Madhya Pradesh High Court holds insulating tape to be classifiable as an insulator under Entry 50, Part II, Schedule II of the MP VAT Act and not under the residuary entry.
Meetu Kumari | Sep 11, 2025 |
Big Relief for Pidilite! HC Rejects Residuary Entry on Insulating Tape
The matter arose from a determination order dated 31.08.2010 by which the product known as “steel grip insulating tape” was placed under the residuary entry in Part IV of Schedule II of the Madhya Pradesh VAT Act. The applicant had originally sought determination under Section 70 of the Act, filing its application along with a sample, technical data, and manufacturing process, and specifically contended that the tape was designed and used exclusively for electrical insulation and therefore fell within Entry 50 of Part II of Schedule II, which attracted tax at 4% up to 31.07.2009 and at 5% thereafter.
Despite this, the Commissioner placed reliance on a circular dated 31.07.2006 and on a broad application of the common parlance test, and held that the tape should be classified under the residuary entry which carried a higher rate of tax at 12.5%/13%. Acting upon this determination, assessing officers issued notices demanding differential tax for the period 01.04.2010 to 30.09.2010.
Central Issue: Whether insulating tape is to be classified as an insulator under Entry 50 of Part II Schedule II of the MP VAT Act or under the residuary entry in Part IV Schedule II.
HC’s Decision: The Court concluded that the product in question was an insulating material and fell within the specific entry covering insulators, and therefore it could not be brought under the residuary entry. It was emphasized that a specific entry must prevail over a general or residuary one, and that classification should be made based on the essential character and intended use of the product rather than the mere fact of it being sold by particular categories of dealers. The Bench found that the Commissioner had committed an error in relying exclusively on a circular without applying independent consideration to the material produced in support of the application.
On this reasoning, the Court quashed the order dated 31.08.2010 and the consequential assessment notices for the relevant period. It directed that the insulating tape is to be taxed under Entry 50 of Part II Schedule II at the rate of 5%. The writ petition was accordingly allowed, the impugned action was set aside, and no order as to costs was made.
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