2016 (8) TMI 247 - HC - VAT and Sales Tax

Rate of tax on the Mango Juc-Fit in liquid form and Mango Fruit Booster, Rasna Utsav and Orange Juc-up in powder form - expression all processed fruit and vegetables - scheduled goods or not - Section 4(1)(b) of the Karnataka Value Added Tax Act, 2003 (KVAT) - Held that - entry No.3 of Third Schedule of the Act transpires that all processed fruits and vegetables including fruit jams, jelly, pickles, fruit squash, paste, fruit drinks and fruit juice (whether sealed in container or otherwise) are included in the said entry. The basis of the aforesaid entry is that the items contained therein must be processed fruit or processed vegetables. Further, if the colour or the meaning of the expression processed fruit or vegetables is to be considered, one may be required to consider the other parts of the entry which may throw light on the intention of the legislature. Jams, jelly, pickles, squash, paste, drink, juice, would show that such processed foods may be in liquid or semi-liquid form or in the form of a paste in contradistinction to the concentrated power form. Unless a strict meaning is given to the expression all processed fruit and vegetables in the form of liquid, semi-liquid paste or squash form, they would not get included in Entry No.3 of Second Schedule . In any case, concentrated powder form, by applying the common parlance test would stand on an altogether different position than any fruit or vegetable found in liquid or semi liquid, paste or squash form. Under circumstances, the contention raised that all types of processed fruits and vegetables would also include concentrated form of powder cannot be accepted. In so far as liquid form of Mango Juc Fit is concerned, the revisional authority has committed an error in excluding the same from Entry 3 of Third Schedule, since it is a concentrated form of mango fruit juice which is in liquid form. In view of the discussion and observation made by us hereinabove the said item would be included in the entry. However, insofar as Mango Fruit Booster, Rasna Utsav, Orange Juc-up in powder forms are concerned, since all such items are in concentrated powder form, as per the observation and discussion made by us hereinabove, such would not get included in Entry No.3 of Third Schedule. The decision of the revisional authority cannot be said to be erroneous or illegal on this aspect of the matter. Decided partly in favor of assessee.

Summary

Issues Involved:
1. Jurisdiction of the Commissioner of Commercial Taxes to exercise revisional power over the Advance Ruling Authority's decision.
2. Interpretation of Entry 3 of the Third Schedule of the Karnataka Value Added Tax Act, 2003 (KVAT Act) concerning processed fruit products in liquid and powder forms.

Detailed Analysis:

1. Jurisdiction of the Commissioner of Commercial Taxes:

The appellant contended that the position and status of the Advance Ruling Authority, comprising three Additional Commissioners, is higher than that of the Commissioner of Commercial Taxes, and thus, the Commissioner lacks jurisdiction to exercise revisional power over the Authority's decisions. However, the court examined Section 60 of the KVAT Act, which allows the Commissioner to constitute an Authority for Clarification and Advance Rulings. The court noted that the finality of the Advance Ruling Authority's orders under Section 60 is subject to Section 64(2) of the Act, which grants the Commissioner revisional power over decisions made by the Authority. The court concluded that the statute expressly provides the Commissioner with revisional power, and thus, the contention regarding the lack of jurisdiction was rejected.

2. Interpretation of Entry 3 of the Third Schedule of the KVAT Act:

The appellant argued that Mango Juc-Fit in liquid form, as well as Mango Fruit Booster, Rasna Utsav, and Orange Juc-up in powder form, should be included under Entry 3 of the Third Schedule, which covers "all processed fruit and vegetables including fruit jams, jelly, pickle, fruit squash, paste, fruit drink and fruit juice (whether in sealed container or otherwise)." The court analyzed the entry and emphasized that it refers to processed fruits and vegetables in liquid, semi-liquid, or paste form, not in concentrated powder form. The court applied the common parlance test, distinguishing between liquid/semi-liquid/paste forms and concentrated powder forms of processed fruits and vegetables.

The appellant cited previous decisions, including D.A. Sons, Bangalore Vs. The Addl. Commissioner of Commercial Taxes, where mango chutney and curry paste were included in the entry. However, the court noted that these items were in paste form, unlike the concentrated powder form in the present case. The court also addressed other cited decisions but found them inapplicable as they did not concern the inclusion of concentrated powder forms.

Conclusion:

The court concluded that the revisional authority erred in excluding Mango Juc-Fit in liquid form from Entry 3 of the Third Schedule, as it is a concentrated form of mango fruit juice in liquid form. However, the court upheld the exclusion of Mango Fruit Booster, Rasna Utsav, and Orange Juc-up in powder forms, as they do not fit the entry's description. The court clarified that any of these products sold in liquid, semi-liquid, paste, or squash form would be included in the Third Schedule. The appeal was partly allowed, with no order as to costs.