Kerala High Court
Manjilas Rice Mill vs State Of Kerala on 16 January, 2007
Equivalent citations: (2007)6VST403(KER)
Author: K.P. Balachandran
Bench: P.R. Raman, K.P. Balachandran
JUDGMENT K.P. Balachandran, J.
1. The appellant, a registered dealer, sought for clarification of the rate of tax leviable for certain commodities vide annex-ure I application, submitted before the Commissioner for Commercial Taxes, invoking Section 94 of the Kerala Value Added Tax Act, 2003 (hereinafter referred to as "the Act"). The Commissioner, vide annexure II order, issued the clarification. Being aggrieved by annexure II clarification, the applicant/dealer has preferred this appeal.
2. At the time of final hearing, it was submitted by the counsel for the appellant that this Court need to consider the correctness of the clarification only in relation to item Nos. 1 to 7,12,14 and 15 of annexure I and that no interference is required in respect of clarifications given under annexure II in relation to item Nos. 8 to 11, 13 and 16 to 19 of annexure I.
3. Hence, the issue to be decided is as to what is the rate of tax applicable under the Act to the commodities shown as item Nos. 1 to 7,12,14 and 15 in annexure I. The commodities, with its description, given in annexure I are as follows:
1. Spices pastes
(a) Roasted coconut paste
(b) Ginger paste
(c) Garlic paste
(d) Ginger garlic paste
(e) Tamarind paste
2. Curry mixes (spices powder)
(a) Kerala chicken curry mix Ingredients : Onion, tomato, garlic, ginger, shallots, green chilly, red chilly, coriander powder, salt, refined oil, spices, pepper, turmeric powder and curry leaves.
(b) Chicken gravy mix
(c) Kerala fish curry mix Ingredients : Shallots, coriander powder, red chilly, salt cocum (kudapuli), ginger, refined oil, garlic, fenugreek, turmeric powder, curry leaves.
(d) Kerala meat mix Ingredients : Onion, tomato, garlic, ginger, red chilly, coriander powder, coconut chips, salt, refined oil, spices, turmeric powder, vinegar, curry leaves.
(e) Chicken biriyani mix Ingredients : Onion, tomato, ginger, garlic, green chilly, salt refined oil, spices, turmeric, coriander leaves, mint leaves, synthetic vinegar.
3. Easy palappam mix Ingredients : Rice powder, lentil, yeast
4. Banana powder
5. Palappam mix Ingredients : Rice powder, rava, yeast.
6. Vattayappam podi Ingredients : Rice powder, black gram, yeast.
7. Crunch flakes Ingredients : Rice flakes, corn flakes, wheat germ invert syrup, malt extract, raisins, cashewnut, almonds, pista, dried banana, dried pineapple, dried pappaya, dried apple, melon seeds, sun flower seeds, pear and apricot.
12. Instant Idiyappam Ingredients : Rice powder, salt.
14. Ragi vita Ingredients : Ragi, red raw rice flour, cocoa, cardamom
15. Puttu mix Ingredients : Sampa wheat, brown rice, Njawara rice, maize, raggi, barley, sago, green gram, bengal gram, badam, cashewnut, brahmi, thulasi, carrot, cocoa, cardamom, rice bran, soyabeans.
4. Before venturing to offer clarification asked for, one has to go by the Rules of Interpretation of the Schedules, which is given in the Appendix to the Act. The relevant portion of the said Rules in the appendix is extracted below:
The commodities in the Schedules are allotted with code numbers, which are developed by the International Customs Organisation as Harmonised System of Nomenclature (HSN) and adopted by the Customs Tariff Act, 1975. However, there are certain entries in the Schedules for which HSN Numbers are not given. Those commodities which are given with HSN Number should be given the same meaning as given in the Customs Tariff Act, 1975. Those commodities, which are not given with HSN Number, should be interpreted, as the case may be, in common parlance or commercial parlance. While interpreting a commodity, if any inconsistency is observed between the meaning of a commodity without HSN Number and the meaning of a commodity with HSN Number, the commodity should be interpreted by including it in that entry which is having the HSN Number. HSN Numbers are allotted in the Schedules either in four digits or in six digits or in eight digits. The four-digit numbers indicate the heading in the HSN classification, six-digit numbers indicate the subheading and the eight-digit numbers indicate the specific commodity number. While interpreting the commodities in the Schedules, the following guidelines may be followed:
(i) The commodities which are given four-digit HSN Number shall include all those commodities coming under that heading of the HSN.
(ii) The commodities which are given six-digit HSN Number shall include all those commodities coming under that sub-heading of the HSN.
