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2016 (2) TMI 815

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..... to 4 refer to soft drinks which are not aerated or branded and to health drinks. This is clearly because aerated branded soft drinks have already been included in the tax net with a higher rate of tax. The product answers to the description of aerated branded soft drink which would fall specifically within the confines of Section 6(1)(a) - Decided against the assessee. - OT.Appeal.No. 7 of 2015 - - - Dated:- 5-2-2016 - THOTTATHIL B.RADHAKRISHNAN AND ANU SIVARAMAN, JJ. FOR THE APPELLANT : ADVS.SRI.ARSHAD HIDAYATHULLAH (SR.), SRI.PREMJIT NAGENDRAN, SRI.N.S.SHAJI FOR THE RESPONDENT : SENIOR GOVERNMENT PLEADER SRI.GEORGE MECHERIL Anu Sivaraman, J. 1. This appeal under Section 62(1) of the Kerala Value Added Tax Act (hereinafter referred to as 'the Act') is directed against Annexure 4 order of the authority issued under Section 94 of the Act. The appellant who is a manufacturer of the product Appy Fizz had preferred Annexure 2 application for clarification under Section 94 of the Act. The clarification sought was whether the product, which had been classified as a 'Fruit Juice Based Drink', is liable to be included under Entry No.71(5) as simi .....

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..... m an order of the Tribunal decided on the basis of the materials produced and the only consideration was whether the Tribunal had decided erroneously or failed to decide any question of law. The scope of the clarification under Section 94 being much wider and having far reaching consequences, the committee should have applied its mind to the questions raised before it, especially in view of the binding judgment of a Division Bench of this Court in W.A.No.2418/2015, wherein the question of clarification was directed to be decided on its merits. It is further urged that the product had been classified as a 'Fruit Juice Based Drink' with HSN Code No.2202.90.20 under the Excise Tariff Act. It is contended that the classification of the product as a 'Fruit Juice Based Drink' had been upheld by the Customs, Excise and Service Tax Appellate Tribunal and the Civil Appeal filed against the said finding by the Revenue had been dismissed. It is also contended that till the amendment of the KVAT Act in 2007, the product was being subjected to tax as a 'Fruit Juice Based Drink' by the authorities in Kerala as well and no change has occurred in the nature of the product t .....

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..... containing 12.7% fruit juice content in the instant case. 6. It is true that the committee constituted for the purpose of Section 94 of the Act had relied almost entirely on the findings of a Division Bench of this Court in OTR No.114 of 2013 to hold that the product was an aerated branded soft drink and could not be classified as a 'Fruit Juice Based Drink'. However, what is before us is a first appeal under Section 62(1) of the KVAT Act. On agreement of the counsel appearing on either side, we deem it appropriate at this stage to consider the question of classification rather than remanding the matter to the committee to be decided afresh. 7. It is not in dispute before us that the product in question is a soft drink. It is alleged that it had been earlier subjected to tax at 12.5% (later 13.5% and 14.5%) on the basis of its classification as a Fruit Juice Based Drink. Before the amendment of the list, going by the provisions contained in SRO 82/2006, the Entry 71 originally reads as follows:- Non-alcoholic beverages and their powders, concentrates and tablets including (i) aerated water, soda water, mineral water, water sold in sealed containers or pouches (i .....

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..... rup and pulp and fruit cordial (3) soft drinks other than aerated branded soft drinks (4) health drinks of all varieties (5) similar other products not specifically mentioned under any other entry in this list or in any other Schedules. 9. It is seen that with the substitution, the sub entry 'Fruit Juice Based Drink' stood deleted. The HSN codes in respect of all the relevant entires also stood obliterated by the amendments. In the above circumstances, the authority was called upon to decide on the classification of the product on the basis of common parlance or commercial parlance. 10. No HSN codes are mentioned in respect of any of the entries in the KVAT Act. Therefore, the nature of the product is to be decided on common parlance or commercial parlance. The learned Senior Counsel for the appellant contends that a wealth of material, including orders of the authority under the Excise regime, which was affirmed by the Apex Court as well as certifications issued by competent technical authorities, had been placed before the authority to show that the product was a 'Fruit Juice Based Drink'. Therefore, the only conclusion which the authority could le .....

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..... ther the product would be a 'Fruit Juice Based Drink' under the Central Excise and Salt Act would be wholly irrelevant in view of the fact that it comes squarely within the specific entry, aerated branded soft drink as contained in Section 6 (1)(a) which has been specifically made liable to tax at the rate of 20%. A reading of Entry 71 of the notified list as amended would go to show that aerated water and soda water are the aerated products included in the entry. Sub entries 2 to 4 refer to soft drinks which are not aerated or branded and to health drinks. This is clearly because aerated branded soft drinks have already been included in the tax net with a higher rate of tax. The residual sub entry (5) of Entry 71 would be attracted only if the product cannot be included elsewhere. Aerated branded soft drink excluding soda having already found a place under Section 6(1) (a) of the Act, it cannot be included in the residuary entry. In the above circumstances, the product answers to the description of aerated branded soft drink which would fall specifically within the confines of Section 6(1)(a). The finding of the committee in the impugned order, therefore, cannot be faulted .....

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