Ram Avatr

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2021 SCC OnLine Kar 15712 : (2022) 96 GSTR 147
In the High Court of Karnataka†

(BEFORE S. SUJATHA AND RAVI V. HOSMANI, JJ.)
Robo Silicon Pvt. Ltd., rep. by Amit Jain, General

Manager … Petitioner;
Versus
State of Karnataka, through its Principal Secretary
and Others … Respondents.
S.T.R.P. No. 24/2019‡
Decided on September 23, 2021
Advocates who appeared in this case:
Sri. Ravi Raghavan, Adv. A/W Smt. Mahwash Fatima, Adv.
Sri. Jeevan J. Neeralgi, HCGP.
The Order of the Court was delivered by
S. SUJATHA, J.:— This revision petition is filed by the assessee under
Section 65(1) of the Karnataka Value Added Tax Act, 2003 (‘KVAT Act’
for short) challenging the judgment dated 03.01.2019 passed in STA
No. 313/2017 by the Karnataka Appellate Tribunal at Bengaluru
(‘Tribunal’ for short) relating to the tax periods April 2014 to March
2015.
2. This revision petition was admitted to consider the following
question of law:—
“Whether the Tribunal was right in holding that Manufactured
Sand (M-Sand) is not covered under Entry 83 of Schedule III to the
Karnataka Value Added Tax Act, 2003?”
3. The assessee, a registered dealer under the provisions of the
KVAT Act was engaged in the manufacture and sale of sand which is
marketed as ‘Robo Sand’ during the tax periods under consideration.
The assessee was collecting and discharging the VAT on the sales of
‘manufactured sand’ (M-sand) at the rate of 5.5% by classifying it
under Entry 83 of Third Schedule of the KVAT Act.
4. The re-assessment proceedings for the tax periods under
consideration were concluded classifying the M-sand under Entry 83 of
Third Schedule of the KVAT Act. Additional Commissioner of
Commercial Taxes exercising the powers under Section 63A of the KVAT
Act initiated the proceedings and concluded vide order dated
22.03.2017, rejecting the claim of the assessee and raised additional
demand. Being aggrieved, the assessee preferred appeal before the
Tribunal, which came to be dismissed. Hence, this revision petition.
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5. Learned counsel for the petitioner - asseessee submits that Entry

83 of Third Schedule of the KVAT Act is wide enough to cover all types
of sands. Merely relying upon the Notilication dated 31.03.2015 issued
by the Government of Karnataka in exercise of powers under Section 4
(3) of the KVAT Act, reducing the rate of tax on M-sand to 5%,
Revisional Authority has revised the assessment order. The Notification
ought to be seen as clarificatory and has to be given retrospective
effect.
6. Learned counsel for the revenue would submit that the Tribunal
has rightly rejected the appeal filed by the assessee confirming the
order of the revisional authority since M-sand sold by the assessee is
understood in common parlance as ‘manufactured sand’ and not as
‘ordinary sand’ i.e., ‘river sand’. The Notification dated 31.03.2015
would make it ample clear that prior to the said date, the
‘manufactured sand’ was liable to be taxed under the residuary entry at
14.5%. In order to reduce the rate of tax on sale of M-sand, the
Government of Karnataka has issued a Notification dated 31.03.2015,
thereby reducing the rate of tax to 5.5%. Thus, sought for the dismissal
of the revision petition.
7. We have carefully considered the arguments advanced by the
learned counsel for the parties and perused the material on record.
8. Entry 83 of Third Schedule to the KVAT Act reads thus:—
“Goods Taxable at Five and One Half Per Cent;
1 to 82. xxxx
83. Sand and grits”.
9. Had the intention of the Legislature was to exclude ‘manufactured
sand’, certainly it would have made it clear in the entry itself.
Legislature with all its wisdom has brought ‘sand and grits’ under Entry
83 of Third Schedule, fixing the rate of tax at 5/5.5%. It is well settled
law that common parlance test is the best way to classify the goods vis
-a-vis the determination of rate of tax. The revisional authority as well
as the Tribunal proceeded to levy higher rate of tax bringing the M-sand
under residuary entry under Section 4(1)(b)(iii) of the KVAT Act
primarily for the reason that the Government of Karnataka has issued a
Notification dated 31.03.2015 reducing the rate of tax on M-sand at
5.5%.
10. The Assessing Authority while arriving at a decision that the
‘manufactured sand’ and ‘river sand’ are construed as sand and there is
no difference between them like the purpose or use, has discussed as
under:—
“Natural or river sand are weathered and worn out particles of
rocks and are of various grades or sizes depending upon the amount
of wearing. The artificial sand produced by proper machines can be a
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better substitute to river sand. Manufacturing of sand process

