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2022 (6) TMI 1210 - HC - VAT and Sales TaxClassification of goods - Bread-Rusk - Process of manufacturing - to be classified under Entry 9 of Schedule B of the HPVAT Act or is classified as an unlisted item under the residual entry i.e. Part III of Schedule A of the HPVAT Act and subject to VAT @ 12.5% (subsequently increased to 13.5%)? - Burden/onus to prove - HELD THAT:- It needs to be borne in mind that it is now well settled principle of law that in interpreting different entries, attempts shall be made to find out as to whether the same answers the description of the contents of the basic entry and only in the event it is not possible to do so, recourse to the residuary entry should be taken by way of last resort. Hon'ble Supreme Court in MAURI YEAST INDIA PVT. LTD. VERSUS STATE OF UP. [2008 (4) TMI 101 - SUPREME COURT] has held that if there is a conflict between two entries one leading to an opinion that it comes within the purview of the tariff entry and another the residuary entry, the former should be preferred. As regards the contention of the respondents that the Rusk would fall under residuary entry, the burden of proof is on the respondents and the onus also lies on them to first establish conclusively that by no conceivable process of reasoning can the said product be brought under any of the tariff items and hence the product was being brought under any of the tariff items, hence the product was being brought under the residuary item - Hon'ble Supreme Court in PUMA AYURVEDIC HERBAL (P) LTD. VERSUS COMMISSIONER OF C. EX., NAGPUR [2006 (3) TMI 141 - SUPREME COURT] has held that It is settled law that the burden of showing correct classification lies on the revenue." If we look at the facts of the instant case there does not appear to have been any strong evidence led by the revenue before the authorities to establish the fact that the matter would not fall within the entry item "bread" as is reflected under schedule-1, entry-7 of the VAT Act. The burden or onus is on the respondent authorities to establish by placing on record cogent, convincing and substantive evidence to show that Rusk is not Bread so as to bring it under the residuary entry under Part-IV of Schedule-B so as to impose tax on Rusk and Toast at the rate specified under the residuary entry. Once the Court agrees that the raw material as also the manufacturing process for Bread and Rusk is same and thereafter only the moisture is extracted, would not term that activity to be falling within the meaning of “manufacturer” as used in the Act. Petition allowed.
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