PVC Insulating Tape Classified as Insulator Taxable at 5% | HC

Case Details: Pidilite Industries Ltd. vs. Commissioner of Commercial Tax (2025) 36 Centax 417 (M.P.)

Judiciary and Counsel Details

• Vivek Rusia & Binod Kumar Dwivedi, JJ.
• S/Shri P.M. Choudhay, Learned Senior Counsel a/by Anand Prabhawalkar, Learned Counsel, for the petitioner.
• Shri Sudeep Bhargava, Learned Deputy Advocate General, for the respondents.

Facts of the Case

The petitioner-assessee was engaged in the manufacture and sale of a product known as steel grip PVC insulating tape and was registered under the Madhya Pradesh Value Added Tax Act, 2002 (MP VAT Act). As uncertainty arose regarding the correct classification of this product for the purpose of levy of tax, the petitioner-assessee filed an application before the Commissioner of Commercial Tax under Section 70 of the MP VAT Act seeking determination of the applicable rate of tax. It was contended that the product is specifically used for insulating electrical wires and therefore falls under Entry 50 Part-II of Schedule II relating to insulators. The Commissioner, however, relying upon Circular No. CT/VAT CEL/2004/292, dated 31-07-2006 and applying the test of common parlance, treated the product as an electrical item ordinarily used in electrical works and sold by dealers of electrical goods. The department further contended that insulating tape was merely an accessory or covering material and not interchangeable with electrical insulators, which, according to it, were distinct commodities, and therefore classified the product under the residuary entry in Part IV of Schedule II. Consequential proceedings for recovery of differential tax were thereafter initiated, which were challenged by the petitioner-assessee. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the classification of a product must be determined by its primary function and essential character. PVC insulating tape is specifically manufactured to insulate electrical wires and prevent the escape of electric current, thereby functioning as an insulator. The court noted that the adhesive component is applied only to provide grip and does not alter the fundamental nature of the product into an ordinary tape used for other purposes. It further reiterated that where a specific entry exists, classification under a residuary entry should be avoided. Accordingly, the impugned order was set aside, the product was held to be classifiable as an insulator under Entry 50 of Part II of Schedule II of the MP VAT Act, and the petition was allowed.

List of Cases Cited

• Alankar Electricals — Referred [Para 10]
• Anchor Electricals Pvt. Ltd. — Referred [Para 10]
• Atul Glass Industries Pvt. Ltd. v. Collector — 1986 (25) E.L.T. 473 (S.C.) — Referred [Para 9]
• Castrol India Ltd. v. Commissioner of Commercial Tax — 2018 (16) G.S.T.L. 495 (M.P.) [Para 9]
• Chetana Industries Ltd. v. Collector — Referred [Para 12]
• Chetna Polycoats Pvt. Ltd. v. Collector — 1988 (37) E.L.T. 253 (Tribunal) — Referred [Paras 2.3, 9]
• Commissioner of Sales Tax v. Jaswant Singh Charan Singh — (1967) 2 SCR 720 — Referred [Para 16]
• Commissioner of Trade Tax v. Parikh Gramodyog Sansthan — 2010 (256) E.L.T. 673 (S.C.) — Referred [Para 16]
• Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan — 1980 (6) E.L.T. 383 (S.C.) — Referred [Para 9]
• Excise & Taxation Officer v. T.R. Solvent Oil Pvt. Ltd. — [2011] 39 v. 387 (P&H) — Referred [Para 9]
• Gupta Plastic Works — Referred [Para 10]
• Indo-International Industries v. Commissioner of Sales Tax — 1981 (8) E.L.T. 325 (S.C.) — Referred [Paras 9, 16]
• Intek Tapes Pvt. Ltd — 2019 (30) G.S.T.L. 136 (A.A.R. – GST) — Referred [Para 10]
• Kruthi R.M. v. Rajiv Gandhi University of Health Science — 2019 SCC OnLine Kar 61 — Referred [Para 10]
• Lazarus Alosious v. State of Kerala — [2006] 144 STC 210 (FB) (Ker) — Referred [Para 9]
• Mauri Yeast India Pvt. Ltd. v. State of U.P. — 2008 (225) E.L.T. 321 (S.C.) — Referred [Para 9]
• Mega Enterprises v. State of M.P. — [2012] 53 v. 422 (MP) — Referred [Para 9]
• Ministry of Finance v. W.S. Insulators of India — 1983 (14) E.L.T. 2184 (Mad.) — Referred [Para 16]
• Ramavatar Bhudhaiprasad v. Assistant Sales Tax Officer — (1961) 1 SCR 1325 — Referred [Para 16]
• Ruchi Soya Industries Ltd. v. State of M.P. — [2025] 140 GSTR 520 (MP) — Referred [Para 9]
  Tvl. Everest Enterprises [Para 10]

List of Departmental Clarification Cited

• Commissioner of Commercial Tax Circular No. CT/VAT CEL/2004/292, dated 31-7-2006 [Paras 2.4, 5]