TMI Blog2009 (3) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner of Commercial Taxes, Chennai 5, first respondent, holding that branded chips are taxable at 12.5 per cent under Part C of the First Schedule to the Tamil Nadu Value Added Tax Act, 2006 (hereinafter referred to as, the TNVAT Act ) the petitioners have filed the present writ petition. Consequently, the petitioners have prayed for a direction to the first respondent to classify potato chips sold under a brand name as taxable under entry 107 of Part B of the First Schedule to the TNVAT Act, 2006 and for further orders. Short facts leading to the writ petition are as follows: The first petitioner is engaged in the manufacture and sale of, inter alia, chips under the branded name of Lays and Uncle Chips (potato chips). They are also a manufacturer and vendor of other products such as Kurkure and Cheetos . The Assistant Commissioner (Fast Track Assessment Circle I), Chennai 6, second respondent, is the assessing authority. The operation of the business is conducted in the following manner: the first petitioner, manufactures and sells potato chips to the distributor, viz., second petitioner, who in turn, sells the same to the retailer, the third petitioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he residuary entry of the Part C of the First Schedule is erroneous. Inviting the attention of this court to the goods that are taxable at the rate of four per cent in Part B of the First Schedule, wherein, processed vegetable occur, learned Senior Counsel for the petitioners further submitted that the first respondent has totally ignored the way in which, the expression processed vegetable is understood in common parlance. According to him, residuary provision can be attracted only if the goods cannot, by any process of reasoning, fall under either the Second Schedule or Part A or Part B of the First Schedule and therefore, the first respondent has manifestly erred in classifying potato chips under the residuary entry of Part C of the First Schedule, without having regard to the specific entry 107 of Part B of the First Schedule. Inviting the attention of this court to the manufacture and sale of Kurkure and Cheetos, by collecting and paying VAT at the rate of 12.5 per cent per annum and the process involved in the manufacture of the abovesaid product, by combining various ingredients, such as, grains, pulses, spices and condiments, learned Senior Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Senior Counsel for the petitioners further submitted that there are certain overlapping items in entries 51 and 107 of Part B of the First Schedule and the same has to be construed as favourable to the petitioners. He also submitted that the Ministry of Food Processing Industry and the HSN Code (Harmonized System of Nomenclature) under the Central Excise Tariff Act recognise potato chips only as a processed vegetable. Therefore, there is no reason as to how and on what basis, the Commissioner of Commercial Taxes, Tamil Nadu, first respondent, had come to the conclusion that potato chips can be classified as a residuary entry. Pointing out the ratio decidendi in Pizzeria Fast Foods Restaurant (Madras) Pvt. Ltd. v. Commissioner of Commercial Taxes reported in [2005] 140 STC 97 (Mad), learned Senior Counsel submitted that though there is no provision to issue the impugned clarification by the first respondent, the same when issued, would be binding on its subordinates as well as the petitioners to pay tax as per the provisions of the TNVAT Act. Mere issuance of clarification itself would create a duty on the petitioners to pay VAT at 12.5 per cent and therefore, the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ato or any other thing has to be looked from the view of the purchaser. Explaining the process of manufacture set out in the counter-affidavit, learned Additional Government Pleader further submitted that after getting potato into slices, they were fried, roasted and mixed with masala or spices powder, etc., with the result that their originality undergoes a drastic change and transformed into a new commodity and therefore, it would be a difficult task even to an unwary observer that those goods had its origin from potato or banana or tapioca, etc. Therefore, he submitted that the contention of the petitioners that Lays and Uncle Chips are processed vegetable products, is unsustainable and incorrect. Inviting the attention of this court to paragraph 19 of the affidavit filed in support of the writ petition, explaining the process involved in the manufacture of chips marketed by the petitioners, i.e., by adding ingredients to make the chips, learned Additional Government Pleader submitted that it is not the case of mere preserving or processing, but frying of chips in oil, which would itself go to prove that they are no longer simply processed vegetables, but something coo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them to approach the appropriate authority. He also relied on the decisions in Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Akola [1961] 12 STC 286 (SC), Om Prakash Gupta v. Commercial Tax Officer [1976] 38 STC 73, Chandreswar Singh v. State of Assam [1978] 42 STC 424 (Gauhati) and State of Goa v. Leukoplast (India) Ltd. [1997] 105 STC 318 (SC), and submitted that the impugned clarification issued by the first respondent is in accordance with the statutory provisions and therefore, there is no need to interfere with the same and hence, prayed for dismissal of the writ petition. Heard the learned counsel for the parties and perused the materials available on record. Before adverting to the facts of this case, it is necessary to extract the relevant provisions for adjudicating the dispute raised in this writ petition. Section 3(2) of the TNVAT Act is the charged provision and it reads as follows: Subject to the provisions of sub-section (1), in the case of goods specified in Part B or Part C of the First Schedule, the tax under this Act shall be payable by a dealer on every sale made by him within the State at the rate specified therein. Entry 51 of Part B of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Part C of the First Schedule to the TNVAT Act. Entry 51 of Part B states that unbranded savouries like chips, would attract TNVAT at four per cent. If the contention of the petitioners that branded chips also would fall under entry 51 is accepted, then the resultant position related to an unbranded chips mentioned in entry 51 would be against the intention of the Legislature and therefore, the clarification issued by the first respondent that branded chips would fall under the residuary item in Part C of the First Schedule to the Act, is in accordance with the provisions of the Act. The circulars issued under the Central Excise Act and relied on by the petitioners are not relevant for the reason that the wording of the entries in the Central Excise Tariff Schedule is different from that of those found in the Tamil Nadu Value Added Tax Act, 2006 and no parallel line could be drawn between the two enactments. External aid can be taken for construction of a statute, only when there is any ambiguity in interpreting the meaning of the words used in a particular statute. Even assuming that if there is any ambiguity in interpreting the words used in the statute, courts have held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst Schedule, taxable at 12.5 per cent, similar to the branded chips. Perhaps, the Legislature, taking into consideration the labour involved in the manufacture of the pickles and the market, decided to help the pickle industry and specifically included this item under entry 107, so that pickles with brand name also would get the benefit of levy of tax. As regards the contention that the petitioners have not been given an opportunity to place the materials before the appropriate authority to substantiate their claim, this court is of the view that it is not required to be given for the reason that the decision taken by the first respondent is not a quasi-judicial one, whereas, it is purely an administrative function of clarifying the rate of tax applicable to the goods under the TNVAT Act on the request made by the manufacturer or dealer. If the request of the petitioners that every manufacturer or dealer of goods, in the instant case, potato chips , has to be given an opportunity before issuing a clarification, is accepted, then there will not be any end to the process of determination of the rate of tax applicable to any goods. It would only open the pandora's box and any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent tax, vide entry 51 of Part B of the First Schedule and sale of chips with brand name, is taxable at 12.5 per cent under Part C of the First Schedule to the TNVAT Act, with effect from January 1, 2007, the distinction is explicit and it could be inferred that the competent authority has taken the administrative decision with reference to the entries in the Schedules and the sale of goods in the market. Once the clarification is issued by the competent authority on the request of the FICC, a body recognised by the Government and Departments, the same is binding on all the manufacturers and dealers. But that does not create a total embargo on the power of the assessing authority to consider each case on merits and decide the rate of tax applicable to goods, sold by the assessee. There is no inconsistency or overlapping in the entries in respect of pickles. As a corollary, if the Legislature had intended to include branded chips similar to branded pickles, it would have included the same in entry 51 of Part B of the First Schedule. But the intention of the Legislature is explicit that branded chips were specifically omitted to be included as attracting difference in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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