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TMI Blog2011 (10) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... sive entry. The use of word "all" and "including" makes it apparently clear that it is an inclusive entry. The effect of the words "all" and the words "including fruit jams, jellies, fruit squash, paste, fruit drinks and fruit juices and achar (whether in sealed containers or otherwise)" under entry No. 6 of Schedule II(B) of the Act and the absence of any exclusion of potato chips within the said entry gives a clear legislative intent of inclusion of potato chips under entry No. 6 of Schedule II(B). Revision allowed - decided in favor of revisionist-assessee. - Commercial Tax Revision No. 55 of 2011 - - - Dated:- 20-10-2011 - TARUN AGARWALA ACTG. C.J. AND BIST V.K. J. JUDGMENT 1. Heard Mr. Bharat Ji Agarwal, the learned senior counsel duly assisted by Mr. Ashish Joshi, the learned counsel for the revisionist and Mr. Sudhir Kumar, the learned brief holder for the respondent-Department. 2. The present revision relates to assessment year 2006-07 under the Uttaranchal Value Added Tax Act, 2005 (hereinafter referred to as, the Act ). The revisionist is a registered dealer under the Act and had purchased potato chips/potato wafers from M/s. Pepsico India Holdings Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (i) At every point of sale at the rate hereafter provided: (a) In respect of goods specified in Schedule II(A) 1 per cent (b) In respect of goods specified in Schedule II(B) 4 per cent (c) In respect of goods specified in Schedule II(C) at the rate specified therein (d) In respect of goods other than those included 12.5 per cent; (ii) At the point of sale by manufacturer or sale by importer in respect of special category goods specified in Schedule III at the rate specified therein. 6. A perusal of section 4(2)(b)(i)(b) and (d) of the Act would indicate that for goods specified in Schedule II(B), a dealer would be liable to pay tax on his taxable turnover at four per cent and in respect of goods, which have not been specified in any of the Schedule, the dealer would be liable to pay tax on his taxable turnover at 12.5 per cent. Entry No. 6 of Schedule II(B) of the Act is relevant for the purpose of this case and is quoted hereunder: SCHEDULE II(B) (See sub-clause (i) of clause (b) of sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned already, is the residuary entry and only such goods as cannot be brought under the various specific entries in the tariff should be attempted to be brought under the residuary entry. In other words, unless the Department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item. . . Similar view was held by the Supreme Court in H.P.L. Chemicals Ltd. v. Commissioner of Central Excise, Chandigarh [2006] 6 RC 508; [2006] 5 SCC 208, wherein it was held (page 521 in 6 RC): 31. It was submitted by the learned senior counsel appearing for the Revenue that the goods were classifiable under heading 38.23 (now 38.24) as 'residual products of the chemical or allied industries, not elsewhere specified or included' which was the last item covered by heading 38.23. The said heading 38.23 is only a residuary heading covering residual product of chemical or allied industries 'not elsewhere specified or included'. In the present case since the goods were covered by a specific heading, i.e., heading 25.01, the same cannot be classified under the residuary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority-I [2010] 36 VST 563 (HP) decided on September 9, 2010 wherein the court held that potato chips cannot come under the classification of processed vegetable under the Himachal Pradesh Value Added Tax Act, 2005. The court further held that the entries under Schedule (B) of the goods exempted from tax and under Schedule (A) relating to taxable goods at four per cent are different and distinct from the entries in the respective State Acts of Assam, Madras, and Punjab and Haryana and consequently, the judgments given by the High Court of Gauhati, Madras, Punjab and Haryana are distinguishable. The Division Bench of the Himachal Pradesh High Court however, found that potato chips was a processed form of potato and that potato was a vegetable and by processing of slicing, frying and spicing the potato chips did not cease to be a vegetable. The Division Bench however held that the Legislature has conspicuously left out any form of potato processing or processed potato, under Part II, Schedule A to be taxed at four per cent, though potato was exempted from tax under Schedule B. 16. The Grolier Encyclopedia of Knowledge defines the word potato as an edible tuber that grows at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether it becomes a snack item or not. A processed vegetable can also be a snack item, but then it does not take the snack item outside the entry of processed vegetables. The characteristics of the potato remains the same and if, by processing potato, it becomes a potato chip, it still remains a processed vegetable and, consequently, will be taxed at four per cent under Schedule II(B) of the Act. 21. There is another aspect of the matter. One of the essential principles of judicial interpretation is whether the definition of the entry is inclusive or exclusive, which in turn indicates the legislative intent. In Deepak Agro Solution Limited v. Commissioner of Customs, Maharashtra [2008] 8 SCC 358 held: 17. It is well-settled what is not excluded would be held to be included. Within the category of sulphur, sulphur recovered as byproduct in the process of refinement of crude oil also finds place. 18. Chapter Note 1 of Chapter 25 starts with the words 'except where their context or Note 4 to this Chapter otherwise requires'. It is, therefore, difficult to hold that the headings of the Chapter would cover only the products which are in the crude state or comes within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessed vegetable. 24. In Tungabhadra Industries Ltd. v. Commercial Tax Officer, Kurnool [1960] 11 STC 827 (SC); AIR 1961 SC 412, the question for consideration was as to whether hardened or hydrogenated groundnut oil (commonly called vanaspati) continues to be called groundnut oil . The court in order to find out whether hardened or hydrogenated groundnut oil remains groundnut oil or not held that two conditions were required to be specified, namely, as to whether the oil in question was from groundnut and whether the commodity was oil or not. The court held that even when it undergoes a hardening process, the essential nature of hydrogenated groundnut oil does not change and it remains a groundnut oil. In the light of the aforesaid, the court is of the opinion that the potato does not lose its basic characteristics in the process of potato to potato chips. 25. In Nestle India Limited v. State of Uttarakhand [2010] 31 VST 404 (Uttara); [2010] (1) U.D. 498, the controversy before the learned single judge of this court was, whether tomato ketchup was liable to be taxed at 12.5 per cent or whether it was included in entry No. 6 of Schedule II(B) of the Act. The court held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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