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NEW DELHI: Silk and Textile Mercantile Traders Association has moved the Delhi High Court challenging the NCT government's decision to bring silk fabrics and silk sarees under the purview of Value Added Tax (VAT).

A Bench comprising Justice T S Thakur and Justice B D Ahmed issued notice to the Commissioner, VAT Department seeking explanation for imposing four per cent tax on silk fabrics and sarees in accordance with the Entry 63 of the Third Schedule of the Delhi VAT Act.

Though the Empowered Committee on VAT has decided to keep sugar, tobacco and textile items out of VAT, the Delhi state government has brought one of the precious varieties of textiles - silk products - under VAT.

Traders through advocate M L Lahoty contended that since silk items being a textile it falls in exempted category under Additional Duties of Excise (Goods of Special Importance) Act, an embargo was cast upon the Commissioner to levy VAT on it.

The Association has sought quashing of VAT Department's July 25 communication ruling that silk items were taxable as per Entry 63 of the Third Schedule of the Delhi VAT Act.

The silk traders have sought a direction for declaring that silk fabrics and sarees fall under Entry 48 of the First Schedule and as such exempted from the levy of VAT.

The merchants referred the Karnataka ordinance and steps taken by Jammu and Kashmir government on the issue by which all varieties of textiles and fabrics other than those specified in the Third Schedule were brought under the First Schedule and exempted from levy of VAT.

Asserting that VAT Commissioner's ruling to levy tax on silk products under Delhi VAT Act violates natural justice, the traders said the concept of VAT was to be uniformly applicable in all states and action of VAT Commissioner in not aligning with other states was not only arbitrary but also contrary to the basic principle of the state-level VAT.