2011 (12) TMI 471 - HC - VAT and Sales Tax

Whether the product Rich s Whip Topping , a raw material for bakery and allied industries falls under entry 100 of Schedule IV to the APVAT Act, 2005 or any other entry of Schedule IV? Held that - Schedule V to the VAT Act reveals that all the goods other than those specified in Schedules I, III, IV and VI are taxable at 12.5 per cent. Thus, the petitioner failed to establish that the product in question falls under entry 100(4) of Schedule IV to the VAT Act. On the other hand, as rightly pointed out by the respondent-State, the product in question does not fall in any of the Schedules I, III, IV and VI, and therefore, it falls under residuary Schedule V to the VAT Act. In that view of the matter, the decisions relied on by the counsel for the petitioner which are mostly to the effect that the onus of proving the classification of goods lies on the Revenue, are not helpful to the petitioner and that the remaining decisions are not relevant to the point involved in this case. In the circumstances, we are of the considered opinion that the Tribunal as well as the Ruling Authority rightly found that the product in question falls under residuary Schedule V and not under entry 100(4) of Schedule IV to the VAT Act, and therefore, it is taxable at 12.5 per cent. Hence, there are no grounds to interfere with the order impugned.

Summary

Issues:
1. Classification of the product 'Rich's Whip Topping' under the Andhra Pradesh Value Added Tax Act, 2005.
2. Whether the product is considered a raw material and/or an industrial input.
3. Determining if the product falls under entry 100 of Schedule IV or the residuary entry of Schedule V to the VAT Act.

Issue 1: Classification under the VAT Act
The case involved a tax revision petition against an order by the Sales Tax Appellate Tribunal regarding the classification of 'Rich's Whip Topping' under the Andhra Pradesh Value Added Tax Act, 2005. The petitioner contended that the product, used in bakery and confectionary industries, should be taxed at 4% under entry 100(4) of Schedule IV, not at 12.5% under the residuary entry of Schedule V. The Authority for Clarification and Advance Ruling initially ruled in favor of the higher tax rate, a decision upheld in a review petition and by the Tribunal.

Issue 2: Raw material or industrial input
The petitioner argued that 'Rich's Whip Topping' is an industrial input made from edible vegetable oils and fats, not a consumable item. However, the respondent contended that the product, a combination of various ingredients including water, fats, sugar, and emulsifiers, does not qualify as a raw material or industrial input. The court examined the manufacturing process and relevant legal precedents to determine the nature of the product.

Issue 3: Classification under Schedule IV or Schedule V
The court analyzed the definitions of Schedule IV and Schedule V of the VAT Act to ascertain the appropriate tax rate for 'Rich's Whip Topping.' Despite the petitioner's reliance on specific legal cases and the amendment to entry 100 of Schedule IV, the court concluded that the product did not meet the criteria for entry 100(4) and fell under the residuary Schedule V, subject to the standard tax rate of 12.5%. The court dismissed the tax revision case, upholding the decision of the Tribunal and the Ruling Authority.

In conclusion, the judgment clarified the classification of 'Rich's Whip Topping' under the Andhra Pradesh VAT Act, emphasizing the distinction between industrial inputs and consumable goods while applying the relevant provisions of Schedule IV and Schedule V to determine the applicable tax rate.