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2015 (12) TMI 1337 - RAJASTHAN HIGH COURT

2015 (12) TMI 1337 - RAJASTHAN HIGH COURT - [2016] 88 VST 161 (Raj) - Demand of tax and interest - Packed masala - AO was of the view that in so far as Asafoetida (Hing) is concerned, the tax of 4% only was being paid but the AO was of the view that it falls in the category of Packed Masala and once it is a Packed Masala, it falls in the entry where levy of tax is @16% - Held that:- When Entry No.82 is seen, the word used 'like' after masala and the legislature intended 'like' means mirchi, dhan .....

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n Packed Masala - Jaljira is made with grinding and mixing of different spices so that a new commercial commodity known by a different name comes up whereas in the case of preparing Asafoetida (Hing), spices are not mixed and only Gum Arabic and Wheat Flours are added which in my view are not spices. When spices are not mixed, it remains Asafoetida (Hing) only and no new product emerges. - Even if we take common and commercial parlance meaning of the term "Masala", in my view, spices/Kirana .....

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nd the arguments raised by counsel for the respondents and not disputed by the counsel for the Revenue. - Tax Board has correctly analyzed the Entry No.82 and no contrary view can be taken in the facts and circumstances of the instant petitions. When the very levy of rate of tax @ 4% has been found to be properly levied then the question of penalty does not arise. - Decided against Revenue. - SB Sales Tax Revision Petition No. 487/2008, SB Sales Tax Revision Petition No. 124/2011, SB Sales Tax R .....

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are that the respondent-assessee is carrying on the business of manufacturing and sale of Kirana items and spices at their factory at Ahmedabad and are also having office at Jaipur for trading in the aforesaid items. The respondent-assessee is also trading in spices like Chilli Powder (Mirchi), Coriander Powder (Dhaniya), Turmeric Powder (Haldi), Cumin Seed (Jeera), Asafoetida (Hing) etc.. It was noticed by the Assessing Officer (for short, 'AO') that the respondent was paying tax @4% on .....

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as to why the Asafoetida (Hing) be not taxed as that of Packed Masala and as to why rate of 16% be not applied. The respondent-assessee furnished detailed explanation, inter-alia, contending that they have sold Asafoetida (Hing) and the tax only @4% is applicable on the sale of Asafoetida (Hing) and that it does not fall in the category of Packed Masala. It was further contended that Asafoetida (Hing) is obtained from roots and to reduce the pungent in the Asafoetida (Hing) , only gum arabic and .....

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ed/printed "Ram Deo Super Compunded Asafoetida Ingredients; 1-Edible Gum, Wheat Flour 30% Aprox. Best before within 11 months from the date of packaging" and that it includes Edible Gum, Wheat Flour, therefore, it falls within the definition of Packed Masala and accordingly levied tax @16% and also directed for levy of interest as also penalty u/Sec.65 of the RST/VAT Act. 3. The matter was assailed in appeal before the Deputy Commissioner (Appeals) (for short, 'DC(A)'), who, ho .....

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levy of 16% applied by the AO which is assailed herein. It also set aside penalty. 5. Counsel for the petitioner contended that the decision of the AO as well as DC(A) was just and proper as by mixing Gum and Wheat Flour in Asafoetida (Hing) , the nature of Asafoetida (Hing) changed and once two items are mixed in the process of preparation of Asafoetida (Hing), then the very nature changes and it falls within the category of Packed Masala. She further contended that even in the packing, admitte .....

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ut mixing of two items. She further contended that once the assessee itself claims that two items were mixed and once the mixing takes place, then it no more remains a single item of Asafoetida (Hing). She relied upon the judgments rendered in the case of Commercial Taxes Officer Vs. Jalani Enterprises : (2011) 4 SCC 386 and A.P. Products Vs. State of Andhra Pradesh and ors.: (2007) 6 SCC 365 and thus contended that the issue requires consideration. She also contended that penalty is also leviab .....

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ngent, two items are added which does not change nature of Asafoetida (Hing) in particular. He further contended that the nature of Asafoetida (Hing) does not change at the starting point so also the termination point. He further contended that this Court has also taking into consideration the issue about Asafoetida (Hing) in earlier proceedings between the same parties and the revision of the petitioner was dismissed and that order of this Court has attained finality. He relied upon the judgmen .....

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oner of Income Tax, Chennai :(2010) 13 SCC 70 and Assistant Commissioner, Anti-Evasion, Rajasthan-3, Jaipur Vs. Honda Siel Power Products Ltd.: (2014) 76 VST 125 (Raj.). 7. I have considered the arguments advanced by counsel for the parties and have perused the impugned order as well as the judgments cited at the bar. 8. In my view, the order of the Tax Board is just and proper and is not required to be interfered with. It would be appropriate to quote the relevant Entries which are under disput .....

