2022 (8) TMI 160 - HC - VAT and Sales Tax

Classification of goods - Chuni by-product of Dal - schedule goods within the meaning of Sl. No.66 of Para-I of the Schedule attached to the Orissa Entry Tax Act 1999 or not - HELD THAT - It is one thing to say that a certain product was exempted for the purposes of taxation by virtue of interpretation of an exemption notification it is another to say that it is amenable to tax by bringing it within the ambit of another product shown in the Schedule to the OET Act and therefore bringing it within the fold of taxation. The approach to both cannot be the same. What perhaps is determinative is Section 26 of the OET Act which clearly states that it is only a finished product which would be amenable to entry tax. Conscious of this the Single Member Chairman tries to bring Chuni within the ambit of a finished and a separate commercial product. However the fact remains that chuni or chokad is only a by-product and not a complete finished product in itself. The finished product as far as the present case is concerned is cattle feed which is what is mentioned in Entry 66 of the Schedule to the OET Act. So the question to be asked is can in the context of Section 26 of the OET Act read with Entry 66 Chuni to be considered in itself to be a finished product and therefore not different from cattle feed ? The answer to this has to be in the negative since Chuni is one of the 16 ingredients into the making of cattle feed and it is not the same thing as cattle feed as occurring in Entry 66 of the Schedule to the OET Act. The Court is of the view that Chuni which is the by-product of Dal is not cattle feed and is therefore not amenable to entry tax - Revision petition dismissed.

Summary

Issues:
- Whether 'Chuni' can be considered 'cattle feed' under the Orissa Entry Tax Act, 1999.

Analysis:

Issue 1: Interpretation of 'Cattle Feed' under the Orissa Entry Tax Act
The revision petitions by the State of Odisha sought to determine whether 'Chuni', a by-product of pulses, can be classified as 'cattle feed' under the Orissa Entry Tax Act. The Tribunal and various Benches consistently held that 'Chuni' is not standalone cattle feed but a raw material for its preparation. The key contention was whether 'Chuni' qualifies as a finished product liable for entry tax under Section 26 of the OET Act.

Issue 2: Legal Precedents and Interpretation
The Court analyzed legal precedents related to tax exemptions for products like 'cattle fodder' and 'cattle feed'. It emphasized the need for strict interpretation in tax matters, citing cases where equitable considerations were deemed irrelevant. The Court differentiated between tax exemptions and taxable products, highlighting the importance of interpreting fiscal statutes strictly and without assumptions.

Issue 3: Trade Parlance and Commercial Understanding
Examining the trade perspective, the Court questioned whether 'Chuni' would be sold independently as 'cattle feed'. It referenced the principle that words in tariff schedules should be understood in the trade's sense. The Court concluded that 'Chuni' is not interchangeable with 'cattle feed' in the market, reinforcing its distinction from the finished product.

Conclusion
Considering the nature of 'Chuni' as a by-product and its role in cattle feed production, the Court ruled that 'Chuni' does not qualify as 'cattle feed' under the OET Act. Emphasizing the commercial understanding and legal interpretation, the Court dismissed the revision petitions by the State of Odisha, affirming that 'Chuni' is not subject to entry tax as 'cattle feed'.