2022 (7) TMI 1461 - HC - VAT and Sales Tax

Classification of goods - toffee - liable to be taxed in schedule-V of U.P. Value Added Tax Act or in the category of sweetmeat and sugar product as mentioned in schedule-IIA at serial no.137? - HELD THAT - While the Tribunal has specifically considered the sugar content in the product manufactured and sold by the assessee and the manufacturing process to reach the conclusion that the products were toffee manufactured by the assessee, in no situation, in the field of tax regime and laws, two persons can be treated differently for the purposes of rate of tax. One commodity has to be charged to tax at one rate. The revenue having chosen to tax the same or similar commodity at the lesser rate in case of other dealers whether manufacturer or trader, it cannot be permitted to take a different view as that may introduce uncertainty and arbitrariness in tax regime, which is never permissible. Revision dismissed.

Summary

Issues:
1. Interpretation of tax classification under the U.P. Value Added Tax Act, 2008 for the commodity 'toffee'.
2. Consistency in tax treatment for similar commodities to avoid arbitrariness in the tax regime.

Analysis:
1. The High Court considered a revision filed against the Commercial Tax Tribunal's order classifying 'toffee' under Entry No. 137 Schedule II Part A of the U.P. Value Added Tax Act, 2008 for A.Y. 2011-12. The main question of law was whether the Tribunal was justified in taxing toffee and candy under schedule-V or under the category of sweetmeat and sugar product as per schedule-IIA at serial no. 137. The Tribunal's decision was based on the sugar content and manufacturing process of the products. However, the High Court emphasized that in the tax regime, the same commodity must be taxed at a consistent rate to avoid uncertainty and arbitrariness.

2. The Court highlighted the importance of maintaining consistency in tax treatment for similar commodities to prevent arbitrary distinctions. It noted a separate order where a revision by the revenue against another manufacturer and distributor of similar commodities had been dismissed due to the revenue's stand and lack of new evidence. The Court, based on the same reasoning, dismissed the present revision as well. This decision aimed to uphold fairness and avoid introducing uncertainty in the tax regime by treating similar commodities differently for tax purposes.