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TMI Blog2010 (3) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order dated July 8, 2009 passed by respondent No. 3 imposing VAT on the sale of tomato sauce at 12.5 per cent instead of four per cent is liable to be set aside. The writ petition deserves to be allowed accordingly. W.P. allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... s covered by entry 6 of the Schedule II(B) of the Act, which is liable to be taxed at four per cent and the same cannot be subjected to tax as unclassified item because it falls within the purview of the processed fruit or processed vegetable and also under the illustrative definition, which has been given in entry No. 6 like fruit jams, jellies, fruit squash and paste, etc. The said circular states that item 6 of Schedule II(B) covers all processed and preserved vegetables besides it covers vegetable mushrooms and products made out of fruit. The Commissioner has ignored to see that tomato sauce being a product made out of tomato fruit is clearly covered by item 6 of Schedule II(B). Entry 24 of Schedule I of the Act covers fresh vegetables and fruits, which are not subjected to tax. The Commissioner has ignored the fact that vegetables and fruits have to be necessarily classified either as fresh (Schedule I) or as processed and preserved (Schedule II(B)) and there is no occasion to any classification under residual entry. On behalf of the respondents, counter-affidavit has been filed. It is stated in the counter-affidavit that the petitioner has not deposited proper tax in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, therefore, it has to be held that the showcause issued by respondent No. 3 is within time. Therefore, the only question to be answered in the present writ petition is--whether the tomato sauce is covered by entry 6 of the Schedule II(B) of the Act which is liable to be taxed at four per cent or not. For a just decision of the controversy, a reference to certain provisions of the Act is necessary. Section 4 of the Act deals with rate of tax. Section 4(2) reads as under: "(2)(a) No tax under this Act shall be payable on the sale or purchase of the goods specified in Schedule I; (b) Subject to the provisions of section 3, a dealer shall be liable to pay tax on his taxable turnover-- The description of goods mentioned under Schedule II(B) of the Act is subject to tax at the rate of four per cent at every point of sale. At serial No. 6 the description of goods has been given as under: "All processed and preserved vegetables, vegetable mushrooms and fruits including fruit jams, jellies, fruit squash, paste, fruit drinks and fruits juices and achar (whether in sealed containers or otherwise)." The learned counsel for the petitioner has vehemently contended th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, fruit squash, paste, fruit drinks and fruit juices (whether in sealed containers or otherwise) are made liable to payment of four per cent tax under the Act on sale. When the Legislature has included jams, jellies, squash, paste derived from fruit and vegetables within the ambit of entry 6, there is no reason why the tomato sauce be not treated under this category. I am of the considered view that "all processed and preserved vegetables and fruits" would also include sauce prepared and manufactured from any vegetable and fruit particularly when there is no exclusion clause given to exclude "sauce" from the ambit of entry 6. If a processed vegetable or fruit is to be understood in the ordinary way, none of the items specifically included in entry 6 of Schedule II(B) of the Act could have been so included. Moreover, from a bare perusal of the entry in respect of processing and preserving of fruit and vegetables of the extract of National Industrial Classification annexed as annexure RA-1 to the rejoinder affidavit, it is obvious that sun-drying of fruit and vegetables, artificial dehydration of fruit and vegetables, radiation preservation of fruits and vegetab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 or outside the ambit of entry 6 of Schedule II(B) of the Act, the view which is favourable to the assessee shall be adopted. It is settled law that when two views are possible, one which favours the assessee has to be adopted. I am fortified in my view by the apex court judgment in the case of Bihar State Electricity Board v. Usha Martin Industries [1997] 5 SCC 289. In view of the discussion above, I am of the considered view that the Legislature has not intended to exclude "sauce" from the ambit of entry 6 of Schedule II(B) of the Act what to say of "tomato sauce". It is held that "tomato sauce" though not specifically included in entry 6, yet, as the same has not been excluded either, would come within the inclusive definition of "all processed vegetables and fruits" and the same is taken to have been included in entry 6 aforesaid. That being so, the petitioner is liable to pay value added tax at every point of sale at the rate of four per cent in respect of tomato sauce. The petitioner is not liable to pay VAT at 12.5 per cent on the sale of tomato sauce. Consequently, the impugned circular dated May 30, 2009 issued by the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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