2011 (3) TMI 1449 - HC - VAT and Sales Tax

Classification - Whether the margarine is classified at Schedule C, entry 100 or Schedule C, entry 107(11)(F) liable at four per cent of tax or entry El and taxable at 12.5 per cent from February 1, 2008 under the Maharashtra Value Added Tax Act, 2002 - Held that - margarine produced by other manufacturers, viz., Kamani or Godrej is taxable at four per cent so under principle of parity margarine which is produced by the respondents is rightly made taxable at four per cent by the Tribunal by its judgment - margarine produced by the respondents was classified in Schedule C, entry 100 as vanaspati and was taxable at four per cent till the decision of the A. O. Since long period, view taken by the Tribunal holds the field, in the case of Merind Ltd, that once a particular view is taken by the authority, it should not be disturbed - view taken by the Tribunal that margarine is vanaspati and it is to be classified under Schedule C, entry 100 and taxable at four per cent is a legal and correct view and cannot be faulted out.

Summary

Issues: Classification of Margarine under Maharashtra Value Added Tax Act, 2002

Issue 1: Classification of Margarine
The primary issue in this case revolves around the classification of margarine under the Maharashtra Value Added Tax Act, 2002. The Tribunal accepted the case of the manufacturers and classified margarine as hydrogenated vegetable oil, falling under Schedule C, entry 100 for "vanaspati." The crucial question of law was whether margarine should be classified under Schedule C, entry 100 or Schedule C, entry 107(11)(F), determining the applicable tax rate.

Analysis:
The appellants argued that margarine, although produced from hydrogenated oil, undergoes further processing beyond vanaspati, making it a distinct product. They emphasized the differences in properties and composition between margarine and vanaspati, advocating for a higher tax rate of 12.5 percent under Schedule E, entry 1. They relied on legal precedents and common parlance interpretation to support their stance.

Conversely, the respondents contended that margarine and vanaspati share similar ingredients due to the hydrogenation and emulsification processes. They highlighted that margarine is primarily used for bakery products, enhancing their texture, and cited expert opinion supporting the classification of margarine as vanaspati under Schedule C, entry 100. They also pointed out that other manufacturers' margarine was taxed at four percent, advocating for parity in taxation.

The Court analyzed the chemical composition, manufacturing processes, and usage of margarine and vanaspati. They considered expert opinions, legal precedents, and the historical classification of margarine under Schedule C, entry 100. The Court ultimately upheld the Tribunal's classification of margarine as vanaspati under Schedule C, entry 100, taxable at four percent, emphasizing the stability of the Tribunal's long-standing view and the principle of non-disturbance once a particular view is established.

In conclusion, the judgment affirms the classification of margarine as vanaspati under Schedule C, entry 100, for taxation purposes, settling the dispute over the applicable tax rate under the Maharashtra Value Added Tax Act, 2002.