2008 (6) TMI 557 - HC - VAT and Sales Tax

Whether white oats sold by the assessee under the name Shantis is exempted from tax under original entry 9 renumbered as 12 of the First Schedule to the Act? Whether the item falls under any entry of any of the other Schedules to the Act to justify the clarification and assessment under the residual entry at 12.5 per cent? Held that - The assessee s product is not coarse grain but a refined product made out of coarse grain oats . Moreover, items 1 to 9 arrayed under entry 12 of the First Schedule are not any product of the grain named therein, but are grains of various types in the pure and simple form. We, therefore, reject assessee s claim that the product is exempted from tax under item 12(3) of the First Schedule to the Act. White oats other than those sold under brand name registered under the Trade Marks Act 1999, will be taxable at four per cent under entry 49(2) of the Third Schedule to the KVAT Act. It is for the assessing officer to examine whether the appellant has obtained a trade mark registration for the product and if not to assess the product at four per cent. Appeal allowed in part.

Summary

Issues:
Tax liability on the assessee's product "white oats" under the Kerala Value Added Tax Act, 2003.

Analysis:
The judgment addressed the issue of tax liability on the product "white oats" marketed by the assessee. The court considered whether "white oats" could be exempted from tax under the original entry 9 renumbered as 12 of the First Schedule to the Act. The court examined the relevant entry which listed various coarse grains, including oats. The product in question was observed to be a refined product made out of coarse grain oats, not a coarse grain itself. The court rejected the assessee's claim that the product should be exempted from tax under this entry.

Furthermore, the judgment analyzed whether the product fell under any entry of the other Schedules to the Act. The court referred to entries 48 and 49 of the Third Schedule, which included items like flour, food products, and similar preparations. While oats were not specifically mentioned in entry 48, the court found that the product "white oats" could be considered a food product similar to corn flakes under entry 49. The court held that "white oats" would be taxable at four per cent under entry 49(2) of the Third Schedule unless the product was sold under a registered brand name.

In conclusion, the court allowed O.T.A. No. 1/2006 in part by determining that "white oats" were taxable under entry 49(2) of the Third Schedule at four per cent if the assessee did not have a registered brand name. The assessing officer was directed to revise the assessments accordingly and forfeit any excess tax collected after the clarification date. The O.T.A. and the writ petitions were allowed to the extent indicated in the judgment.