2017 (1) TMI 784 - HC - VAT and Sales Tax

Classification of deoiled cake - tax free commodity specified in Entry No.3, Schedule I of the MP VAT Act, 2002 or not? - is it correct to hold that the product is superior quality of deoiled cake is sold in the name and style of defatted soya products or hypro soya products - Held that - goods specified in Entry-3 are Deoiled Cake including soya meal and the expression Deoiled cake is a generic expression which would include different types of DOC ie., defatted soya hypro products also. Even otherwise according to the principles of specific Vs. General entry when the product falls under specific entry, its end use cannot determine its classification. The product in question would fall in category of deoiled cake including soyabean meal, as specified in Entry No.3 of Schedule I of the M.P. VAT Act, 2002 - petition allowed - decided in favor of petitioner.

Summary

Issues: Classification of commodities for taxation under the M.P. VAT Act, 2002.

Analysis:
The petitioners, an Association of Soyabean Processors and a Company manufacturing Soya Oil and Deoiled Cake, challenged the Commissioner of Commercial Tax's orders dated 24/3/2015 and 26/6/2014 regarding the classification of commodities like Defatted Hypro Soyameal, Defatted Soya Flakes, and Defatted Soya Grits under the M.P. VAT Act, 2002. The petitioners contended that deoiled cake is a tax-free commodity under Entry No.3, Schedule I of the Act, and they are entitled to full input tax rebate for raw materials like Soyabean Seed. They argued that the Commissioner's classification was erroneous, applying the common parlance test. The respondents claimed that the manufacturing process for Defatted Soya products differs from normal DOC, justifying the classification.

The High Court analyzed the facts and legal precedents, including the judgments in Alladivenkateswarlu v. Govt. of Andhra Pradesh and Commissioner of Commercial Tax, U.P. v. A.R. Thermosets (Pvt.) Ltd. The Court held that the superior quality Defatted Soya products were variations of DOC and fell under the category of deoiled cake, including soya meal. It emphasized that the term 'DOC' is broad and covers all its forms, rejecting the Commissioner's differentiation based on product names and prices. The Court applied the common parlance test and the specific vs. general entry principle to determine classification, quashing the impugned orders and allowing the Writ Petition, with no costs awarded.

In conclusion, the High Court's judgment clarified that the Defatted Soya products were part of the deoiled cake category under the M.P. VAT Act, 2002, emphasizing the broad interpretation of terms and principles governing commodity classification for taxation purposes.