2017 (9) TMI 1303 - HC - VAT and Sales Tax

Classification of goods - aloe vera juice - whether aloe vera juice is covered by the expression processed or preserved vegetable ? - Held that - The case of the Revenue is not as to whether aloe vera is a vegetable or Sabji but aloe vera juice is not fruit juice nor covered under the expression processed or preserved vegetables . It is settled principle of law that if an entry had been interpreted consistently in a particular manner for several assessment years, then in that event it is not permissible for the Revenue to depart therefrom, unless there is any material change - It is not disputed by the Revenue that aloe vera juice is being sold by the dealer at lower rate of tax since 2007-08 and even after the enactment of the U.P. Value Added Tax Act, 2008. Tribunal was justified in holding that the entry processed vegetable is of wide amplitude and would within its ambit include aloe vera juice which can only be sold upon being processed - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of Entry 103 of Schedule-II of U.P. Value Added Tax Act - Whether aloe vera juice is classified as "processed or preserved vegetable" or an unclassified item.

Analysis:
The case involved a dispute regarding the classification of aloe vera juice under Entry 103 of Schedule-II of the U.P. Value Added Tax Act. The dealer, engaged in the business of selling cosmetic and toilet preparation products, challenged the higher tax rate imposed on aloe vera juice by the assessing authority. The first appellate authority and the Tribunal both ruled in favor of the dealer, categorizing aloe vera juice as a preserved vegetable falling under Entry 103.

The Tribunal considered similar entries in tax laws of other states and the dictionary meaning of "vegetable" to conclude that aloe vera juice qualifies as a processed or preserved vegetable. It noted that aloe vera juice had been consistently taxed as a preserved vegetable in the past, and there was no material change to warrant a departure from this classification.

The Revenue argued that aloe vera should not be considered a vegetable in common parlance in the State of U.P., citing previous court decisions emphasizing the popular understanding of terms used in tax statutes. However, the Tribunal upheld its decision, stating that aloe vera juice is processed and sold as a preserved vegetable, aligning with interpretations in other states.

The High Court affirmed the Tribunal's decision, emphasizing that the trade and commercial understanding of a product should guide its classification. It noted that aloe vera juice had been taxed as a preserved vegetable for years, and there was no justification for a sudden change in classification. The Court ruled in favor of the dealer, dismissing the revision filed by the Revenue.

In conclusion, the High Court upheld the classification of aloe vera juice as a processed vegetable falling under Entry 103 of the U.P. Value Added Tax Act. The consistent interpretation of the entry over the years and the commercial understanding of the product supported this classification, leading to the dismissal of the Revenue's revision.