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TMI Blog2015 (8) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... ded Tax Act, 2003 (hereinafter referred to as "the Act"). Exhibit PI is the order passed by the Commissioner of Commercial Taxes (hereinafter referred to as "the Commissioner"), purporting to be a clarification issued under section 94 of the Act. It is, inter alia, stated that under the caption "vegetable rolls" the rate of tax is to be four per cent in regard to the pickles other than those sold under brand name "registered under the Trade Marks Act, 1999". Reference is made to entry 49(1) of the Third Schedule. It is further stated as follows:- "All kinds of pickles other than those sold under brand name registered under the Trade Marks Act, 1999 are taxable at four per cent. vide entry No. 49(1) of the Third Schedule to the KVAT Act, 2003, as amended by KVAT Act, 2005. Pickles, if sold under brand name registered under the Trade Marks Act, 1999 will attract tax at 12.5 per cent." Exhibit P2 purports to be the assessment order for the year 2006-07. According to the appellant, the pickles sold by the appellant are not registered under the Trade Marks Act and, therefore, it is taxable at four per cent. under entry 49 of the Third Schedule. Complaint of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Legislature. A person must be exigible to tax on the clear terms of the charging section. Otherwise, he cannot be brought within the tax net, he points out. Per contra, learned Government Pleader would contend that by no stretch of imagination, can pickles come within entry 84(29) of the Third Schedule. Pickles, is specifically enumerated in entry 49 of the Third Schedule. He would submit that there is a scheme as to taxation in regard to pickles. He points out that goods covered by the First Schedule are exempt from tax. Entry 24A of the First Schedule reads as follows:- "Handmade soaps, squashes and pickles sold under the registered kudumbasree brand." Then there is entry 49 of the Third Schedule which we shall advert to at a later stage, and finally under entry 103 of SRO. No. 82 of 2006, tax at the rate of 12.5 per cent. being the residuary entry is provided for. He would submit that there is a clear intention revealed by the scheme of the Act. Wherever pickles is sought to be exempted, the law-giver has succinctly articulated the same as is evident from the wording of entry 24A of the First Schedule. The Legislature has evinced its intention to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be interpreted by including it in that entry which is having the HSN Number." Therefore, the argument is that in so far as there is no HSN Number as against the item pickles in entry 49 of the Third Schedule as against 2001 (HSN Number) mentioned against entry 84(29), pickles should be interpreted as falling within the scope of entry 2001 found against entry 84(29) and, therefore, it should be taxed at four per cent. This is further on the basis of the Rules of interpretation which provides as follows:- "HSN Numbers are allotted in the Schedules either in four digits or in six digits or in eight digits. The four digit numbers indicate the heading in the HSN classification, six digit numbers indicate the subheading and the eight digit numbers indicate the specific commodity number. While interpreting the commodities in the Schedules, the following guidelines may be followed:- (i) The commodities which are given four digit HSN Number shall include all those commodities coming under that heading of the HSN. (ii) The commodities which are given six digit HSN number shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it contains permitted class of preservative sodium benzoate E-211. Annexure B is produced along with the statement to indicate that the appellant has held out that the "Happy" brand includes fruit squash, syrups, crushes, soft drink concentrates, fruit jams, sauces, pickles, vinegar and RTS beverages. Annexure C produced along with the statement of the first respondent, purports to be information from the website regarding the ingredients. Therein, it is stated, inter alia, that the pickles contain appropriate quantity of vegetables, condiments, gingelly oil (sesame oil), salt, synthetic vinegar, asafoetida and permitted preservative. It is the case of the respondent that the appellant is not dealing exclusively in vegetable pickles. Annexures D and E are produced to show that the appellant is also dealing in prawn pickle. It is the case of the State that the appellant is representing and selling pickles as a branded item coming under the registered brand name "Happy". A bill of lading is produced as annexure G. So also, the audit statement of the appellant is produced as annexure F. Therein, it is mentioned that pickles is coming under entry 49(1) of the Third Schedule and no HSN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods do not fall in the Third Schedule, can they be taxed at 12.5 per cent. Merely issuing a notification and providing for a residuary clause which, in fact, itself only provides that the goods which are not falling under any of the entries specifically enumerated in the Schedules will be taxable at 12.5 per cent. will not do, it is submitted. A perusal of entry 103 would show that it is intended to cover goods which are, inter alia, not falling under any of the Schedules to the Act. Therefore, pickles even if they are sold under a name registered under the Trade Marks Act will fall under entry 84(29) and it cannot be taxed under entry 103 