2006 (9) TMI 504 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of tax rates for bakery margarine under different entries of the Kerala General Sales Tax Act.

Summary:
The High Court of Kerala addressed the question of whether bakery margarine should be taxed at a concessional rate as edible oil under item 17A of a specific notification, or at a higher rate under entry 90 of the First Schedule to the Kerala General Sales Tax Act. The court analyzed the definitions of edible oils and margarine under the relevant schedules and notifications. While edible oil includes refined or hydrogenated oils, the court noted that the bakery margarine in question was specifically intended for use in the bakery and confectionery industry, as indicated by the manufacturer's instructions. The court distinguished between the general use of edible oils for cooking purposes and the specific purpose of the bakery margarine. Despite arguments about the presence of vitamins and additives in both bakery margarine and hydrogenated oils like vanaspathi, the court concluded that the bakery margarine did not qualify as edible oil under the notification. The court overturned the Tribunal's decision and upheld the assessment of bakery margarine at a higher tax rate of eight percent under entry 90 of the First Schedule to the KGST Act, 1963.