TMI Blog2019 (10) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... his court holds that rusk and toast also would fall within entry 7 of Schedule I of the VAT Act and it cannot be considered to be one which would come under the residuary entry, is well fortified and supported by the settled principles of law and binding precedents in relation to such interpretation, therefore, we are not enthused by the argument made on behalf of the State that the decision of the learned single judge needs to be interfered with by treating rusk and toast as different items to be brought under residuary entry and allow the taxing authorities to assess such items as such and demand tax. Appeal dismissed. - W. A. Nos. 760, 764, 766, 782, 783 of 2018 - - - Dated:- 18-2-2019 - AJAY KUMAR TRIPATHI C. J. and SMT. VIMLA SINGH KAPOOR J. Rajneesh Singh Baghel , Deputy Advocate General, for the appellants. Anup Majumdar and Neelabh Dubey for the respondents. JUDGMENT The batch of writ appeals arose out of common order and judgment dated March 5, 2018 passed by the learned single judge (Kesharwani Enterprises v. State of Chhattisgarh [2018] 59 GSTR 187 (Chhattisgarh)) who clubbed all the writ applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parlance by which such products are known as. But when no such effort has been made by the State authorities in the notification issued under the VAT Act, 2005 then such items will have to be interpreted under the broad head of bread and since bread carries zero per cent. duty rusk/toast cannot be charged by bringing them under the residuary head. 5. An effort was made on behalf of the State, before the learned single judge (Kesharwani Enterprises v. State of Chhattisgarh [2018] 59 GSTR 187 (Chhattisgarh)) to urge and argue that the two items should be read into the residuary entry. The assessment or demand so made therefore, based on such an interpretation by sales tax authority should be sustained. The learned single judge (Kesharwani Enterprises v. State of Chhattisgarh [2018] 59 GSTR 187 (Chhattisgarh)) while considering such a submission did not agree with such stand of the State, keeping in mind the judicial precedents. He had this to say on this question (pages 193 and 194 in 59 GSTR) : 23. In [2008] 14 VST 259 (SC) ; [2008] 5 SCC 680 in case of Mauri Yeast India Pvt. Ltd. v. State of U. P., the Supreme Court in para graphs 34, 48 and 56 held as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing with the similar matters including the honourable apex court, details of which have been noted in the impugned order and are being extracted from the impugned order as under (pages 194-199 in 59 GSTR) : 26. So far as, whether the toast or rusk would fall under the residuary entry under Part IV, the burden of proof is on the State Government and the onus also lies on them to first establish conclusively that by no conceivable process of reasoning can the said pro duct be brought under any of the tariff items and hence the product was being brought under the residuary item. 27. So far as the issue of bringing an item under the residuary entry, it is the primary and paramount responsibility of the State to first convincingly prove and establish that the item under no circumstances can be brought under any of the tariff items under the schedule of the VAT Act. Only then could the Government claim a particular product to be one which would come under the residuary entry. The honourable Supreme Court in this regard dealing on the classification of goods and the onus of proof in the case of Commissioner of Central Excise, Calcutta v. Sharma Chemical Works re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '. . . It is settled law that the burden of showing correct classification lies on the Revenue. . . .' If we look at the facts of the instant case there does not appear to have been any strong evidence led by the Revenue before the authorities to establish the fact that the matter would not fall within the entry item 'bread' as is reflected under Schedule I, entry 7 of the VAT Act. 29. In 1953, the High Court of Hyderabad dealing with a similar issue in a matter which is reported in [1953] 4 STC 387 (Hyd) in the case of Kayani and Co. v. Commissioner of Sales Tax, while considering the definition of bread under the provisions of Hyderabad General Sales tax Act in paragraph No. 2 held as under (page 389 in 4 STC) : '. . . When the Legislature uses a term relating to any article of food, we must construe it in the sense in which it is understood in this country and not elsewhere. In fact bread which is commonly labelled as a loaf of bread in Europeon countries has a particular name in this country and is called a double roti thereby distinguishing it from ordinary roti which is synonymous with a loaf of bread. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been given in the additional affidavit dated July 30, 1990. It is stated : The ingredients of bread and bun are maida, sugar, salt, fat, yeast, glycerine mono stala, vitamin premix, potassium bromate, acetic acid and calcium propionate. The manufacturing process is also the same. The flour is sifted and the raw materials are mixed with water to form a dough. It is then fermented and remixed. The remixed dough is allowed a short resting period before it is divided to form each bread or bun. It is then founded, moulded, panned, pruned to the required volume and baked. The baked bread is cooled to room temperature and sliced and packed. The cooled bun is directly packed without slicing. In bun the percentage of yeast is more than bread. 11. The variety of the breads made and sold by the petitioners is reflected in the enumeration : White bread, sweet bread, Kairali special, milk bread and fruity . The ingredients are virtually the same with marginal difference in their percentage. Bun contains more of yeast. Additional ingredients are there in milk bread and in fruity. Adocument-daily production and raw material control report-has been produced along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at milk in powder form can be looked upon as a result of this continually evolving technology. There is no reason why it should be excluded from the generic term 'milk'. 42. In Dunlop India Ltd. v. Union of India [1983] 13 ELT 1566 (SC), it was reiterated that when an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule, it will be against the very principle of classification to deny it the percentage and consign it to an orphanage of the residuary clause. . . 43. In H. P. L. Chemicals Ltd. v. Commissioner of Central Excise [2006] 6 RC 508 ; [2006] 197 ELT 324 (SC), the question was of classification of denatured salt . The court disagreed with the Department of Excise in that case that the said product was classifiable under the residuary Heading No. 38.23 and not Heading 25.01 of the Central Excise Tariff Act, 1985 which was a specific heading. The court observed as under (pages 519 and 520 in 6 RC) : This apart, classification of goods is a matter relating to charge ability and the burden of proof is squarely upon the Revenue. If the Department intends to classify t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and it cannot be considered to be one which would come under the residuary entry. 8. The State is aggrieved by the decision so taken by the learned single judge (Kesharwani Enterprises v. State of Chhattisgarh [2018] 59 GSTR 187 (Chhattisgarh)) and, therefore, these appeals have been preferred on their behalf. Again since these appeals arise out of a common order dated March 5, 2018 and the issue raised before us are identical in nature which was urged before the learned single judge, therefore, after hearing the parties all these appeals were clubbed together and heard together. 9. Before us, the Deputy Advocate General representing the State reiterates his submission that since toast and rusk are understood as different goods in common parlance by different people, therefore, they should be treated as different goods and in absence of the same being specifically incorporated in any of the Schedule, the residuary clause, i.e., entry in Part IV of Schedule II will come to the rescue of the Revenue. 10. Such arguments have to be rejected keeping in mind the judicial precedents which the learned single judge (Kesharwani Enterprises v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X
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