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2016 (8) TMI 247 - KARNATAKA HIGH COURT

2016 (8) TMI 247 - KARNATAKA HIGH COURT - TMI - Rate of tax on the Mango Juc-Fit in liquid form and Mango Fruit Booster, Rasna Utsav and Orange Juc-up in powder form - expression "all processed fruit and vegetables" - scheduled goods or not - Section 4(1)(b) of the Karnataka Value Added Tax Act, 2003 (KVAT) - Held that:- entry No.3 of Third Schedule of the Act transpires that all processed fruits and vegetables including fruit jams, jelly, pickles, fruit squash, paste, fruit drinks and fruit jui .....

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cessed foods may be in liquid or semi-liquid form or in the form of a paste in contradistinction to the concentrated power form. - Unless a strict meaning is given to the expression "all processed fruit and vegetables" in the form of liquid, semi-liquid paste or squash form, they would not get included in Entry No.3 of Second Schedule . In any case, concentrated powder form, by applying the common parlance test would stand on an altogether different position than any fruit or vegetable found .....

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by us hereinabove the said item would be included in the entry. However, insofar as Mango Fruit Booster, Rasna Utsav, Orange Juc-up in powder forms are concerned, since all such items are in concentrated powder form, as per the observation and discussion made by us hereinabove, such would not get included in Entry No.3 of Third Schedule. The decision of the revisional authority cannot be said to be erroneous or illegal on this aspect of the matter. - Decided partly in favor of assessee. - SA .....

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ter, Rasna Utsav and Orange Juc-up in powder form are unscheduled goods liable to tax under Section 4(1)(b) of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as "the KVAT Act"). 2. The brief facts of the case are that the appellant is a dealer under KVAT Act dealing in processed fruit products. The appellant sought a clarification from the Authority for Clarification and Advance Ruling (hereinafter referred to as "the Advance Ruling Authority" for the sake o .....

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imately, on 18/2/2012, the impugned order was passed as referred to above. Under the circumstances, the present appeal is before this court. 3. We have heard Mr.B.P.Gandhi, learned counsel appearing for the appellant and Mr. K.M.Shivayogiswamy, learned Addl. Government Advocate appearing for the respondent. 4. The contention raised on behalf of the appellant is that as per Entry 3 of the Third Schedule of KVAT Act, processed fruits and vegetables are included in the said entry and therefore, Man .....

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uthority comprises of more than one Commissioner, which is comprising of three Commissioners, the Commissioner of Commercial Tax cannot exercise the revisional power. He submitted that the impugned order can also be said to be without jurisdiction. 6. In furtherance of this contention, learned counsel relied upon certain decisions which shall be referred to by us hereinafter at the appropriate stage to the extent found relevant. But the principal contention on interpretation of the Entry is the .....

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the KVAT Act. 7. On the aspect of interpretation of the entry, learned counsel for the respondent submitted that the view taken by the revisional authority is correct. The contention was two fold. One, is that Mango Juc-Fit cannot be equated with the other items prescribed in Entry No.3. Further, it was contended that Mango Fruit Booster, Rasna Utsav and Orange Juc-up are in powder form which in any case, cannot be included in Entry No.3 since in Entry No.3 all the items are in liquid and semi .....

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s as under: "60. Clarification and Advance Rulings.- (1) The Commissioner may constitute an "Authority for Clarification and Advance Rulings", consisting of atleast three Additional Commissioners, to clarify the rate of tax in respect of any goods or the exigibility to tax of any transaction or eligibility of deduction of input tax or liability of deduction of tax at source under the Act, in respect of any case or class of cases as the Commissioner may specify. (2) Any registered .....

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mining the application and any records called for, by order either, admit or reject the application: Provided that the Authority shall not allow the application where the question raised in the application. - (i) is already pending before any officer or authority of the Department or Appellate Tribunal or any Court; (ii) relates to a transaction or issue which is designed apparently for the avoidance of tax: Provided further that no application shall be rejected under this sub-section unless an .....

