TMI Blog2017 (3) TMI 1695X X X X Extracts X X X X X X X X Extracts X X X X ..... on record that the Ministry of Food Processing Industry has understood processing of Potato Wafers or Chips as Vegetable Processing Industry and even the Govt. of India has understood “Potato Chips” to be a Vegetable Product for the purposes of classification under the Central Excise Tariff Act - “Potato Chips” can certainly be taken within the definition of entry 107 taking within its compass all other species including “Potato Chips” belonging to the common genus of the 'Processed Vegetables', and if any particular item is classifiable under a specific entry in a Schedule, such item or commodity must not be relegated to the Residuary entry. Even if common parlance test is applied, it can always be noticed that it would certainly fall within the category of 'Processed Vegetables'. The claim of the petitioner is justified - “Potato Chips” would fall in the category of entry 107 to be charged with tax @ 4%, and once rate of 4% has been held to be well reasoned and justified, which was claimed by the petitioner, then question of levy of interest and penalty does not arise. Petition allowed - decided in favor of assessee. - S. B. Sales Tax Revision/Reference Nos. 195, S. B. Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fall within the category of 'Processed or Preserved Vegetables' and in the earlier assessment year it was held so by the AO himself, however, the claim of the assessee was not accepted and accordingly the AO charged tax @ 12.5% and since tax @ 4% was already paid, therefore, differential tax along with interest u/s 55 so also penalty u/s 61 of the Act was levied. 6. An appeal was preferred before the Dy. Commissioner (Appeals) who also, however, did not interfere in the findings reached by the AO and upheld the order as it is. On a further appeal by the asessee before the Tax Board, also resulted into dismissal of the appeal and upheld the order as it is. 7. Learned counsel for the assessee vehemently contended that a bare perusal of entry 107 of Schedule IV, would clearly bring out the case within the ambit of entry 107 as Potato Chips are produced/manufactured from Potato, and Potato is a vegetable and chips being produced, become a 'Processed Vegetable'. For making Potato Chips initially Potato is sliced, fried and sprinkled with spices and flavouring substances, however, the resultant product retains all the characteristics of Potato, and Potato in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, holding that Potato Chips manufactured and sold by the appellant-petitioner company would fall under entry 88 of Schedule-B of the Punjab VAT Act and not under the Residuary Item. Learned counsel also relied upon M/s Shriya Enterprises v. Commissioner Commercial Taxes, Uttarakhand [CTR 55/2011, decided by Uttarakhand High Court on 20.10.2011] and judgment of this court in Pepsico India Holding Pvt Ltd. v. CTO, Special Circle Rajasthan Another [ STR 196/2009, decided on 22.12.2016]. 9. Learned counsel thus contended that though the entry may be slightly differently worded in other States, but by large in all other States the courts have held it to be under the heading of 'Processed Foods Vegetables' etc. and thus contended that the claim of assessee being just and proper, deserves to be allowed and simultaneously, interest and penalty should also be waived/deleted. 10. Per contra, learned counsel for the Revenue vehemently contended that all the three authorities in unison and by concurrent finding of fact, have held that the case of assessee does not fall in entry 107 and would clearly fall within the Residuary Schedule and the assessee has not been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80 of Part-A of the II Schedule of the Assam VAT Act, 2003, which is quoted hereunder :- 3. Entry 80 of Part A of the Second Schedule at the relevant time was in the following terms : 80. Processed or preserved vegetables fruits including fruit jam, jelly, pickle, fruit squash, paste, fruit drink and fruit juice. 14. If we analyse the said entry of Assam vis-a-vis the entry as existing in the State of Rajasthan and being considered in the present case, it is almost identical except that in Rajasthan sharbat and thandai have also been added. It would also be appropriate to quote the relevant paras of the said judgment passed by the Gauhati High Court in Pepsico India Holding Pvt. Ltd. v. The State of Assam Others (supra) :- 18. The law laid down by the apex court in Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co. Ltd. 1989 (72) STC 280 SC, therefore, has to be understood to mean that in the normal course the ordinary meaning according to the common parlance has to be ascribed but in a given case, if the situation so demands, a technical, scientific or special meaning that may be discernible may have to be ascribed to the words used in the statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in PepsiCo India Holdings Pvt. Ltd. v. Commissioner of Commercial Taxes Others (supra), which reads as under :- 8. In our view, as far as the present case is concerned, once a clarification is given by the Commissioner of Commercial Taxes, that will bind the subordinate assessing authorities and one cannot expect a different order from the assessing officers. In these circumstances, no fruitful purpose would be served by directing the appellant to go for an assessment and for that reason, not to entertain the writ petition. That apart, in the present case, for the very branded products, there is a well reasoned Division Bench judgment of another High Court. It is a settled proposition that in tax matters, when there is a Division Bench judgment of another High Court on a similar provision, it has to be treated with due respect and in the instant case, since the Guwahati High Court has taken a view, which is according to us also otherwise correct, there is no reason for us to take a different view. 17. The relevant entry 88 of Schedule B of the Punjab VAT Act, 2005, reads as under :- ..processed fruits, vegetables including fruit jams, jelly, pickle, fruit squ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Gauhati High Court, Madras High Court, Punjab Haryana High Court, which appear to be just and proper. 22. Analysing the above, Potato Chips can certainly be taken within the definition of entry 107 taking within its compass all other species including Potato Chips belonging to the common genus of the 'Processed Vegetables', and if any particular item is classifiable under a specific entry in a Schedule, such item or commodity must not be relegated to the Residuary entry. Even if common parlance test is applied, it can always be noticed that it would certainly fall within the category of 'Processed Vegetables' and in this regard it would be appropriate to quote the observations of Apex Court in the case of Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co. (1989) 1 SCC 150, which reads as under :- ..But there is a word of caution that has to be borne in mind in this connection, the words must be understood in popular sense, that is to say, these must be confined to the words used in a particular Statute and then if in respect of that particular items, an artificial definition is given in the sense that a special meaning is attached to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amkin, normally the shopkeeper who may be selling both locally made namkin bikaneri bhujia, chana dal, chewra etc. as also the product of assessee, will immediately provide bikaneri bhujia, chana dal, chewra etc. and only if one specifically asks for potato chips, kurkure and cheetos etc., then the shopkeeper may give such items otherwise the product of namkin like sev, bikaneri bhujia, mogar etc. would immediately be given by the shopkeeper. Even normal ordinary meaning of namkin in my view is bikaneri bhujia, chana dal, chewra or a similar product. 12. In my view, potato chips, kurkure and cheetos can clearly be said to be food articles and though may be that it may taste like a namkin, but cannot really be said to be pure and simple namkin, it can only be classified to be falling in the category of food articles . 20. The judgments relied upon by the learned counsel for the petitioner are primarily decided on the basis of Excise Laws and taking into consideration the above findings, in my view, can be said to be distinguishable and not applicable on facts. One has to take into consideration the plain and simple meaning of Namkin and when taken into consideration t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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