1974 (6) TMI 33 - AT - VAT and Sales Tax

Summary

Issues:
1. Whether Mainpuri Tobacco is covered by entry No. 42 of Sch. I and exempt from tax under the M.P. GST Act, 1958.

Detailed Analysis:
The judgment by the Appellate Tribunal ITAT GWALIOR dealt with three second appeals under the M.P. GST Act, 1958 to determine if Mainpuri Tobacco is exempt from tax under entry No. 42 of Sch. I. The appeals involved two dealers, one being a bidi and cigarette dealer who also sold Mainpuri Tobacco, and the other dealing in Mainpuri Tobacco, betelnuts, and cigarettes. The gross turnover and exemption claims of both dealers were assessed and rejected, leading to the appeals (para 1-3).

The key question revolved around whether Mainpuri Tobacco falls under the definition of tobacco product as per Entry No. 42 of Sch. I, which includes various forms of tobacco. The Tribunal referred to a previous decision and the Allahabad High Court ruling to establish that Mainpuri Tobacco is indeed a product of tobacco and thus qualifies for exemption under the said entry (para 4-5).

The argument raised by the counsel for the CIT contended that Mainpuri Tobacco was a mixture of 'Supari', tobacco, and 'Chuna', with a small percentage of actual tobacco, citing a Supreme Court decision in support. However, the Tribunal dismissed this argument, emphasizing that the focus should be on whether Mainpuri Tobacco is a product derived from tobacco, which it is, as it is specifically prepared for chewing with added ingredients (para 6-7).

Further, the Tribunal clarified that the issue at hand was not about the manufacturing process, as it was admitted that Mainpuri Tobacco is a manufactured product. The reference to a previous Allahabad High Court decision affirmed that Mainpuri Tobacco, known and sold as such in the market, should be treated as a product of tobacco eligible for exemption under Entry No. 42 (para 8-9).

Additionally, the judgment highlighted a similar decision by the High Court of Orissa, which established a principle based on consumer perception to determine if a commodity with tobacco content qualifies as a tobacco product. Applying this reasoning, the Tribunal concluded that Mainpuri Tobacco is indeed a tobacco product exempt from tax under the relevant entry (para 10-11).

In conclusion, the appeals were allowed, and the cases were remanded to the assessing authority for revising the assessment in line with the finding that Mainpuri Tobacco is a tobacco product exempt from tax under Entry No. 42 of Sch. I (para 12).