The Bombay High Court recently upheld the Maharashtra Sales Tax Tribunal’s decision that Byozyme is correctly classifiable as a “Fertiliser” under Entry C-I-4 and taxable at 4% rather than a “Plant Growth Promoter” under Entry C-II-85. The Court’s decision was primarily based on the Revenue’s failure to discharge the onus of proof required by law through proper evidence.
The Division Bench comprising Justice M.S. Sonak and Justice Advait M. Sethna observed that the onus of establishing that goods are classifiable under a particular tariff entry always lies on the Revenue Department. The Bench noted that the Revenue had not led any evidence to establish that the respondent’s goods could be classified as “plant growth promoters,” while the respondent had provided expert evidence supporting classification as fertiliser.
The Bench emphasized that even if the respondent’s expert evidence were to be discarded, the Revenue could not succeed without discharging the onus placed on it by law, as mere criticism of opposing evidence is insufficient without positive proof. Reference was made to the expert evidence and trade parlance evidence through letters from agriculturists, which showed that the excise authorities had classified the same product as a fertiliser.
Speaking for the Bench, Justice Sonak clarified that while exercising reference jurisdiction under Section 61 of the Bombay Sales Tax Act, 1959, it does not sit in appeal but exercises jurisdiction akin to judicial review, limited to questions of law. Accordingly, the Bench answered the reference in favour of the respondent.
In this case, a reference was made by the Maharashtra Sales Tax Tribunal to the Bombay High Court regarding the classification of Wockhardt Ltd.’s product “Byozyme” for sales tax purposes. The Revenue contended that Byozyme should be classified as a “Plant Growth Promoter” under Schedule Entry C-II-85, attracting 8% tax rate, while the taxpayer claimed it was a “Fertiliser” under Entry C-I-4, taxable at 4%. The Tribunal had ruled in favor of the assessee, holding that Byozyme was a fertilizer and not a plant growth promoter, since the period in question was before 2000, when bio-fertilisers were not specifically included in the fertiliser entry.
Case Relied On:
Ventakasami Naidu & Co. Vs Commissioner of Income-Tax – 1959 (35) ITR 594
Appearances:
Advocates Jyoti Chavan and Himanshu Takke, for the Applicant/ Revenue
Advocates Ishaan V Patkar, Vinit V Raje, Durgesh G. Desai, Yeshwant J. Patil, and Jindagi Shah, for the Respondent/ Revenue
