M/S Bundelkhand Health Care Thru Its Prop. Bhagwat Porwal vs. State Of U.P. And 3 Others

Facts

The petitioner, M/s Bundelkhand Health Care, challenged an order dated September 15, 2017, and a show cause notice dated October 11, 2017, concerning the assessment year 2008-09. The petitioner, a distributor of products including Harpic, was initially assessed under Entry 20, Part A of Schedule II of the U.P. VAT Act. A subsequent rectification order taxed Harpic at a higher rate (12.5%) under Schedule V. The assessing authority then set aside the rectification order, restoring the original assessment at 4%. However, a Joint Commissioner issued a show cause notice to set aside this restoration order. The petitioner approached the High Court, which directed them to approach the assessing authority. The assessing authority then passed the impugned order dated September 15, 2017, setting aside the order that restored the original assessment. The revenue argued that the original assessment was wrong, justifying rectification.

Held

The Court allowed the writ petition, quashing the impugned order dated September 15, 2017, and the consequential notice dated October 11, 2017. The Court held that Harpic is squarely covered and classifiable under Entry No. 20, Part A of Schedule II of the U.P. VAT Act, which pertains to "pesticides." This decision was based on the principle of stare decisis, following the judgment in a companion writ petition (Writ Tax No. 850 of 2017) and numerous other High Court judgments (Andhra Pradesh, Guwahati, Rajasthan) and a Supreme Court order that consistently classified Harpic and similar products under the "pesticides" entry, attracting a lower tax rate. The Court found no new material presented by the respondents to justify classifying Harpic under a higher tax rate schedule. The ratio decidendi is that products like Harpic, established as disinfectants and capable of destroying germs, fall under the "pesticides" category as per Entry 20, Part A of Schedule II of the U.P. VAT Act, and subsequent orders attempting to reclassify them under residuary entries are erroneous.

Key Issues

1. Whether Harpic is classifiable under Entry 20, Part A of Schedule II of the U.P. VAT Act, or under a residuary entry attracting a higher tax rate, for the assessment year 2008-09? Petitioner's arguments: The petitioner contended that Harpic is a disinfectant and falls under Entry 20, Part A of Schedule II of the U.P. VAT Act, which covers pesticides. They relied on a companion writ petition (Writ Tax No. 850 of 2017) decided by this Court, which held Harpic and Mortein Coil to be covered under the said entry. They also cited judgments from the Andhra Pradesh High Court, Guwahati High Court, and Rajasthan High Court, as well as a Supreme Court order dismissing a Special Leave Petition, all supporting the classification of Harpic and Lizol as pesticides or insecticides under similar VAT provisions. Respondent's arguments: The respondent argued that the original assessment order was incorrect and that the rectification to tax Harpic at a higher rate was justified. They contended that the subsequent recall of the rectification order was erroneous. The respondent did not dispute the petitioner's submission regarding the companion writ petition.