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on the questions specified in the application, after giving an opportunity to the applicant of being heard, if he so desires and also to the Assessing Authority or Registering Authority concerned. The Authority shall pass an order within ninety days of the receipt of any application and a copy of such order shall be sent to the applicant and to the officer concerned. (3) No officer or any other authority of the Department or the Appellate Tribunal shall proceed to decide any issue in respect of .....

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re is a change in law or facts on the basis of which the order was passed. (6) Where the authority finds, on a representation made to it by any officer or otherwise, that an order passed by it was obtained by the applicant by fraud or misrepresentation of facts, it may, by order, declare such order to be void ab initio and thereupon all the provisions of this Act shall apply to the applicant as if such order had never been made. (7) Subject to the provisions of sub-section (4) of Section 59, sub .....

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ette." As per the aforesaid provision, the Commissioner may constitute the authority for Clarification and Advance Ruling consisting of atleast three Additional Commissioners for clarifying the rate of tax in respect of any goods or exigibility to tax of any transaction or eligibility of deduction of input tax or liability of deduction of tax at source under the Act. Therefore, it is trite that the constitution of the Advance Ruling Authority may comprise of atleast three additional Commiss .....

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ides that the order of the authority will be binding as aforesaid unless there is a change in law or facts on the basis of which the order was passed. Sub- section (6) provides that where the authority finds that there was any fraud or misrepresentation, it may declare such order void ab initio and thereupon all the provisions of this Act shall apply to the applicant as if such order had never been passed. Sub-section (7) of the Act provides that subject to the provisions of Section 64(2) and Se .....

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that the finality attached to the order of the Advance Ruling Authority under Section 60 is subject to the provisions of sub-section(2) of Section 64. Section 64 of the KVAT Act reads as under: "64. Revisional powers of Additional Commissioner and Commissioner.- (1) The Additional Commissioner may on his own motion call for and examine the record of any order passed or proceeding recorded under this Act and if he considers that any order passed therein by any officer, who is not above the r .....

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a fresh assessment. (2) The Commissioner may on his own motion call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by any officer subordinate to him [or the Authority for Clarification and Advance Rulings constituted under Section 60] is erroneous in so far as it is prejudicial to the interest of the revenue, he may if necessary, stay the operation of such order for such period as he deems fit and after giving the person concerned .....

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) the matter has been subject to an appeal under Section 63 or a revision in the High Court; or (c) more than four years have expired after the passing of the order sought to be revised. [Provided that in the case of an order passed by the Appellate Authority under Section 62 allowing the appeal preferred in full, the conditions specified in clause (a) shall not apply.] (4) Notwithstanding anything contained in sub-section (3), the Additional Commissioner or the Commissioner may pass an order un .....

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ction and Sections 66 and 67, be final. (6) Every order passed in revision under sub- section (2) shall, subject to the provisions of Sections 65 and 66, be final. (7) If the order passed or proceedings recorded by the appropriate authority referred to in sub-section (1) or (2), involves an issue on which the High Court has given its decision adverse to the revenue in some other proceedings and an appeal to the Supreme Court against such decision of the High Court is pending, the period spent be .....

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s under this Act available at the time of examination by the Additional Commissioner or the Commissioner." Sub-section (1) of Section 64 provides that the revisional powers of Additional Commissioner may be exercised on his own motion and he may call for and examine the record of any order passed or proceeding recorded under the KVAT Act and if he finds that the order therein passed by any officer, who is not above his rank of Joint Commissioner is erroneous and is also prejudicial to the i .....

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r sub-section (2). 9. We may record that the words "Authority for Clarification and Advance Rulings" constituted under Section 60 of the KVAT Act is already inserted by Act No.6 of 2005 with effect from 19/3/2005. Therefore, upon consideration of sub-section (7) of Section 60 read with sub-section (2) of Section 64, it cannot be said that the Commissioner will have no revisional power against the order of the Advance Ruling Authority. 10. On the contrary, express provision of statute o .....