involves three stages, crushing of stones in to aggregates by VSl and
then fed to Rotopactor to crush aggregates into sand to required
grain seizes (as fines). Screening is done to eliminate dust particles
and Washing of sand eliminates very fine particles present within.
The end product will satisfy all the requirements of IS : 383 and can
be used in Concrete & Construction The artificial sand produced by
proper machines can be a better substitute to river sand. The sand
should be sharp, clean and course. The grains should be of durable
material. The grain sizes must be such that it should give minimum
voids. The presence of day and silt retards the setting of the cement
and makes the weaker and the walls or the slab leaks and holds
dampness.
Comparison of artificial sand with river sand.
Sand manufactured by Vertical Shaft Impactor is of cubical shape.
Such sand can be used for all types of construction work, Concreting,
Plastering etc. and is better substitute to river sand.
Followings are the actual result of Concrete Designed with river
sand and Artificial sand proportions are by weight Mix Design M 15 M
55 concrete is designed for River sand and artificial sand. Results are
as follows:
1) With using River sand:
*Cement one bag………50 Kg
*Sand 13.5 Kg
*Agg. 20 mm 13.5 Kg
*Agg 12 mm 67.5 Kg
* Water 27.5 ltrs.
2) With using Artificial sand: Proportions are by weight
*Cement one bag 50 Kg
*Sand (artificial m/c made) 125 Kg
*Agg. 20 mm 137 Kg
*Agg 12 mm 75 Kg
* Water 27.5 ltrs.
Strength achieved after 7 days curing……….186.67 Kg/Cmsq.
Result are as follows:
1) With using River sand: All proportions are by weight
*Cement 50 Kg
*River Sand 75 Kg
*Agg. 20 mm 75 Kg
*Agg 12 mm 37.5 Kg
*Water 19 ltrs.
Strength achieved after 7 days curing……441 Kg per Sq. cm.
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2) With using Artificial sand: All proportions are by weight

*Cement 50 Kg
*Artificial Sand 70 Kg
*Agg. 20 mm 80 Kg
*Agg 12 mm 35 Kg
* Water 19 ltrs
Strength achieved after 7 days curing……468.14 Kg per Sq. cm.
Source : Journal of Engineering Computers and Applied Science
(JBC&AS) Volume - 2 No. 2 Feb-12.
From the above design results it can be observed that the river
sand and artificial sand are equally strength for Concrete and
increases the workability and gives more sound Concrete. The slabs,
using Artificial sand, are more leak proof than by river sand. Further
I have relied the following Judgments in the strength of the above
opinion.”
11. Further noticed that the Commissioner of Commercial Taxes,
Bengaluru in the case of a different assessee has clarified that the
manufactured sand attracts tax of 5% as per Entry 83 of the Third
Schedule of the KVAT Act vide clarification No. CLR/CR/134/2011-2012
dated 03.02.2012.
12. It is true that the clarification issued by the Advance Ruling
Authority shall be binding, only on the applicant who seeks clarification
and only in respect of the goods or transaction in relation to which a
clarification is sought and also only in the proceedings before the
officers of the department (other than the Commissioner) and the
Appellate Tribunal in terms of sub-section (4) of Section 60 of the KVAT
Act. But the same can throw some light while considering the
classification of the same goods though may not be binding.
13. In the case of Annapurna Biscuit Manufacturing Co. Kanpur v.
Commissioner of Sales Tax, U.P., Luknow reported in (1981) 48 STC
254, the Hon'ble Apex Court has held that it is well settled rule of
construction that if an expression is capable of a wider meaning as well
as narrower meaning, the question whether the wider or the narrower
meaning should he given depends on the context and the background
of the case.
14. It is trite that the commodity could be classified based on how
ordinarily or commonly it is known and its purpose and use. It is not
disputed by the revisional authority and the Tribunal that the
‘manufactured sand’ is used for construction activity. The ‘Robo Sand’
i.e., ‘manufactured sand’ and the ‘river/natural sand’ is found to be
having similar physical properties as per the report of a project
sponsored by the Department of Mines and Geology, Government of
Karnataka and conducted by the Department of Civil Engineering of the
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Indian Institute of Science placed on record by the assessee. As could

