Karnataka High Court Bench, headed by Justice S Sujata, opined that the M-sand (artificial sand) also comes under the purview of the normal sand from the perspective of the Karnataka Value Added Tax Act-2003. Dealers were classifying M-sand under Entry 83 of Schedule III of the VAT Act which read as ‘sand and grits’ and collecting VAT at a rate of 5%/5.5%.
In 2015, the Government issued a Notification dated 31.03.2015 stating that the rate of tax on M-sand is reduced to 5.5%. The same was interpreted by the Finance Department to mean that prior to the issuance of notification, M-sand was classifiable at a higher rate i.e., at the rate of 14.5% under residuary entry.
This led to an industry wide dispute and Robo Silicon Private Limited, manufacturer and dealer of M-sand under brand name ‘Robo sand’ approached Karnataka High Court by way of Sales Tax Revision Petition challenging the order of Karnataka Appellate Tribunal which upheld classification of M-sand under residuary entry in its decision awarded on January 3, 2019. It said that the M-Sand cannot be included under Entry 83 of Schedule III of the VAT Act. The Robo Sand approached the high court. After perusing the records and other evidence, the High Court passed an order stating that M-sand is classifiable under Entry 83 as ‘sand’.