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to the order of the said Authority subject to the revisional power with the Commissioner under sub-section (2) of Section 64 of the Act. The statute expressly confers the revisional power upon the Commissioner under sub-section (2) of Section 64 of the Act against the decision of the Advance Ruling Authority under Section 60 of the Act. 12. The fact that the Advance Ruling Authority comprises of three Additional Commissioners or the fact that the power is to be exercised by the Commissioner und .....

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raised by the learned Counsel for the appellant with regard to jurisdiction of the revisional authority cannot be accepted. Hence, the said contention fails. 13. One other contention raised by the learned counsel for the appellant was that since the Commissioner himself is exercising power for constituting Advance Ruling Authority, he cannot in revisional jurisdiction upset the order and therefore the revisional jurisdiction cannot be exercised. 14. In our view, the contention is ex-facie misco .....

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aid contention also cannot be accepted. 15. The aforesaid would lead us to examine the merits of the matter. Entry No.3 of Third Schedule of the Act for ready reference is reproduced and the same reads as under: "3. All processed fruit and vegetables including fruit jams, jelly, pickle, fruit squash, paste, fruit drink and fruit juice (whether in sealed container or otherwise)." On a plain reading of the aforesaid entry, it transpires that all processed fruits and vegetables including .....

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islature. Jams, jelly, pickles, squash, paste, drink, juice, would show that such processed foods may be in liquid or semi-liquid form or in the form of a paste in contradistinction to the concentrated power form. 16. The attempt made on the part of the learned counsel for the appellant is that when the words used are "all processed" it would include all form of processed fruit and vegetables and it is not necessary that it should be in the form of liquid, semi liquid, paste or squash .....

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pears that whenever any entry is to be interpreted, the said entry is to be read as a whole and not by segregating the entry into different parts and by picking up certain words from the entry the meaning cannot be stressed. 18. In our view, if the earlier part of the entry viz., "all processed fruits and vegetables" is to be considered and given meaning, one has to also keep in mind the other words following the aforesaid expression used by the legislature for inclusion of certain spe .....

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common parlance which is one of the prime tests for interpreting any entry is considered, then concentrated powder form of any fruit which is marketed is always different in comparison to any liquid or semi-liquid or paste form of any fruit or vegetable. Not only that, if the composition and form of any processed fruit or vegetable is considered as liquid or semi liquid or paste or squash form of any fruit or vegetable, it is different from the concentrated powder form of any fruit or vegetable. .....

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e extracted from nuts. Entry 45 provides for husk and bran of cereals and pulses extracted after a process from vegetable plants. If certain entries are considered of the First Schedule which is for exempted goods then Entry 25 provides for fresh plants, saplings; Entry 30 provides for jaggery which is made out of sugarcane juice; Entry 33 provides for leaf plates which is made out of plants; Entry 51 provides for toddy, neera and arrack which is extracted from fruit. If the contention of the le .....

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ny case, concentrated powder form, by applying the common parlance test would stand on an altogether different position than any fruit or vegetable found in liquid or semi liquid, paste or squash form. Under circumstances, the contention raised that "all types of processed fruits and vegetables" would also include concentrated form of powder cannot be accepted. 21. Learned Counsel for the appellant relied upon the decision of this Court in the case of D.A. Sons, Bangalore Vs. The Addl. .....

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ore, the items are not analogous. 23. Another decision relied upon by the learned Counsel for the appellant is the case of G.D.Sunagar & Brothers Vs. Commissioner of Commercial Taxes reported at 1991 (1) KAR.LJ page 179, which was a case concerning lime water and the question was that whether it is a chemical or not. The said decision also cannot be applied to the facts of the present case, as the issue herein is totally distinct. 24. We may not burden our judgment with other decisions relie .....

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