9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (10) TMI 564 - HC - VAT and Sales TaxRate of tax - potato chips - entry No. 6 of Schedule II(B) of the Act - 4% or 12.5%? - whether potato chips is a processed vegetable or not, and consequently liable to be taxed at four per cent or at 12.5 per cent? - Held that - A perusal of entry No. 6 of Schedule II(B) of the Act indicates that all processed and preserved vegetables would be taxed at 4%. Potato is a vegetable after going through the process of slicing, frying and spicing, potato chips does not cease to be a vegetable. It is irrelevant as to whether it becomes a snack item or not. A processed vegetable can also be a snack item, but then it does not take the snack item outside the entry of processed vegetables. The characteristics of the potato remains the same and if, by processing potato, it becomes a potato chip, it still remains a processed vegetable and, consequently, will be taxed at 4% under Schedule II(B) of the Act. It is well-settled what is not excluded would be held to be included - from a reading of entry No. 6 of Schedule II(B) of the Act to be an inclusive entry. The use of word all and including makes it apparently clear that it is an inclusive entry. The effect of the words all and the words including fruit jams, jellies, fruit squash, paste, fruit drinks and fruit juices and achar (whether in sealed containers or otherwise) under entry No. 6 of Schedule II(B) of the Act and the absence of any exclusion of potato chips within the said entry gives a clear legislative intent of inclusion of potato chips under entry No. 6 of Schedule II(B). Revision allowed - decided in favor of revisionist-assessee.
Issues Involved:
1. Whether potato chips are classified as processed vegetables under the Uttaranchal Value Added Tax Act, 2005. 2. The applicable tax rate for potato chips under the Act. Detailed Analysis: 1. Classification of Potato Chips: The primary issue revolves around whether potato chips qualify as "processed vegetables" under Entry No. 6 of Schedule II(B) of the Uttaranchal Value Added Tax Act, 2005. The revisionist argued that potato chips, being derived from potatoes (a vegetable), should be classified as processed vegetables and thus taxed at 4%. The respondent-Department contended that potato chips, due to their manufacturing process, should be classified as snack items and taxed at 12.5%. The court examined various precedents and definitions to determine the classification. It referred to decisions from the Gauhati High Court, Madras High Court, and Punjab and Haryana High Court, which had previously classified potato chips as processed vegetables. The court also considered the Himachal Pradesh High Court's decision, which had a contrary view but noted that the Supreme Court had stayed this decision. The court reviewed definitions from encyclopedias and the Ministry of Food Processing Industry, which classified potato chips as a processed form of potatoes, thus supporting the revisionist's argument. The court concluded that potato chips do not lose their essential characteristics as potatoes through processing and should be classified as processed vegetables. 2. Applicable Tax Rate: The applicable tax rate for potato chips hinges on their classification. Under Section 4(2)(b)(i)(b) of the Act, goods specified in Schedule II(B) are taxed at 4%, while unspecified goods fall under the residuary category and are taxed at 12.5%. The court emphasized that if an item can reasonably fit under a specific entry, it should not be placed in the residuary category. The court cited the Supreme Court's rulings in Bharat Forge & Press Industries (P.) Ltd. v. Collector of Central Excise and H.P.L. Chemicals Ltd. v. Commissioner of Central Excise, Chandigarh, which supported the principle that specific entries should prevail over general or residuary entries. Given that potato chips fit the description of processed vegetables in Entry No. 6 of Schedule II(B), the court ruled that they should be taxed at 4%. The court also highlighted that the legislative intent, as indicated by the inclusive nature of Entry No. 6 and the absence of exclusions for potato chips, supported this classification. Conclusion: The court concluded that potato chips are processed vegetables and should be taxed at 4% under Entry No. 6 of Schedule II(B) of the Uttaranchal Value Added Tax Act, 2005. Consequently, the orders of the assessing authority, the Joint Commissioner (Appeals), and the Tribunal were quashed. The revision was allowed, and the assessing authority was directed to levy tax on potato chips at 4% instead of 12.5%.
|
