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TMI Blog2009 (12) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... . CLR. 436/2005-06 dated April 18, 2006 under section 16 of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as , the tax for brevity). The facts leading to the filing of this appeal are that the appellant is having an industrial unit at Kodigehalli village, Doddaballapur taluk engaged in extraction of chilly oleoresin from dry chillies. It was contended by the appellant before the Advance Ruling Authority that, by virtue of the process carried out for the extraction of oleoresin, parts of the dry chilly that remains thereafter is termed or called in common parlance as dry chillies, skinned/cut chilly and crushed chilly or spent chilly. It was the contention of the appellant that under section 3 of the Act, the charging section, sub-section (1) prescribes that tax is to be levied on every sale of goods in the State by registered dealer or dealer liable to be registered in accordance with the provisions of the Act and section 4 of the Act prescribes the liability to tax as also the rate of tax. It was contended that as per section 4(1)(a)(ii) of the Act, the rate of tax applicable to the goods specified in the Third Schedule is four per cent and goods which ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in Sl. No. 61, takes different forms like cut chillies, spent chillies and chilly seeds and accordingly, it is contended that the Advance Ruling Authority was in error in holding that the residuary clause is applicable to the product in question for the period April 1, 2005 to March 31, 2006. It is also contended that in dry chillies, the outer skin alone is processed to extract chilly oleoresin or chilly oil and the remnants thereafter which remains after crushing is to be termed as crushed chilly/spent chilly as it consists of the stem, part of the skin and chilly seeds. Thus, it takes a different form of chilly which can be sold as such in the market. It is also contended that with effect from April 1, 2006 the earlier entry 61 has been amended by insertion of the words including cut chillies, spent chillies and chilly seeds in entry 89 but excluding spices in the form of masala powder, instant mixes and other mixtures containing more than one spice or a spice with other materials by Amendment Act, 2006 with effect from April 1, 2006 which in fact includes the present product and thus, the same is also applicable to the period from April 1, 2005 to March 31, 2006 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeds and the amendment being clarificatory was applicable for construing the expression dry chillies in the old Sl. No. 61 of the Third Schedule as existed up to March 31, 2006 to include cut chillies, spent chillies and chilly seeds for the said goods to be eligible for levy of tax at four per cent, the Authority for Clarification and Advance Rulings was right in having held otherwise and issued the clarification that for the period prior to April 1, 2006 cut chillies, spent chillies and chilly seeds were liable to tax under section 4(1)(b) at 12.5 per cent? (3) On the facts and in the circumstances of the case of the appellant, where according to common parlance understanding cut chillies, spent chillies and chilly seeds are also regarded as dry chillies and therefore, were within the scope and ambit of the expression dry chillies in the old Sl. No. 61 of the Third Schedule to the KVAT Act, 2003 as it existed up to March 31, 2006 to be eligible for levy of tax at four per cent, the Authority for Clarification and Advance Ruling was right in having held otherwise and issued the clarification that for the period prior to April 1, 2006, cut chillies, spent chillies and chil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abeeb Proteins [2007] 6 VST 87; [2005] 58 Kar. L.J. 155 (HC) (DB) referred to supra requires to be extracted which reads as follows (at page 99 of VST): 26. Secondly, the learned counsel for the parties have not placed any material before us to demonstrate how the sunflower oil cake and groundnut oil cake are in any way different from de-oiled sunflower cake and groundnut oil cake. Therefore, the only way we need to understand these commodities is the way in which they are understood in common parlance and in trade circles. The oil cake contains a certain percentage of oil and several other ingredients. When these commodities are subjected to processing of extraction of oil, some quantum of oil is removed, but they continue to remain as oil cakes with lesser content of oil, and the original commodity is not used in the manner as to cease to exist or cease to be available in that form for sale or purchase to attract levy of tax under section 6 of the Act. An article which is commonly and generally known as oil cake would not lose its identity merely because the purchasing dealer utilises the same for extraction of oil and therefore, the essential ingredients required to attract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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