1986 (10) TMI 316 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of tax rate for "vermicelli" under Orissa Sales Tax Act.

Analysis:
The writ petition raised the issue of whether "vermicelli" falls under entry No. 1 or entry No. 13 of List-C under the Orissa Sales Tax Act, determining the applicable tax rate. The petitioner, a registered dealer of "vermicelli," contested the taxing authority's decision to tax it at 8% instead of 4% on the taxable turnover.

The assessing officer calculated the taxable turnover of the petitioner's business and directed payment of the balance tax amount. Despite the availability of an appeal, the petitioner directly approached the High Court under Article 226 of the Constitution, citing a pure interpretation of law without disputed facts.

The Court analyzed the relevant provisions of the Orissa Sales Tax Act, particularly Section 5(1) and the notification specifying different entries and tax rates under List-C. Entry No. 1 pertains to "atta, maida and suji," taxed at 4%, while entry No. 13 covers "cereals other than specific grains" also taxed at 4%.

The Court examined whether "vermicelli" qualifies as a cereal under entry No. 13, considering its preparation from "maida" derived from wheat. Despite precedents from other High Courts, the Orissa High Court concluded that "vermicelli" does not fit within the scope of entry No. 13 due to specific exclusions and inclusions in the list.

The alternative argument was whether "vermicelli" could be classified under entry No. 1 for "atta, maida and suji." The Court applied the principle of interpreting words in their commercial sense, emphasizing common parlance understanding in trade. Relying on a decision of the Andhra Pradesh High Court, the petitioner's contention was rejected, and "vermicelli" was deemed distinct from "maida" for tax classification.

Ultimately, the Court upheld the assessing officer's decision to tax "vermicelli" under the residuary entry No. 101 for "all other articles" at 8%, dismissing the writ petition. The judgment was delivered jointly by two judges, with one judge concurring, resulting in the petition being dismissed without costs.