of the notification of goods taxable at 12.5 per cent., it is submitted. Therefore, we must consider the question whether the pickles even if they are registered under the Trade Marks Act, 1999 would fall under entry 84(29). No doubt, the learned senior counsel for the appellant has arrayed before us the following material:- Exhibit P19 is a request made to the Public Information Officer, Central Excise, Kozhikode Division by one Shri M. Sharafuddeen. Questions asked are whether the assessees are paying Central excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearts, yams, walnuts and mangoes." Reliance is placed on the statements to the effect that the heading includes pickles. It is specifically contended that in view of the employment of the four digits, it will include all those commodities coming under the heading of HSN. Therefore, it is pointed out that pickles would be comprehended under entry 84(29). Per contra, learned Government Pleader would contend that pickles is understood differently in different parts of the world. Pickles as understood in the USA may not be the same as it is understood in India. He would also emphasise the ingredients of the product pickles manufactured and marketed by the appellant. He would submit that it cannot be treated as vegetables or other edible parts of plants prepared or preserved by vinegar or acetic acid. He would submit that there may be, for example, a case where mango is preserved in vinegar or acetic acid, which may be covered by entry 84(29). The item pickles is a different commodity altogether. It is submitted that the State has a great degree of flexibility in the matter of classification in taxation matters. The State has, in this case, classified pickles specifically and separat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 'In a taxing Act', one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." If words used are ambiguous and reasonably open to two interpretations, the benefit of interpretation is to be given to the subject (see Central India Spinning and Weaving and Manufacturing Co. Ltd. v. Municipal Committee, Wardha AIR 1958 SC 341 and C. A. Abraham v. Income-tax Officer, Kottayam [1961] 41 ITR 425 (SC) ; AIR 1961 SC 609). We must, however, note, at the same time, we must not be persuaded to hold that the principle of purposive interpretation is inapplicable, in a taxing statute. We extract the following passages from Principles of Statutory Interpretations by G. P. Singh:- "The shift from literal to purposive construction has not left taxing statutes untouched leaving them 'as some island of literal interpretation'. The context, scheme of the relevant Act as a whole as its purpose are as relevant in construing a taxing Act as in construing any other Act. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Act. As already noted, when pickles is sold under the registered kudumbasree brand, it is completely exempt under entry 24A of the First Schedule. When pickles are sold which are not having any registration under the Trade Marks Act is sold, it is brought to tax at the considerably low rate of four per cent. The rationale behind pickles which are sold under registered Kudumbasree brand not being subjected to any tax, is not hard to find. It is apparently to encourage the kudumbasree movement and to promote their activities that their products are not subjected to any tax. The Legislature has clearly understood pickles as not falling under HSN Code 2001, as otherwise, there was no reason at all to carve out pickles as a separate food product under entry 49. When such is the scheme and when the Legislature did not intend to confer benefit of four per cent. tax rate on the pickles which are sold under a brand name which is registered under the Trade Marks Act, we would think that we would be adopting an interpretation in consonance with the scope, setting, scheme and object of the taxing statute, if we agree with the clarification that such products attract tax at higher rate. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le that the entry which is having an HSN number, must gain predominance as against any entry which is without an HSN number, is that there must be inconsistency in the meaning of the commodity without HSN and with HSN numbers. We are of the view that the word "pickles" as used in entry 49 of the Third Schedule is a distinct food product and not plant or vegetable which is preserved in vinegar or acetic acid. Pickles as understood in India with all the ingredients has a special connotation. At any rate, whatever be the approach the excise authorities or the customs authorities may take, we would think that the hands of the State Legislature is not tied in the matter of classification. The law giver in the State has chosen to specifically refer to the word "pickle" perceiving the product as specific food item to be dealt with on a separate basis from merely the vegetable as prepared or preserved in acetic acid or vinegar. We have already extracted the ingredients of pickles sold by the appellant itself. No doubt, it could be argued that as indicated in exhibit P13, the product covered by 2001 may contain salt, spices, mustard, sugar or other sweetening matter and they may also contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be made necessary parties to such application. (2) The authority shall decide the question after giving the parties to the dispute a reasonable opportunity to put forward their case and produce evidence and after considering such evidence and hearing the parties pass