(iii) The commodities which are given eight-digit HSN Number shall mean that commodity which bears that HSN Number.
(iv) As an exception to the above Rules, there are certain entries in the Schedules, which bear the eight-digit numbers but the four digit heading numbers of such commodities are given for some other commodities mentioned elsewhere. In such cases, the four-digit heading shall include only those commodities under that heading excluding that commodity for which the eight-digit numbers are given. Similar cases are available in the case of six-digit numbers also. In such cases, the above principle shall apply mutatis mutandis.
(v) Where the term 'other7 is used in sub-entries or in sub-sub-entries, it should be construed by using the doctrine of ejusdem generis. (When specific words are followed by general words, the general words should be interpreted as having the meaning identical to the meaning attributed to the specific words).
5. What this Court has to consider is the correctness of the clarification issued by the Commissioner vide annexure II order in relation to the items mentioned above. In view of the Rules provided in the appendix, one has to verify the code number allotted to the commodity in the Harmonised System of Nomenclature ("HSN Code", for short) in the Customs and Tariff Act, 1975.
6. Serial No. 1(a) in relation to which rate of tax is sought to be clarified, is roasted coconut paste. According to the appellant, it falls under entry 23(2) of the Third Schedule to the Act. Entry 23 of the Third Schedule to the Act reads as follows:
Coconut products including coconut powder (other than sweets and confectionery and those not specifically included under any other item in this Schedule)
1. Dessicated coconut 0801.11.00
2. Other coconut products 0801.19.90.
7. The HSN Number of entry 23(2) of the Third Schedule to the Act is 0801.19.90. The four-digit HSN Code Number 0801 in the Customs Tariff Act deals with, inter alia, coconut-fresh or dried, whether or not, shelled or pealed. For fresh coconuts, the HSN Number is 0801.19.10 and for dried coconuts the HSN Number is 0801.19.20. The code number 0801.19.90 is for other coconuts. Applying the ejusdem generis doctrine, as provided in Rule (v) of Rules of Interpretation in the appendix, the HSN Code Number 0801.19.90 can apply only to other forms of coconuts other than fresh and dried. Any process of manufacture undertaken to roast coconut and then to convert it into paste renders the commodity to fall outside the HSN Code Number 0801.19.90. Hence, the rate of tax applicable to the commodity is as per Clause (d) of Sub-section (1) of Section 6 of the Act read with the residuary entry 103 of S.R.O. No. 82 of 2006 and is at 12.5 per cent at all points of sale, as clarified by the Commissioner in annexure II order.
8. Serial Nos. 1(b), 1(c), 1(d) and 1(e) in annexure I are respectively ginger paste, garlic paste, ginger garlic paste and tamarind paste. They specifically fall under sub-entry (18) of entry 120 of the Third Schedule to the Act, attracting tax at four per cent. Thus, those items cannot fall under entry 42 of S.R.O. No. 82 of 2006, as clarified vide annexure II order.
9. The commodities enlisted under SI. No. 2 in annexure I, with the ingredients thereof already extracted above, are the following:
2. Curry mixes (spices powder)
(a) Kerala chicken curry mix
(b) Chicken gravy mix
(c) Kerala fish curry mix
(d) Kerala meat mix
(e) Chicken biriyani mix.
10. The Commissioner has, vide annexure II order, clarified that all the above items are commodities falling under entry 42 of S.R.O. No. 82 of 2006, exigible to tax at 12.5 per cent. According to the appellant, all the above commodities fall under sub-entry (18) of entry 120 of the Third Schedule to the Act with HSN Code Number 2103.90.10. The above commodities cannot fall under the HSN Code Number 2103.90.10 as claimed, as it takes in only curry paste and not curry mixes. Paste and mixes are not the same, but different commodities, whether going by the user theory or the commercial parlance theory. Vide Rules of Interpretation in the appendix to the Act, the commodities, which are given eight-digit HSN number shall mean only that commodity, which bears that HSN number and no other. Hence, under Section 6(1)(d) of the Act read with the residuary entry 103 of S.R.O. No. 82 of 2006, the rate of tax applicable is 12.5 per cent.
11. The commodities shown as serial Nos. 3, 5 and 6 in annexure I, viz., easy palappam mix, palappam mix and vattayappam podi, according to the counsel for the appellant, fall under entry 86 of the Third Schedule to the Act. Entry 86 of the Third Schedule takes in mixtures of cereals, pulses and spices in raw form, roasted or powdered, sold under brand name other than those registered under the Trade Marks Act, 1999 and without any HSN Code. Serial Nos. 3, 5 and 6 in annexure II are essentially powdered rice. As per entry 9 of the Second Schedule to the Kerala General Sales Tax Act, 1963 cereals are described as follows:
Cereals, that is to say, paddy, rice, jower or milo, bajra, maize, ragi, kodon, kutki and barli.