be seen from the material on record, the M-sand cannot be considered
as excluded from Entry 83 of Third Schedule of the KVAT Act.
15. The common parlance test’, ‘marketability test’, popular
meaning test’ are all tools for interpretation to arrive at a decision on
proper classification of a tariff entry. The test, as to what a common
man viewing or dealing with the article will understand it to be, would
be relevant. The Hon'ble Apex Court has held that while interpreting
the entry for purpose of taxation recourse should not be made to the
scientific meaning of the terms or expressions used but to their popular
meaning, that is to say, the meaning attached to them by those dealing
in them.
16. The Hon'ble Apex Court in the case of Union of India v. Garware
Nylons Ltd., reported in (1996) 10 SCC 413, observed that the burden
of proof is on the taxing authorities to show that the particular case or
item in question is taxable in the manner claimed by them. There
should be material to enter appropriate finding in that regard and the
material may be either oral or documentary. It is for the taxing
authority to Jay evidence in that behalf even before the first
adjudicating authority.
17. In the case of Bharat Forge and Press Industries (P) Ltd. v.
Collector of Central Excise, Baroda, Gujarat reported in (1992) 84 STC
414, the Hon'ble Apex Court has reiterated that only such goods as
cannot be brought under the various specific entries in the tariff should
be attempted to be brought under the residuary entry.
18. The Hon'ble Apex Court in the case of Ramavatar Budhaiprasad
v. Assistant Sales Tax Officer, Akola reported in (1961) 12 STC 286,
held that the word “vegetables” must be construed not in any technical
sense nor from the botanical point of view but as understood in
common parlance. Everyday use it must be construed in its popular
sense meaning “that sense which people conversant with the subject
matter with which the Statute is dealing would attribute to it”.
Consequently, it has been held that “betel leaves” are not vegetables
under the Berar Sales Tax Act, 1947.
19. In the light of these judgments, applying the principle of
common parlance, ‘sand’ includes ‘manufactured sand’ in whatever
name it would be called.
20. Either viewed from common parlance/trade parlance/popular
meaning test, applying the user theory, ‘manufactured sand’ would
certainty fall under the entry ‘sand’, as it stood during the relevant
period. The Notification dated 31.03.2015 is only clarificatory and that
would not disentitle the assessee to claim the reduced rate of tax at
5/5.5% under Entry 83 of the Third Schedule of the KVAT Act. On the
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other hand, to classify it under the residuary entry different from the
claim by the assessee, the department has to discharge the burden of
proof. Except relying on the Notification dated 31.03.2015, no further
material was relied on by the revenue to bring the ‘manufactured sand’
under the residuary entry.
21. For the reasons aforesaid, we answer the question of law in
favour of the assessee and against the revenue.
22. Hence, we pass the following
ORDER
i) The revision petition is allowed.
ii) The judgment dated 03.01.2019 passed in STA No. 313/2017 by
the Karnataka Appellate Tribunal at Bengaluru relating to the tax
periods April 2014 to March 2015 is set aside.
iii) The assessing authority is directed to re-compute the tax on the
‘M-sand’ sold by the assessee as the goods falling under Entry 83
of the Third Schedule of the KVAT Act for the relevant tax periods
in question.
———
†
Principal Bench at Bengaluru
‡
This STRP is filed under Section 65(1) of the Karnataka Value Added Tax Act, 2003 against
the judgment dated 03.01.2019 passed in STA No. 313/2017 on the file of the Karnataka
Appellate Tribunal at Bengaluru, dismissing the appeal and upholding the Order dated
28.04.2017 passed in VAT.AP.1308/15-16 on the file of the Joint Commissioner of Commercial
Tax (Appeals-2), and re-assessment Order dated 20.02.2016 passed in VAT. Case. No.
262706937 on the file of the Deputy Commissionser of Commercial Taxes, (Audit) -2.2, DVO-
02 Bengaluru, for the tax periods of April 2014 to March 2015.
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SCC Online Web Edition, © 2023 EBC Publishing Pvt. Ltd.

Page 1 Wednesday, April 05, 2023

2021 SCC OnLine Kar 15712 : (2022) 96 GSTR 147

In the High Court of Karnataka†

Robo Silicon Pvt. Ltd., rep. by Amit Jain, General

5. Learned counsel for the petitioner - asseessee submits that Entry

better substitute to river sand. Manufacturing of sand process

2) With using Artificial sand: All proportions are by weight

Indian Institute of Science placed on record by the assessee. As could

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