orders within three months or within such time as may be extended by the Commissioner. Commissioner may considering the fact in issue decide whether such orders have prospective operation only. (2A) Notwithstanding anything contained in this Act, where a clarification has been issued under this section clarifying the rate of tax of any goods and the registered dealers were paying tax at lower rates on the sale of those goods before the issuance of such clarification, then if the manufacturer or first seller of the goods within the State, who shall also be a registered dealer, pays the entire tax due on the turnover of such goods sold by him at the maximum retail price, then subsequent registered dealers who had purchased those goods and has sold the same shall not be assessed or penalized for the differential tax payable:- &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reupon all the provisions of this Act shall apply to the applicant as if such order had never been made.:- (a) Power of Commissioner to revise a clarification: The clarification once made does not bar the statutory authority from making another clarification on the same entry, if the first once was found patently wrong. (b) No retrospective effect: The later clarification issued by the Commissioner overriding the earlier clarification cannot have retrospective effect as the assessee's right under the Act to collect tax is denied. (c) Application of the clarification to be limited to the item on which clarification is sought for: If the clarification was issued for an item sold by a particular assessee, the other dealers are not entitled to the benefit of such clarification." Therefore, a perusal of the aforesaid provisions shows that disputes which can be settled, include the tax rate of a commodity. In the circumstances of the case, we are not inclined to think that the clar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing goods under the Trade Marks Act:- "1. Item No. 29 of the Trade Mark Registry. Appl. No. 1307149 Appl Date 06-09-2004 Journal No. 1329(S-1) Certificate No. 550596 29. Meat, fish, preserved, dried and cooked fruits, vegetables, jellies, jams, milk and other dairy products. 30. Coffee, tea, cocoa, sugar, flour and preparations made from cereals, breads, biscuits, cakes, pastry and confectioneries, vinegar, spices. 31. Agricultural grains not included in other fresh fruits, vegetables, food stuffs included in class 31." It was contended, inter alia, that pickle is neither animal food stuff, nor vegetable food stuff and it could not come under class 29. It was further contended that class 30 also does not take in pickles. Class 31, it was pointed out, consisted mainly of land products not included in any other classes. It was contended that the appellant registered only items as specified in classes 29, 30 and 31 and that it is selling jams, sauces, concentrates and syrups tart which are goods registered under the Trade Marks Act. The officer refers to the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tamil Nadu (jam group) and West Bengal (jam group) (soft drinks, etc.). Thereafter it is stated that, therefore, the item pickle was rightly sold by the dealer under the trade mark registered under multi-class application obtained from the registry concerned. The contention that pickle cannot find a place under class 30 of the registration was rejected as without merit as it has obtained registration under either classes also. Reference is made to rule 22(2) of the Trade Marks Rules, 2002 to uphold that the Fourth Schedule only provides a means by which the general content of numbered international classes can be quickly identified, which indicates that broad line classification only was made in the Fourth Schedule and it is up to the dealer to properly include goods in the class in which it has obtained registration, unless there is any dispute from other dealers. "Pickle" will be sold under the brand name "Happy" label registered vide certificate No. 1307149. On the said basis, the contention of the appellant was overruled. Taking note of the contention of the appellant that "Happy" brand name is well-known in market and whether registered under the Trade Marks Act or not, is im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of each and every item is essential under the Trade Marks Act, 1999 to get the status of registered trade mark for those items." According to the appellant, the office letter is dated March 19, 2012 and the reply which we have referred to from the Trade Mark Registry is dated March 23, 2012. But, the assessing officer has not cared to refer to the question or the answer in fact in the order. We are of the view that the assessee must be a person who has obtained registration of its brand in respect of pickles to suffer tax at 12.5 per cent. It is not sufficient that there is general registration obtained. Going by the reply given by the trade mark registry which we cannot hold to be illegal or wrong (in fact it has been issued by the Deputy Registrar of Trade Marks), though the appellant may be using the brand name "Happy" (label), there is no registration for the trade mark for the product "pickles". It may be true that the appellant may be advertising its products under the label "Happy". It may also be true that the appellant has obtained registration in respect of many of its food products under the Trade Marks Act, 1999 with the trade mark "Happy" (label). But, to d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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