12. As per the Excise Tariff Act also rice falls under cereals. There is no corresponding entry in the KVAT Act for the above commodity. But, all the same, it has to be taken that cereals include rice, as powdered rice or rice flour is not included elsewhere and serial No. 6 in the Second Schedule of the Act does not take in powdered rice or rice flour. At the same time, entry 86 is specific with regard to the mixtures of cereals in raw form, roasted or powdered. Hence, as contended by the appellant, serial Nos. 3, 5 and 6, viz., easy palappam mix, palappam mix and vattayappam podi fall under entry 86 of the Third Schedule to the Act, exigible to tax at four per cent only. The clarification issued by the Commissioner vide annexure II order to the contrary is incorrect.
13. Serial No. 4 in annexure I is banana powder, which, according to the counsel for the appellant, falls under sub-entry (25) to entry 84 of the Third Schedule to the Act with HSN Code Number 0712. But, HSN Code Number 0712 by itself is not an HSN Number under sub-entry (25) of entry 84 of the Third Schedule to the Act. But, however, the commodity falls under the HSN Code Number 0712.90.90, applying the ejusdem generis rule, as banana is a vegetable and therefore, falls under sub-entry (25)(a) of entry 84 of the Third Schedule to the Act, exigible to tax at the rate of four per cent only and not as clarified in annexure II order.
14. Serial No. 7 in annexure I is crunch flakes. Ingredients thereof are mentioned as against serial No. 7 in annexure I. According to the appellant, it falls under entry 6 of the Second Schedule to the Act, attracting tax at one per cent. Entry 6 of the Second Schedule is extracted below:
Rice including broken rice, puffed rice, parched rice and beaten rices (1) Rice other than paddy (2) Puffed rice, parched and beaten rice (3) Broken rice.
15. The ingredients of crunch flakes, as disclosed by the appellant in annexure I, are as follows:
Rice flakes, corn flakes, wheat germ invert syrup, malt extract, raisins, cashewnut, almonds, pista, dried banana, dried pineapple, dried pappaya, dried apple, melon seeds, sun flower seeds, pear and apricot.
16. Crunch flakes is not a commodity under any of the items under entry 6 and therefore, crunch flakes cannot fall under entry 6 of the Second Schedule as claimed. It is an item not specified in any of the other Schedules as well and is, hence, exigible to tax at 12.5 per cent under Section 6(1)(d) of the Act read with the residuary entry 103 to S.R.O. No. 82 of 2006.
17. Serial No. 12 in annexure I is instant idiyappam, ingredients of which, as shown in annexure I, are rice powder and salt. All the same, instant idiyappam is not rice flour and is not in the form of powder either. It is not a mix for making idiyappam either. It cannot fall under entry 140 (without any HSN Code) of the Third Schedule to the Act as claimed. Hence, it is a commodity exigible to tax at 12.5 per cent under Section 6(1)(d) of the Act read with the residuary entry 103 of S.R.O. No. 82 of 2006.
18. Serial No. 14 ragivita in annexure I contains the following ingredients:
Ragi, red raw rice flour, cocoa and cardamom.
19. According to the appellant, it falls under entry 48 of the Third Schedule to the Act. Being not only flour, but a preparation of ragi, red raw rice flour, cocoa and cardamom, the commodity cannot fall under entry 48 of the Third Schedule to the Act and hence, it is exigible to tax at 12.5 per cent under Section 6(1)(d) of the Act read with the residuary entry 103 of S.R.O. No. 82 of 2006.
20. Item No. 15 in annexure I, puttu mix, namely, health puttu mix, as stated in annexure II, is not rice flour, which is commonly known as puttu podi. The ingredients of the commodity as stated in annexure I are the following:
Sampa wheat, brown rice, njawara rice, maize, raggi, barley, sago, green gram, bengal gram, badam, cashewnut, brahmi, thulasi, carrot, cocoa, gardamom, rice bran, soyabeans.
21. Hence, the commodity cannot fall under entry 48(4) of the Third Schedule to the Act as claimed. It is liable to tax at the rate of 12.5 per cent under Section 6(1)(d) of the Act read with the residuary entry 103 of S.R.O. No. 82 of 2006.
22. In the result, this appeal is partly allowed as indicated above, holding that items 1(b), 1(c), 1(d), 1(e), and items 3, 4, 5 and 6 in annexure I are exigible to tax at four per cent only.