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centrates, corn flakes and wheat flakes, custard powder, baking powder, ice cream powder and packed masala 16%". 9. In my view, when Entry No.82 is seen, the word used 'like' after masala and the legislature intended 'like' means mirchi, dhania, sonf, methi, ajwain, suwa, haldi, kathodi, amchoor and asalia jeera (cumin seeds), which, in my view, are illustrative and not exhaustive and therefore, all like items would also fall within the category of Entry No.82. The Entry No. .....

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ntry No.82." 10. Asafoetida (Hing) as the nature of it remains is that it is obtained from the roots of the ferual plants and is not fit for human consumption due to its strong pungence and has to be mixed with additives like Gum Arabic and Wheat Flour. The process of preparing compounded Asafoetida has elaborately been explained by the CEGAT, West Zonal Bench, Mumbai in the case of Lalji Godhu & Co. Vs. Commissioner, Central Excise, Mumbai: 2001 (132) ELT 287 and the same is as under:- .....

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g any fine iron particles. The compounded asafoetida is powder form is then packed in different grammage bottles. In case of lump form, the gum and wheat flour along with filtered water mixed with Asafoetida is poured into the sigma mixer. This process takes about 40 minutes. After this the mixture, which has by now made into lumps, is extracted and put into the aluminium trays and dried for a day before it is packed in cartons." 11. Therefore, taking into consideration the nature of Asafoe .....

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ounsel for the petitioner has relied upon judgment of the Hon'ble Apex Court in the case of Commercial Taxes Officer Vs. Jalani Enterprises (supra) but even the counsel for the respondent has also relied upon the said judgment to contend that it supports the case of the assessee. It would be relevant to quote Para No.17 which observes as under:- 17. Each one of the contents of the product referred to above and relied upon by the High Court would indicate that most of the items used in the ma .....

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l spices could be termed as different commercial commodities. When they are grinded and mixed they give rise to a separate commercial commodity altogether which could be taxed separately. It is settled law that when one particular item is covered by one specified entry, then the Revenue is not permitted to travel to the residuary entry. If from the records it is established that the product in question could be brought under a specific entry then there is no reason to take resort to the residuar .....

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d that it would come under the residuary entry as held by the High Court." 12. On perusal of the above findings of the Hon'ble Apex Court, it clearly shows that Jaljira is made with grinding and mixing of different spices so that a new commercial commodity known by a different name comes up whereas in the case of preparing Asafoetida (Hing), spices are not mixed and only Gum Arabic and Wheat Flours are added which in my view are not spices. When spices are not mixed, it remains Asafoeti .....

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ch the raw asafoetida (hing) is subjected to, resulting in the formation of "compunded asafoetida", constitues "manufacture" under the Central Excise Act, 1944. We have gone through the process. As rightly held by the Tribunal there is no chemical change brought about by the aforestated process. The product at the starting point of the process and the product at the terminal point of the process remains the same. In the circumstances the Tribunal was right in holding that the .....

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issed with no order as to costs." 14. On perusal of the above, the Hon'ble Apex Court was of the opinion that the product Asafoetida (Hing) at the starting point of the process and the product at the termination point of the process remains the same. Therefore, even after addition of Gum Arabic and Wheat Flour, there is no change in the said commodity. 15. It would also be appropriate to observe that in between the same parties, same controversy was raised for the Assessment Years 2000- .....

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es Officer, Rajasthan. The Revenue assailed the same by filing two petitions before this Court and this Court in SB Sales Tax Revision Petition No.187/2008 and 216/2008 vide judgment dt.21/02/2008 dismissed the revision petitions filed by the department (Revenue) and it is admitted fact that the judgment has attained finality. Once the similar issue has come up before this Court and this Court has already expressed its opinion on an issue on the similar identical facts, in my view, no contrary v .....

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quality control manager, who was described as "Expert" on the point and accepting his evidence, the court held that the goods imported by the company were ferrous in nature and not non-ferrous and the company was right in paying octroi under item No.71. It was thus a "fundamental factor" and the nature of the goods imported by the company was directly and substantially in issue, on the basis of which the decision was taken. It would indeed be very difficult to hold that such .....

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benefit of the decision in the earlier litigation to the respondent-company. There is an additional factor also as to why the trial court was wrong and the revisional court and the High Court were right in setting aside the order passed by the trial court in the present proceedings. The revisional court in the present proceedings also considered the evidence of two witnesses- Mr. R.K. Deb, quality control manager, and Mr. Arora- a public servant. The revisional court observed that they had ' .....

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nai (supra) has held that even if in another case similar question arose and has not been raised or assailed before higher forums, then too the revenue is precluded and held thus:- "It is evident from the impugned order that while answering the question in favour of the assessee, the High Court has relied upon its earlier decision in K.R.M. Marine Exports Ltd. v. CIT. In that decision it was held that freezing and processing charges would definitely form part of one of the components of bus .....

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