2026-VIL-1177-MAD
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VAT High Court Cases

Tamil Nadu Value Added Tax Act, 2006 – Classification of Dupatta - Pre-assessment notices were issued and assessments were framed classifying the goods as taxable. The Assessing Authority rejected the Petitioner's claim of exemption under Entries 3 to 10 of Part A of the IV Schedule and did not quote any rival entry. The first appellate authority and the Tribunal confirmed the levy on the basis that a dupatta is worn only along with the main garment and cannot be sold separately, and classified it under Entry 49 of Part B of Schedule I relating to fibres - Whether the dupatta is classifiable under Entry 49 of Part B of Schedule I relating to fibres, or under Entries 3 to 10 of Part A of the IV Schedule relating to fabrics - HELD - A dupatta cannot, by any stretch of imagination, fall into an Entry encompassing only fibres as it comprises woven fabric. The approach of the authorities is fundamentally flawed and the basis of assessment is rejected. If the case of the authorities was that the dupatta is a readymade garment, the Department ought to have referred to the entry for readymade garments. This was never the case of the Department. The argument that a dupatta is circumscribed by a specific length whereas fabrics are yardage of unlimited length does not merit acceptance - The object of classification is to pigeonhole goods into an Entry that most appropriately describes them, taking into account their functionality and appearance. A plain reading of Entries 3 to 10 of Part A of the IV Schedule shows that they are the appropriate entries for dupattas of varying materials. A dupatta, being primarily a fabric, falls only under Entries 3 to 10 of Part A of the IV Schedule. The substantial questions of law are answered in favour of the assessee – The Tax Case (Revisions) are allowed
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