Sale Of Liquid Carbon Dioxide Is Liable To Be Taxed At 5%: Andhra Pradesh High Court

The Andhra Pradesh High Court stated that the sale of liquid carbon dioxide is liable to be taxed at 5%. The Bench consists of Justices R Raghunandan Rao and K Manmadha Rao were addressing the issue of whether 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 taxed @ 14.5% instead of 5%. In this case, the assessee/petitioner 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 assessee, who was registered under the Andhra Pradesh Value Added Tax Act, 2005 had declared the turnovers in relation to the said products, for the period February, 2016 to June, 2017 and paid tax @ 5% 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 (2nd Respondent), had issued a notice of revision, calling upon the assessee to show cause as why the turnover relating to the sale of liquid Carbon Dioxide should not be taxed @ 14.5%. In the show cause notice, the Joint Commissioner 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 taxed @ 14.5% instead of 5%. As per the assessee, 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 assessee 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 bench observed that the description of goods in Entry 100(190) of Schedule-IV is other inorganic acids and other inorganic oxygen compounds of non-metals and carbon dioxide definitely would fall within such a category. The fact that there are other products mentioned under the main Heading No.2811 would not mean that carbon dioxide does not fall within Heading No.2811. In any event, 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, added the bench. The bench disagreed with the contention of the department that a declaration has to be obtained from the purchaser of carbon dioxide to obtain concessional rate of tax available to such products. In view of the above, the bench allowed the petition and set aside the order of revision. Case Title: Punjab Carbonic (p) Ltd. v. The Commercial Tax Officer and Others Case Number: WRIT PETITION NO: 12529/2024 Counsel for Petitioner/ Assessee: A Sarveswar RaoCitation: 2025 LiveLaw (AP) 80 Click here to download order/judgment

Sale Of Liquid Carbon Dioxide Is Liable To Be Taxed At 5%: Andhra Pradesh High Court

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Sale Of Liquid Carbon Dioxide Is Liable To Be Taxed At 5%: Andhra Pradesh High Court

Mehak Dhiman

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