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2007 (4) TMI 354 - SC - VAT and Sales TaxMeaning of the term cooked food in the M.P. Commercial Tax Act, 1994 - fryums fall under item No. 2 of Part I of Schedule II which refers to cooked food and in which case the rate of tax is four per cent OR item fryums falls under Part VII of Schedule II to the M.P. Commercial Tax Act, 1994, under which the rate of tax is eight per cent (earlier it was six per cent) Held that - Appeal allowed. The legislative intent in the present case under section 2(g) is to include consumables. Fryums in the present case at the relevant time were not directly consumable. They were under-cooked items. They were semi-cooked items. They required further process of frying and addition of preservatives to make them consumables even after the specified time. But for the preservatives the items would have become stale.
Issues:
1. Classification dispute regarding the tax rate applicable to "fryums" under the M.P. Commercial Tax Act, 1994. Detailed Analysis: The civil appeal in question revolves around a classification dispute concerning the tax rate applicable to "fryums" under the M.P. Commercial Tax Act, 1994. The appellant contends that "fryums" should be classified under item No. 2 of Part I of Schedule II as "cooked food," attracting a tax rate of four percent. Conversely, the department argues that "fryums" fall under the residuary entry of Part VII of Schedule II, subject to a higher tax rate of eight percent. The primary issue for determination is the interpretation of the term "cooked food" as per the 1994 Act, specifically in relation to "fryums" for the assessment years 1992-93 and 1993-94. The assessment history reveals that the Assistant Commissioner initially assessed the sale of "fryums" at eight percent tax under the residuary entry, leading to a tax demand. Subsequent assessments for the period from April 1, 1993, to March 31, 1994, also attracted an eight percent tax rate. The appellant, dissatisfied with these assessments, approached the Madhya Pradesh High Court through a Writ Petition seeking a declaration that "fryums" should be considered as "cooked food" taxable under a lower tax rate entry. The High Court, in its initial decision, ruled in favor of the appellant, classifying "fryums" as "cooked food" under entry 2 of Part I of Schedule II. The department, aggrieved by this decision, appealed to the division bench, which upheld the High Court's ruling, confirming "fryums" as falling under the category of "cooked food." The critical legal interpretation revolves around the definition of "cooked food" as provided in section 2(g) of the M.P. Commercial Tax Act, 1994. The Act's definition of "cooked food" includes various items but excludes certain consumables like ice-cream, cakes, and chocolates. The court, after analyzing the inclusive definition of "cooked food," concluded that "fryums" do not qualify as "cooked food" under the Act. The court reasoned that "fryums" are semi-cooked items requiring further processing, such as frying, before consumption, thus falling under the residuary entry for taxation. Moreover, the court referred to legal precedents emphasizing that an inclusive definition, as in the case of "cooked food," does not restrict the term but rather extends its scope to encompass specific items. Applying this principle, the court found that "fryums" did not meet the criteria to be classified as "cooked food" based on their processing requirements and consumability status. Therefore, the court set aside the previous judgment, allowing the civil appeal filed by the department, with no costs imposed. In conclusion, the Supreme Court's judgment clarifies the classification of "fryums" for taxation purposes under the M.P. Commercial Tax Act, 1994, emphasizing the interpretation of "cooked food" and the applicability of specific tax rates based on the nature of the goods involved.
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