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2014 (11) TMI 1045 - HC - VAT and Sales TaxRate of VAT on sale of Appy Fizz. Treating the product as fruit juice an item falling under entry 71(2) of SRO No.82/2006 - the petitioner paid tax @12.5%. However proceedings were initiated under Section 25 of the KVAT Act proposing to levy tax @20% treating the product as an aerated branded soft drink falling under Section 6(1)(a) of the KVAT Act. - Held that - the product is an aerated soft drink and the fruit juice is added as a flavouring agent which cannot alter the character of the product. In Entry 71(1) of SRO 82/06 the aerated products included are aerated water and soda water. Fruit juice included in entry 71(2) and soft drinks included in entry 71(3) are all products which are not aerated. This therefore makes it clear that aerated products except those which are specifically included in entry 71 are outside the purview of SRO No.82/06 and consequently the product in question has to be treated as an aerated branded soft drink coming within the purview of Section 6(1)(a) of the KVAT Act. - Decided against the assessee.
Issues:
1. Interpretation of whether the product Appy Fizz is classified as a fruit juice or an aerated branded soft drink under the KVAT Act. Analysis: The judgment pertains to a revision filed under Section 63 of the Kerala Value Added Tax Act challenging the order passed by the Kerala Value Added Tax Appellate Tribunal. The key issue revolves around determining the classification of the product Appy Fizz for tax purposes. The petitioner claimed that the product should be treated as a fruit juice falling under entry 71(2) of SRO No.82/2006, attracting a tax rate of 12.5%. However, the authorities proposed to levy tax at 20% considering the product as an aerated branded soft drink under Section 6(1)(a) of the KVAT Act. The petitioner's objections based on previous orders were rejected, leading to the final assessment of 20% tax, confirmed by the Tribunal. The primary question before the court was whether Appy Fizz should be classified as a fruit juice or an aerated branded soft drink for tax assessment. Section 6(1)(a) of the KVAT Act specified the tax rates for different goods, including aerated branded soft drinks at 20%. Entry 71 of SRO No.82/2006 listed non-alcoholic beverages, including fruit juices, fruit concentrates, and soft drinks. The court analyzed the content of Appy Fizz, noting that although it contained fruit juice as a flavoring agent, the predominant character remained that of an aerated soft drink. The court emphasized that aerated products not specifically included in entry 71 are considered outside the scope of SRO No.82/06, leading to the classification of Appy Fizz as an aerated branded soft drink under Section 6(1)(a) of the KVAT Act. Regarding the interpretation of entries without HSN code numbers, the court referred to the Rules of Interpretation under the KVAT Act. It highlighted that such commodities should be understood in common or commercial parlance. The court concluded that since Appy Fizz met the description of an aerated soft drink under Section 6(1)(a), the absence of HSN code did not alter its classification. The court dismissed reliance on orders under the Central Excise Act due to the inapplicability of HSN code in the present case. Ultimately, the court upheld the Tribunal's decision, stating that no interference was warranted, and dismissed the revision accordingly.
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