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TMI Blog2017 (3) TMI 1695X X X X Extracts X X X X X X X X Extracts X X X X ..... entry 131 of the same Schedule, a general entry dealing with sweetmeats and unbranded namkeen? (ii) Whether the Tax Board erred in ignoring the evidence placed on record of the various government bodies and institutions concerned in fruits & vegetable processing sector and deciding the issue merely on the basis of opinion formed by it? 4. The brief facts noticed are that a survey was carried out at the business premises of the assessee on 4.12.2006, wherein the AO noticed certain incriminating material and after carrying investigation, proceeded to assess the assessee for the assessment years 2006-07 & 2007-08. 5. The assessee is a Limited Company, and is a dealer registered under the provisions of RVAT Act, and is engaged in the sale of 'Processed Vegetables' such as "Potato Chips" and other food products in the State of Rajasthan. The petitioner assessee is manufacturing "Potato Chips" in the States of Punjab, Maharashtra and West Bengal. On the sale of "Potato Chips" the claim of assessee was that it falls in entry 107 of Schedule IV with a rate of 4% VAT classifying the same as 'Processed Vegetables', however, the claim of Assessing Officer on the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be falling within the category of 'Processed Vegetables' and in this regard relied on the judgments of the Gauhati High Court in assessee's own case in Pepsico India Holding Pvt. Ltd. v. The State of Assam & Others, [OT.Appl 1/2007, decided on 28.4.2009, wherein the court was considering a case of "Potato Chips" under the brand name of "Lays" and "Uncle Chips" and the entry which was relevant for consideration before the Gauhati High Court was Entry 80 of Part A of the Second Schedule which reads - "Processed or preserved vegetables & fruits including fruit jam, jelly, pickle, fruit squash, paste, fruit drink and fruit juice", and after analysing the entry and the process, the court by a detailed reasoning, allowed the revision of assessee holding that the said item will not fall under the Residuary Items. 8. Learned counsel also contended that the Madras High Court also, in assessee's own case in PepsiCo India Holdings Pvt. Ltd. v. Commissioner of Commercial Taxes & Others [Writ Appeal No.551/2009, decided on 10.11.2009], had an occasion to consider the same products "Lays" and "Uncle Chips", and held that the case of assessee does not fall in the Residuary Cate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower authorities. Learned counsel also contended that the Karnataka High Court in State of Karnataka & Another v. Merino Industries Limited [2015] 83 VST 409 (Karn), has in assessee's own case (same product), considered the judgments relied upon by the learned counsel for the petitioner and has also held against the assessee, which is squarely applicable. 11. I have heard the learned counsel for the parties, scanned the material on record and have gone through the judgments relied upon by the learned counsel for the parties. 12. Before proceeding ahead, it would be appropriate to quote the relevant entry 107, as it stands, which has been claimed by the assessee in its favour, as also entry 131 which has been relied upon by the Revenue, which read as under :- S.No. Description of Goods Rate of Tax 107. Processed or preserved vegetables and fruits including fruit jam, jelly, pickle, fruit squash, paste, fruit drink and fruit juice, sharbat and thandai 4 131. Sweetmeat Deshi including Gazak & Revri, banded bhujiya made of pulses, and unbranded namkeens (including dried potato chips] 4 13. It would also be appropriate to refer to some of the judgments which have t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e view that the words "processed vegetables or fruits" appearing in entry 80 must be ascribed a fictional meaning to include items which in everyday use may not be vegetable or fruit items. 20. The net result of the above discussions leaves no doubt in our mind that "potato chips" manufactured and sold by the petitioner-company would fall under entry 80 of Part A of Schedule II to the Assam Value Added Tax Act, 2003, as contended by the petitioner and that the said item will not fall under the residuary item contained in serial No. 1 of the Fifth Schedule to the Act as claimed by the Revenue. Our above finding, naturally, has to be understood in the context of the provisions of the Act as it stood prior to the amendment to the Schedule to the Act made w.e.f. 16.10.2008. 15. Under the Tamil Nadu VAT Act, 2006, the entry 107 as it stood, reads as under :- "Entry 107 of Part-B of Schedule-I 107. Processed fruits and vegetables including fruit jam, jelly, fruit squash, paste, fruit drink and fruit juice (whether in sealed containers or otherwise), other than those specified in the Fourth Schedule." 16. If we peruse the said entry of Tamil Nadu vis-a-vis the entry as being consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wahati High Court in Pepsico India Holding Pvt. Ltd (supra) and the judgment of the Madras High Court referred to above, squarely cover the case of the appellant, as similar questions were involved in those cases also." 19. After analysing the judgments referred to hereinbefore, in my view, it cannot be disputed that Potato is a vegetable, and after going through the process of slicing, frying and spicing, "Potato Chips" does not cease to be a vegetable. It is irrelevant as to whether it becomes a snack item or not, but then it does not take a snack item outside the entry of 'Processed Vegetables'. The characteristics of Potato does not change and merely because by processing Potato, "Potato Chips" are produced/manufactured, in my view, it will certainly remain as Potato and would be a 'Processed Vegetable'. 20. Material is available on record that the Ministry of Food Processing Industry has understood processing of Potato Wafers or Chips as Vegetable Processing Industry and even the Govt. of India has understood "Potato Chips" to be a Vegetable Product for the purposes of classification under the Central Excise Tariff Act. 21. I have also gone through the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto consideration that the same is mixed with preservatives, salt, spices, edible oil, nitrogen, being put in a packet to retain the freshness, held in favour of the Revenue by holding that it would fall in the category of "Preserved Food Articles". After taking into consideration material, this court finally concluded as under :- "11. I have considered the arguments advanced by the learned counsel for the parties, and in my view, the view of the Tax Board appears to be just and proper and is not required to be interfered with. I do concur with the arguments of the learned counsel for the Revenue that the product in which the assessee is dealing, though technically can be said to be namkin but taking into consideration the specific entry under the Act, it can only be placed in the category of "preserved food article" because the assessee for whatever reasons adds number of preservatives and nitrogen gas may be for purposes that it lasts longer, but adding preservatives and nitrogen is sufficient to hold that it may fall within category of entry 150 of "preserved food article". The Apex court time and again has observed that in cases like this, test of "common parlance" is to be ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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