State of Haryana vs Liberty Shoes Limited and Another

Hemant Gupta, J.—The Revenue is in appeal u/s 36 of the Haryana Value Added Tax Act, 2003 raising the following substantial questions of law:

(i) Whether, on facts and in circumstances of the case, the learned Tribunal is justified in ignoring the effect of new entry 55 in Schedule C instead with effect from January 1, 2007 in Haryana Value Added Tax Act, 2003?

(ii) Whether, on facts and in circumstances of the case, the learned Tribunal is justified in overturning the clarification issued u/s 56(3) of the Haryana Value Added Tax Act, 2003 and holding that entry 55, even prior to January 1, 2007, would apply to both single and double moulded plastic footwear?

(iii) Whether, on facts and in circumstances of the case, the learned Tribunal is justified in ignoring the reliance on Union of India (UOI) and Others Vs. Martin Lottery Agencies Ltd., which clearly lays down that for an entry to be clarificatory, there has to be corroboratory evidence as regards the clarificatory character?

(iv) Whether, on facts and in circumstances of the case, the learned Tribunal is justified in substituting its own views for the views of the State Government in fiscal matters?

(v) Whether, on facts and in circumstances of the case, the reliance on Porritts and Spencer (Asia) Ltd. Vs. State of Haryana, is misplaced as the said judgment dealt with an entirely different issue?

The said questions of law are said to have arisen consequent to an opinion of the State Government u/s 56(3) of the Act clarifying that the moulded plastic footwears would attract VAT at the rate of 12� percent even prior to January 1, 2007.

The relevant entry 55 prior to January 1, 2007 of Schedule C reads as under:

Moulded plastic footwears and Hawai Chappals and straps thereof except those covered by Schedule B.

Such entry was substituted with effect from January 1, 2007. The substituted entry reads as under:

Moulded plastic footwears whether of single mould or more than one mould and hawai chappals and straps thereof except those covered by Schedule B.

At this stage, it may be mentioned that Schedule B contains the list of goods which are exempt from payment of VAT, whereas the goods mentioned in Schedule C attract VAT at the rate of four per cent.

The State Government examined the entry and clarified as under:

It is seen clearly that shoes made of upper and lower where upper is separately made and lower (sole) is separately made by injection moulding though joined with the upper, as claimed, at the time of moulding of sole, are entirely of a class quite different and distinct from simple moulded plastic shoes, which are made by the process of moulding of plastic alone in one piece, i.e., the upper and sole are not joined together but the whole shoe comes out from the moulds as single piece. Not only from the angle of the manufacturing process involved in their making but also from the angle of pricing the two types of shoes are quite apart. The two piece plastic shoes are quite compared to the moulded plastic shoes. Plastic moulded shoes are priced under Rs. 200 and Rs. 1,000 per pair. The inescapable conclusion, therefore, is that plastic footwear other than moulded plastic footwear is not covered by entry 55 in Schedule C to the Act and these are taxable at 12.5 per cent.

A perusal of the unamended and amended entry 55 shows that only distinction is that in the amended entry, it is clarified that moulded plastic footwears, whether of single mould or more than one mould shall attract VAT being not exempted whereas in the unamended entry, there is no reference to single or multiple moulds.

In the absence of any exclusion in the original entry, the moulded plastic footwears will include single or multiple moulds. Therefore, the findings of Tribunal that the VAT at four per cent alone would be payable on single or multiple moulds even prior to January 1, 2007 cannot be faulted in any manner.

In view of the above, we do not find that any substantial question of law as sought by learned counsel for the appellant arise for adjudication in this appeal. Dismissed.