2014 (2) TMI 1135 - HC - VAT and Sales Tax

Classification of goods - Whether item manufactured by revisionist-assessee would be covered by entry Edible oils & oilcake at serial no.687 or Vegetable oil at serial no.2331 in the Schedule of Rates under Value Added Tax Act, 2008 - Held that - Looking to the meaning of term edible and edible oil , I have no hesitation in holding that commodity in question, which admittedly was a cooking medium, and consisted of various fats etc., is covered by term edible oil . The mere fact that assessee claims various qualities of the aforesaid commodity, for the purpose of claiming a better marketability, that would not make any difference so as to take away from the ambit of edible oil . The mere fact that commodity in question was mentioned on the packet as a blended fat as a healthier cooking medium will be of no relevance to take away from its basic concept of edible oil. The further fact that it is a proprietary food also would not result in any consequence of excluding the commodity in question from the wide term Edible oil under entry 43. Under the Act, 2008, the commodity in question is an edible oil under entry 687 of the Schedule and also a vegetable oil under Entry 2331. Since the commodity in question is covered by two entries, in my view, specific entry vegetable oil will prevail over entry edible and oilcake and therefore, question, referred to above, is answered by holding that commodity in question is taxable under Entry 2331 i.e. Vegetable oil including gingili oil and bran oil - Decided in favour of assessee.

Summary

Issues:
Interpretation of tax entry for manufactured item - Edible oils & oilcake vs. Vegetable oil.

Detailed Analysis:
The judgment by the High Court of Allahabad involved a dispute regarding the classification of a commodity manufactured by the revisionist-assessee under the Value Added Tax Act, 2008. The primary issue at hand was whether the item in question falls under the entry "Edible oils & oilcake" or "Vegetable oil" in the Schedule of Rates. The first appellate authority had initially ruled in favor of considering the commodity as "Edible oil and edible vegetable ghee," subject to taxation. However, the Tribunal overturned this decision based on reasons deemed irrelevant to the core issue under consideration.

The Court emphasized that the classification of a commodity under a fiscal statute should be based on the nature and substance of the product rather than the individual understanding or claims of the assessee. In this case, the commodity manufactured by the assessee, primarily used as a cooking medium, was found to be prepared using various fats and natural flavoring substances. The Court noted that the entry "Vegetable oil" encompasses all oils of vegetable origin, including those prepared using vegetable ingredients, with specific tax rates applicable.

Regarding the interpretation of the term "Edible oil," the Court referred to precedents where the term "edible" was defined as something fit for human consumption as food. The Court held that the commodity in question, being a cooking medium consisting of various fats, falls within the definition of "edible oil" under the relevant entry. The Court also addressed the term "vegetable oil," highlighting that the commodity, prepared using vegetable fats and substances, qualified for classification under this entry as well.

Based on the findings that the commodity met the criteria for both "Edible oil" and "Vegetable oil" entries, the Court concluded that the specific entry for "vegetable oil" would prevail over the general entry for "edible oils & oilcake." Consequently, the Court ruled that the commodity in question should be taxed under the entry for "Vegetable oil," thereby allowing the revision and setting aside the Tribunal's judgment.

In conclusion, the Court's detailed analysis focused on the interpretation of tax entries, the nature of the manufactured commodity, and the application of specific entry provisions to determine the appropriate tax treatment. The judgment provided clarity on the classification of the commodity under the Value Added Tax Act, resolving the dispute in favor of the revisionist-assessee.