2013 (10) TMI 590 - HC - VAT and Sales Tax

Assessment u/s 27(1)(b) - Maize products - Classification of item - Held that - no justifiable ground in the plea of the assessee that the item would fall under Sl.No.80, Part B of the First Schedule to the Act. On the admitted fact that the items in question are sold under the brand name, in the absence of any Entry in the Schedule to cover such items, residuary item will have relevance for the purpose of fixing the rate of tax. Even though in normal circumstances, the item in question would fall under Sl.No.51, Part-B, First Schedule to the Act, yet, on the admitted case, the items being sold under the brand name, the products viz., Peppy, Cheese Balls, Senon Papito, Tortilla Chips and Peppy Eatos, as branded food products, attract tax at 12.5%, falling under the residuary clause under Sl.No.69, Part C of First Schedule to the Act - Decided against assessee.

Summary

Issues:
1. Interpretation of classification for maize products under the Tamil Nadu Value Added Tax Act, 2006.
2. Assessment of tax rate for branded maize products.

Issue 1: Interpretation of classification for maize products under the Tamil Nadu Value Added Tax Act, 2006:
The case involved a registered dealer selling food products made of maize, challenging the assessment under Entry 69 Part C instead of Sl.No. 80 Part B of the First Schedule of the Act. The assessee contended that their maize products should be assessed at 4% under Sl.No. 80, arguing that the products' branding did not change their classification. The First Appellate Authority supported the assessee's claim, citing a ruling that similar products were exempt. However, the Sales Tax Appellate Tribunal overturned this decision, stating that the branding and packaging of the products affected their classification. The Tribunal emphasized that the products could not be solely classified as maize products based on manual labeling.

Issue 2: Assessment of tax rate for branded maize products:
The assessee relied on various legal precedents to argue that their branded maize products should be classified under Sl.No. 80 Part B of the Act. The counsel highlighted the manufacturing process to support the claim that the products retained their essential nature as maize-based items. However, the Court rejected this argument, stating that the products' substantial identity as maize products was lost due to further processing. The Court differentiated the case from precedents involving milk products and bone derivatives. Ultimately, the Court ruled that the branded maize products were liable for tax at 12.5% under the residuary clause of Sl.No. 69 Part C of the First Schedule, due to their branding and ready-to-eat nature.

In conclusion, the Court dismissed the Tax Case (Revision) and upheld the assessment of tax at 12.5% for the branded maize products, emphasizing that the items did not qualify as maize products under the Act's classification.