2015 (3) TMI 431 - HC - VAT and Sales Tax

Classification - Whether pure coconut oil which is manufactured by the revisionist is taxable at 4% under entry 43 or entry 131 of Schedule II Part A of the U.P. VAT Act, 2008 - whether Revive Instant Starch, which is also manufactured by the revisionist and which contains 90% tapioca starch and about 3% of other additives is liable to be charged to tax under Entry 118 of Schedule II Part A of VAT Act, 2008 or was liable to be treated as an unclassified item chargeable to tax at 12.5%. - Held that - Tribunal having accepted that the findings recorded by the authorities below that pure edible coconut oil should be identified by its common parlance association with hair oil was not a sound finding and the appellate authority should have determined as to whether it fell within Entry 43 or Entry 131 of Schedule II, Part A is no doubt a correct finding but having said that it was incumbent upon the Tribunal, since the matter was before it and also within its competence, to have itself recorded a clear and unambiguous finding as to whether pure coconut oil (edible) fell within Entry 43 or Entry 131 or both for the purposes of tax. The Tribunal has in any case not accepted the finding of the appellate authority or the assessing officer that edible coconut oil should be treated as an unclassified item taxable at 12.5%. - Entry 43 of Schedule II Part A of the U.P. VAT Act, 2008 mentions edible oil and oil cake therefore if Parachute pure coconut oil which is marked as edible on its packaging cannot be labeled as hair oil and therefore an unclassified item liable to tax at 12.5% it must necessarily be classified as edible oil under Entry no. 43 of Schedule II Part A and therefore, in my opinion would be liable to tax at 4% and not as an unclassified item taxable at 12.5%. Word Starch as used in Entry 118 of Schedule II Part A of the U.P. VAT Act, 2008 has neither been referred to as edible or inedible and therefore Revive Starch must be held to be falling within the meaning of word Starch as used in Entry 118. If it had been the intention of the Legislature to distinguish between edible and inedible Starch, the Entry 118 itself would have explicitly said so and therefore when the Legislature itself is silent a meaning or interpretation to a word used in the statute must not be given which the Legislature itself did not intend and did not say in so many words. - order of the Tribunal dated 28.3.2011 is set aside - Decided in favour of assessee.

Summary

Issues:
1. Classification of pure coconut oil under U.P. VAT Act, 2008.
2. Classification of Revive Instant Starch under U.P. VAT Act, 2008.

Classification of Pure Coconut Oil:
The issue revolves around whether pure coconut oil should be taxed at 4% under Entry 43 or Entry 131 of Schedule II Part A of the U.P. VAT Act, 2008. The assessing officer treated coconut oil as an unclassified item, associating it more with hair oil, and therefore liable to tax at 12.5%. The Tribunal disagreed, stating that the product should be classified based on its common parlance association. However, the Tribunal failed to conclusively determine if coconut oil fell within Entry 43 or Entry 131, remitting the matter for reconsideration. The High Court held that since Parachute pure coconut oil is marked as "edible," it cannot be labeled as hair oil and must be classified as edible oil under Entry 43, thus liable to tax at 4%.

Classification of Revive Instant Starch:
Regarding Revive Instant Starch, the Tribunal classified it as an unclassified item, rejecting the claim that it should be treated as Starch under Entry 118 of Schedule II Part A. The revisionist argued that since tapioca starch comprises 97% of the product, it should be classified as Starch under Entry 118 and taxed accordingly. The Tribunal contended that since Revive Starch is inedible due to additives, it cannot be considered Starch under Entry 118. The High Court disagreed, emphasizing that the statute does not differentiate between edible and inedible starch. The Court cited the principle of ejusdem generis, stating that unless Sago and Sabudana are exclusively edible, Starch in Entry 118 should not be limited to only edible starch.

In conclusion, the High Court set aside the Tribunal's order, allowing all revisions and holding that Revive Starch falls within the meaning of Starch as used in Entry 118 of the U.P. VAT Act, 2008, as the statute did not specify edible starch, thereby rejecting the distinction drawn by the Tribunal.