2001 (11) TMI 1020 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Limitation and condonation of delay in filing the appeal before the Tribunal.
2. Taxability of "Bubble Gum" as a confectionery item or unclassified item.
3. Taxability of "Swad" tablets as Ayurvedic medicine or confectionery.

Issue-wise Detailed Analysis:

1. Limitation and Condonation of Delay:
The applicant contended that the appeal filed before the Tribunal was barred by limitation and there was no application for condonation of delay. The Tribunal registered the appeal as defective but later regularized it. The Tribunal decided on regular Appeal No. 357 of 1999, indicating that any delay must have been condoned. The judgment and order of the Tribunal could not be challenged on this ground.

2. Taxability of "Bubble Gum":
The applicant claimed "Bubble Gum" was sweet meat (confectionery item), referencing a prior Tribunal decision in the case of Gum of India Ltd. v. Commissioner of Trade Tax, which held "Bubble Gum" as sweet meat. The Tribunal, however, held "Bubble Gum" as an unclassified item taxable at 10%. The Tribunal was not bound by another Tribunal's decision and should have referred the matter to a larger bench to avoid conflicting judgments. The Tribunal failed to consider that "Chewing Gum" and "Bubble Gum" are defined as confectionery under the Central Excise Tariff Act, 1985, and contain significant sugar content. The Tribunal erred in treating "Bubble Gum" as an unclassified item instead of confectionery, which is taxable at 7.5%.

3. Taxability of "Swad" Tablets:
The applicant claimed "Swad" tablets were Ayurvedic medicines. The Tribunal, however, held them as unclassified items taxable at 10%. The Rajasthan Taxation Tribunal in Khandelwal Drug Agencies v. Commercial Tax Officer had held "Swad" tablets as confectionery, not Ayurvedic medicine. The Tribunal relied on the product's label and a decision by the Madhya Pradesh High Court, but there was no evidence that "Swad" tablets were prescribed by physicians or had curative effects. The Tribunal did not find that "Swad" tablets were prepared as per any authoritative medical text. The Tribunal's decision to classify "Swad" tablets as non-scheduled medicine was incorrect. The correct classification should be as a confectionery item.

Conclusion:
The revision was allowed, setting aside the Tribunal's order and restoring the First Appellate Authority's decision. The excess tax deposited by the revisionist was ordered to be refunded in accordance with the law.