TMI Blog2012 (10) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... ss was required - the 'fryums' came in plastic bags - These 'fryums' were required to be fried depending on the taste of the consumer - 'fryums' were like seviyan - 'Fryums' were required to be fried in edible oil - That oil had to be heated - There was certain process required to be applied before 'fryums' become consumable - the item 'fryums' will not fall within the term 'cooked food' under item 2, Part I of the Second Schedule to the 1994 Act - It will fall under the residuary item 'all other goods not included in any part of Schedule I'. The honourable Supreme Court has not declared that the fryums are not the pappad – it has been clearly held that the shape of the pappad is not a relevant consideration when the ingredients are the same - there is no infirmity or irregularity in the order passed by the Karnataka Appellate Tribunal - The petitioners have not made out a case to interfere with the order passed by the Karnataka Appellate Tribunal – Decided against petitioner. - STRP.NO.6/2011 & STRP.NOS.29 - 63/2011, C/W.STRP.NO.73/2011 & STRP.NOS.170 - 192/2011, STRP.NO.89/2009 - - - Dated:- 5-10-2012 - SREEDHAR RAO K. AND MANOHAR B., JJ. For the Appellant : Smt. S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the KVAT Act. The assessees have filed their objections to the contending that the fryums are the pappad in smaller shapes. It has similar taste and the characteristics of pappad. All the ingredients of pappad are being used for manufacturing of fryums. However, it is only in smaller dimensions. 4. The honourable Supreme Court in Shiv Shakti Gold Finger v. Assistant Commissioner, Commercial Taxes, Jaipur reported in [1996] 9 SCC 514, has held that . . . all varieties of pappad, whether they are circular or flat in shape consisting of all the ingredients, whether it is pulses, rice, maida, etc. Hence, the fryums has to be treated as pappad for the purpose of payment of tax whereas, sandige is a dense, solid of small diameter and substantially thick. After frying, the sandige has to be chewed whereas the fryums after frying become crunchy wafers and it melts into fine paste. The fryums sold by the respondents had been dealt by the Central Excise and Service Tax Appellate Tribunal, Bangalore and held the commodity as a pappad. In the market also it was sold as pappad round, pappad twist and pappad trikone. Further, it was in different shapes such as mini checks, buttons, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order passed by the Karnataka Appellate Tribunal, the State has preferred these revision petitions. 7. In STRP No. 89 of 2009, the order made in STA Nos. 204-208 of 2008 and other connected matters disposed of by the Karnataka Appellate Tribunal on October 30, 2008 is challenged for the assessment years 1999-2000 to 2003-04 under the Karnataka Sales Tax Act. The assessee is the company incorporated under the Companies Act and also registered under the KST, CST and KTEG Act. The assessee is engaged in the manufacturing of food products and fryums at industrial area situated at Hosakote, Bangalore District. On verification of the books of accounts of the said company on October 7, 2006, it was noticed that the assessee is manufacturing ready to fry snack pallet , which was named as pappad mainly made of maida, starch, flavours, potato powder and other ingredients and it is named as fryums and not pappad. The assessee has paid tax at the rate of one per cent whereas he was liable to pay tax at the rate of 10 per cent. Accordingly, issued notice under section 12A(1) of the Karnataka Sales Tax Act for the assessment months from assessment years 1999-2000 to 2003-04. 8. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Additional Government Advocate appearing for the State Government contended that the order passed by the Karnataka Appellate Tribunal is contrary to law and error apparent on the face of the record. The State Government with a view to encourage cottage industries has given exemption of tax to happala in kannada which is also known as pappad. The pappad or happala has definite shape and taste and it was made of different cereals and also rice and jack fruits. The products manufactured and sold by the assessees cannot be treated as pappad. In fact, the assessee in STRP No. 89 of 2009 earlier filed an application before the Authority for Clarification and Advance Ruling under section 60 of the KVAT Act seeking clarification with regard to the rate of tax on fryums. He also contended that the fryums falls under entry 40 of the First Schedule to the Act. 11. The Advance Ruling Committee after considering the matter held that fryums cannot be treated as pappad and it falls under the residuary clause and by its order dated March 30, 2007 held that the assessees had to pay tax at the rate of 12.5 per cent under section 4(1)(b) of the Act. Being aggrieved by the order passed by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar or flat in shape consisting of all ingredients, whether it is pulse, rice or maida, etc., have to be treated as pappad and entitled for exemption. Further, the order passed by the Division Bench of this court in STA No. 11 of 2007 (T.T.K. Healthcare Limited v. Authority for Clarifications Advance Rulings [2009] 22 VST 561) is not binding on the respondents-assessees. Liberty has been reserved to reagitate the matter under section 60 of the KVAT Act, since the State Government itself has extended the benefit of tax exemption to the sandige by amending Act No. 6 of 2007. Since, the assessees have not collected the tax from the customers, the question of paying tax at the rate of 12.5 per cent does not arise and sought for dismissing the revision petitions. 13. We have carefully considered the arguments addressed by the learned counsel for the parties and perused the orders passed by the Karnataka Appellate Tribunal, first appellate authority as well as the assessing authority. 14. The records clearly disclose that the assessee in STRP Nos. 6 and 29-63 and STRP Nos. 73 and 170-192 of 2011 are the dealers in the commodity in question known as fryums. The respondent in STRP N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved by the same, the above revision petitions are filed. 16. The main contention urged by the Revenue is that the fryums are not pappad. It falls under the residuary entry under section 4(1)(b) of the KVAT Act. Further the honourable Supreme Court in a judgment in Commissioner of Commercial Tax v. T.T.K. Health Care Ltd. reported in [2007] 7 VST 1 (SC); [2007] 11 SCC 796, has held that the fryums are not pappad. Hence, they are liable to pay higher tax. The issue is fully covered by the judgment of the honourable Supreme Court. On the other hand, the respondents-assessees contended that the fryums are the smaller size of the pappad. It was made in different size and type in order to attract the customers. The fryums contain all the ingredients of pappad and is of the same taste. However, it was made in different sizes and shapes, such as mini checks, buttons, short tubes, O rings, stars and mini wheels. It is the semi-cooked food and it has to be deeply fried in the edible oil. Then only it can be eaten. Further pappad can be used by deep frying as well as by flame frying. Further the honourable Supreme Court in a judgment reported in Shiv Shakti Gold Finger case [1996] 9 SCC 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d appear that they did not intend to differentiate between gole or flat pappad made of any ingredient. 4. Under those circumstances it appears that the interpretation given by the High Court is not correct and that of the Tribunal is correct. 17. The contention of the State that the issue as to whether the fryums is pappad or not is covered by the judgment of the Supreme Court in T.T.K. Health Care case reported in [2007] 7 VST 1 (SC); [2007] 11 SCC 796 cannot be acceptable. In the said case, the honourable Supreme Court has examined whether the fryums are cooked food or not? The assessing authority held that the fryums are not cooked food. On an appeal, the Madhya Pradesh High Court held that the fryums are cooked food and liable to be taxed under entry 4 of Part I of Schedule I of the Madhya Pradesh Sales Tax Act. On an appeal filed by the Commissioner of Commercial Taxes, the honourable Supreme Court examined the matter and held as under in paragraphs 3, 5 and 12 of the judgment (pages 3-5 in 7 VST): 3. On March 12, 1996, the Assistant Commissioner, Indore, assessed sale of 'fryums' at eight per cent sales tax under the residuary entry referred to above. He de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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