1987 (11) TMI 362 - HC - VAT and Sales Tax

Summary

Issues: Classification of sambar powder, meat masala, pickle powder as spices under the Kerala General Sales Tax Act.

The judgment pertains to a tax revision case filed by the Deputy Commissioner of Sales Tax regarding the classification of sambar powder, meat masala, pickle powder, etc., under the Kerala General Sales Tax Act. The respondent-assessee's turnover of these powders was initially assessed at 8%, treating them as "spices." The Tribunal, however, held that these powders should be classified as general goods taxable at 4%. The main issue raised was whether these powders could be considered spices under entry 27 of the First Schedule to the Act.

The Revenue argued that since the powders contained ingredients like chilly and coriander, they should be assessed at 8% as spices. On the other hand, the Tribunal opined that the mixture of ingredients formed a new commodity not specifically listed in the Act, thus falling under general goods taxable at 4%. The critical question was whether these powders qualified as spices under the relevant entry in the First Schedule.

The First Schedule of the Act lists various items subject to single-point tax, including spices under item 27. The definition of "spices" was crucial, as it was not explicitly defined in the Act. The court referred to dictionary meanings, which described spices as aromatic and pungent vegetable substances used to flavor food. It was emphasized that the original product intended as spices, not manufactured products, should be considered under this category.

The court highlighted that the Sales Tax Act's provisions should be strictly construed, and any ambiguity should benefit the taxpayer. Referring to a previous judgment, it was noted that the term "spices" should be understood in common parlance as ingredients adding flavor to food. The court concluded that even if ingredients like chillies and coriander seeds were taxable at 8%, the powders derived from them should not automatically fall under the spices category. Therefore, the Tribunal's decision to tax the powders as general goods was upheld.

In conclusion, the tax revision case was dismissed, affirming the classification of sambar powder, meat masala, and pickle powder as general goods taxable at 4%, rather than spices taxable at 8%.