass” under Entry 4 of Notification, by attracting 15% tax. It was held as under:

“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.

Case No.: 2023 LiveLaw (SC) 896

Click here to read the judgment