The Andhra Pradesh High Court has held that 5% Value Added Tax (VAT) on sale of liquid carbon dioxide.
The bench of Justice R Raghunandan Rao and Justice K Manmadha Rao has observed that Heading No.2811 21 specifically mentions carbon dioxide, it may however be noted that there is no qualification that carbon dioxide should be in a gaseous form. In the absence of any such qualification, carbon dioxide in gaseous form or liquid form, would fall under HSN Heading No.2811 and also in Entry No.100(190) of Schedule- IV of the VAT Act.
The petitioner/assessee is in the business of purchasing carbon dioxide and production of liquid carbon dioxide by scrubbing, purification, drying, filtration and liquefaction and selling the purified liquid carbon dioxide and Dry Ice.
The petitioner, who was registered under the Andhra Pradesh Value Added Tax Act, 2005, (VAT Act) had declared the turnovers in relation to the said products, for the period February, 2016 to June, 2017 and paid 5% tax on the turnover of Carbon Dioxide Gas and 14.5% on the sale of Dry Ice. The Assessing Officer had accepted the said rate of tax, in relation to sale of Carbon Dioxide and passed an assessment order for the period February 2016 to June 2017.
The Joint Commissioner (ST), Vizianagaram Division, who is arrayed as the department, had issued a notice of revision, calling upon the petitioner to show cause as why the turnover relating to the sale of liquid Carbon Dioxide should not be taxed at the rate 14.5%. In the show cause notice, the department simply stated that purified liquid Carbon Dioxide gas falls in the unclassified category of goods i.e., Schedule-V to the VAT Act, and is liable to be 14.5% taxed instead of 5%. No reasons why such a view should be taken, is adduced in the show cause notice. The petitioner, after receipt of the show cause notice, had filed his objections and had also availed of a personal hearing.
The petitioner contended that liquid Carbon Dioxide falls within Entry-100 (190) in Schedule-IV of the VAT Act and the rate of tax would be 5%. The case of the petitioner was that Entry 100(190) was applicable to “other inorganic acids and other inorganic oxygen compounds of non-metals” falling under HSN Code Heading No.2811.
The department stated that HSN Code Heading No.28112190 is classified under Chapter 28 (Inorganic Chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of; isotopes) of ITC (Indian Tariff Code). The department took the view that this category of goods would not include liquid Carbon Dioxide. The department also took the view that Entry 100(190) does not include liquid Carbon Dioxide and as such the said product would have to be treated to fall within the ambit of Schedule-V and not within Entry-100 (190) of Schedule-IV.
The court allowed the writ petition.
Case Details
Case Title: Punjab Carbonic (p) Ltd Versus The Commercial Tax Officer and Others
Case No.: Writ Petition No: 12529/2024
Date: 21/04/2025
Counsel For Petitioner: A Sarveswar Rao
Counsel For Respondent: GP For Commercial Tax
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