Recently, the High Court of Andhra Pradesh, while allowing a batch of writ petitions challenging VAT assessments under the Andhra Pradesh Value Added Tax Act (A.P. VAT Act), held that fitness-related equipment such as treadmills, dumbbells, and weightlifting apparatus qualify as "sports goods" under Entry-60 of Schedule-IV.
Brief Facts:
The petitioner, M/s Acme Fitness Pvt. Ltd., is a dealer in gym and fitness equipment registered under the A.P. VAT Act and the Central Sales Tax Act. For several years, the petitioner had classified the goods sold under Entry-60 of Schedule-IV of the A.P. VAT Act and paid tax at the concessional rate of 5%. The petitioner also filed returns under the Central Sales Tax Act. However, assessment orders were passed by the 5th respondent for different assessment periods (ranging from 2015–2018), disallowing the concessional rate of 2% due to non-submission of C-Forms and F-Forms. Further, the goods were reclassified by the assessing authority as “unspecified goods” under Schedule-V, thereby attracting VAT at the higher rate of 14.5%. The petitioner challenged these assessment orders through writ petitions.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the petitioner argued that the goods sold—namely treadmills, dumbbells, weightlifting equipment, rotators, and fit-kit exercise sets—are integrally connected to sports and physical activity. It was submitted that weightlifting is a recognized sport, and related equipment clearly falls within the category of sports goods under Entry-60 of Schedule-IV. The remaining equipment, although not linked to a single sport, are widely used by sports persons for fitness and training purposes, and hence must also be treated as sports goods. The petitioner placed reliance on a decision of the Hon’ble High Court of Uttarakhand in M/s Bhatia Sports Company vs Commissioner, Commercial Tax, which had categorised fitness and exercise equipment as sports goods eligible for lower VAT. It was further submitted that the refusal to accept this classification was based on an overly narrow interpretation and lacked legal justification.
Contentions of the Respondent:
The learned Government Pleader for Commercial Taxes contended that the goods in question were not associated with any specific sport and were general physical fitness equipment. Therefore, they did not fall within the ambit of Entry-60 of Schedule-IV and had been rightly assessed as unspecified goods under Schedule-V, attracting tax at 14.5%. It was argued that Entry-60 required a closer connection to specific sporting activities, which was lacking in the petitioner’s products.
Observations of the Court:
The Court began by considering the core issue—whether the goods sold by the petitioner, including treadmills, dumbbells, weightlifting equipment, rotators, and fit-kit exercise kits, could be classified as "sports goods" under Entry-60 of Schedule-IV to the Andhra Pradesh VAT Act. This classification was pivotal because it would determine the applicable rate of VAT: either the concessional 5% under Schedule-IV or the general 14.5% under Schedule-V as unspecified goods.
The Court observed that the petitioner had been consistently classifying these goods under Entry-60 and paying VAT at 5%, and that the deviation by the assessing authority stemmed from a restrictive interpretation that only goods directly linked to a specific sport could fall under the category of “sports goods.” The respondents argued that fitness equipment like treadmills and dumbbells were general in nature and not associated with any particular sport, thereby making them ineligible for concessional treatment.
In analysing this argument, the Court examined the nature and purpose of the goods in question. It held that while certain goods such as weightlifting equipment are clearly associated with an established sport—weightlifting—others like treadmills and dumbbells, although not tied to a single sport, are essential for maintaining the physical conditioning of sports persons across all disciplines. The Court emphasized that the function of these goods in training and preparing athletes gives them a clear nexus with sports, and hence they ought to be considered within the broader scope of “sports goods.”
The Court found the reasoning adopted by the petitioner to be persuasive and in line with judicial precedent. It referred to the judgment of the High Court of Uttarakhand in M/s. Bhatia Sports Company vs Commissioner of Commercial Tax (2022), where similar fitness equipment was held to qualify as sports goods. The Uttarakhand High Court had also relied on a decision of the Allahabad High Court in Cosco Industries Ltd. vs State of U.P. (2009), which took a broader view of the term “sports goods” to include equipment used for maintaining physical fitness necessary for sports performance.
In light of these observations, the Court concluded that a restrictive interpretation of Entry-60 would defeat the object of providing a concessional rate for goods integral to sporting activity. The use of fitness equipment by athletes to achieve physical readiness and sustain performance levels is inseparable from sports practice. Therefore, such goods deserve to be taxed under the concessional rate available for sports goods.
The decision of the Court:
The writ petitions were allowed. The assessment orders passed by the 5th respondent for the relevant periods were set aside. The matters were remanded to the Assessing Authority for passing fresh orders, treating the goods as falling within Entry-60 of Schedule-IV to the A.P. VAT Act.
Case Title: M/s Acme Fitness Pvt. Ltd. vs. The State of Andhra Pradesh and Others
Coram: Hon’ble Mr. Justice R. Raghunandan Rao and Hon’ble Mr. Justice B.V.L.N. Chakravarthi
Case No.: W.P. Nos. 7514 of 2020
Advocate for the Applicant: Mr. G.V.S. Ganesh and Mr. G. Tuhin Kuma
Advocate for the Respondent: GP for Commercial Tax (AP)
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