Sunglasses Not Covered Under 'Spectacles' Entry; Taxable As Residuary Goods At 12.5% VAT: Punjab & Haryana High Court
The Punjab and Haryana High Court held that the sunglasses are classified as a residuary item, as they did not fall under any specified Schedule, and therefore are exigible to VAT (Value Added Tax) at the rate of 12.50%. Justices Lisa Gill and Meenakshi I. Mehta stated that sunglasses are indeed a distinct commodity, which is not covered under Entry 110 of Schedule B of PVAT Act...
The Punjab and Haryana High Court held that the sunglasses are classified as a residuary item, as they did not fall under any specified Schedule, and therefore are exigible to VAT (Value Added Tax) at the rate of 12.50%.
Justices Lisa Gill and Meenakshi I. Mehta stated that sunglasses are indeed a distinct commodity, which is not covered under Entry 110 of Schedule B of PVAT Act and Entry 100-E Schedule-C of HVAT Act.
In the case at hand, the case of the assessee/appellant was that item 'sunglasses' fall under the definition of 'spectacles', hence are taxable at the rate as applicable to spectacles under relevant entries (the Entry 110 of Schedule-B of Punjab Value Added Tax Act, 2005 in respect to State of Punjab and entry 100-E of Schedule-X of Haryana Value Added Tax Act, 2003) and that sunglasses can thus not be taxed at the rate applicable to unclassified items under residual entry.
The counsel for the assessee argued that 'spectacles' is a broad and generic term, clearly including within its ambit sunglasses as well, irrespective of whether the primary purpose is vision correction or vision protection. Popular meaning and parlance would include sunglasses in the genus of spectacles.
The bench disagreed with the argument of the assessee that the term 'Chashme' in common parlance can mean 'Dhoop Ke Chashme' as well as 'Nazar Ke Chashme' i.e sunglasses and spectacles.
The bench stated that insofar as the common parlance test is concerned, there is nothing on record which would indicate that 'sunglasses' can be a part of the term 'spectacles' or that 'Chasme' or 'Ainak' would include sunglasses within their ambit.
The bench opined that sunglasses and spectacles are indeed different products. It cannot be held that 'spectacles' is a term broad enough to include 'sunglasses', therefore entailing taxation of sunglasses under the entry relatable to spectacles and not under the residual entry.
Once such a 'lens' is for corrective vision, it is admittedly exigible to tax as applicable to spectacles. Therefore, sunglasses are indeed a distinct commodity, which is not covered under Entry 110 of Schedule B of PVAT Act and Entry 100-E Schedule-C of HVAT Act, stated the bench.
The bench noted that factum of an amendment being brought about in the PVAT Act on 07.01.2011 to include sunglasses in the entry whereby spectacles, googles or sunglasses, parts and components thereof, contract lenses and lens cleaners all made exigible to 8.5.% tax, in fact proves the point that googles or sunglasses cannot be made or read to be a part of 'spectacles'.
The bench held that the sunglasses have been correctly held to be a residuary item because it did not fall under any specified Schedule, thus, exigible to tax at the rate of 12.50%.
In view of the above, the bench dismissed the appeal.
Case Title: M/s Himalaya Optical Centre Pvt. Ltd v. The State of Punjab
Case Number: VATAP-38-2013 (O&M)
Counsel for Appellant/Assessee: Sandeep Goyal and Prakyat J.S.
Counsel for Respondent/Department: Mamta Singla Talwar, DAG, Haryana and Saurabha Kapoor, Addl. A.G., Punjab