Kerala High Court
M/S. Trade Lines vs State Of Kerala
Author: Antony Dominic
Bench: Antony Dominic, Anil K.Narendran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE ANTONY DOMINIC
&
THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN
MONDAY,THE 17TH DAY OF NOVEMBER 2014/26TH KARTHIKA, 1936
OT.Rev.No. 114 of 2013 ()
--------------------------
AGAINST THE ORDER/JUDGMENT IN TA 33/2013 of KERALA VAT APPELLATE
TRIBUNAL, ERNAKULAM DATED 10/5/13
REVISION PETITIONER(S)/APPELLANT:
--------------------------------------------------------
M/S. TRADE LINES
28/3266, RAVEENDRAN ROAD, ELAMKULAM
KOCHI-20, REP BY T J EUGENE, MANAGER
BY ADVS.SRI.HARISANKAR V. MENON
SRI.MAHESH V.MENON
RESPONDENT(S)/RESPONDENT:
--------------------------------------------------
STATE OF KERALA
REP BY ITS SECRETARY, TAXES DEPARTMENT
GOVT.SECRETARIAT, THIRUVANANTHAPURAM-695001
BY SR GOVERNMENT PLEADER SRI.LIJU STEPHEN
THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 17-11-
2014, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
O.T.REVN. NO.114/13
APPENDIX
REVN.PETITIONER'S EXHIBITS
ANNEXURE A: COPY OF ORDER OF THE CUSTOMS, EXCISE &
SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI DT 18.3.2008.
ANNEXURE B: COPY OF JUDGMENT IN CIVIL APPEAL
NO.5354/2008 OF THE HON'BLE SUPREME COURT DT 8.7.09.
ANNEXURE C: COPY OF ASSESSMENT ORDER FOR THE YEAR
2009-10 OF THE COMMERCIAL TAX OFFICER, KALAMASSERRY DT
30.9.2011.
ANNEXURE D: COPY OF APPELLATE ORDER OF THE
ASST.COMMISSIONER, ERNAKULAM IN KVAT 3196/11 DT 30.11.12.
ANNEXURE E: COPY OF APPELLATE ORDER OF THE KERALA
VALUE ADDED TAX APPELLATE TRIBUNAL, ERNAKULAM DT
10.5.2013.
//True Copy//
PA to Judge
Rp
ANTONY DOMINIC & ANIL K. NARENDRAN, JJ.
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O.T.Revn. No. 114 of 2013
====================
Dated this the 17th day of November, 2014
J U D G M E N T
Antony Dominic, J.
This revision under Section 63 of the Kerala Value Added Tax Act (hereinafter referred to as 'the KVAT Act') is filed by the assessee challenging the order passed by the Kerala Value Added Tax Appellate Tribunal dismissing TA(VAT) No.33/13.
2. The facts lie in a narrow compass. The relevant assessment year is 2009-10. Among the various items, the revision petitioner is engaged in the trading of Appy Fizz. Treating the product as fruit juice, an item falling under entry 71(2) of SRO No.82/2006, the petitioner paid tax @12.5%. However, proceedings were initiated under Section 25 of the KVAT Act proposing to levy tax @20%, treating the product as an aerated branded soft drink, falling under Section 6(1)(a) of the KVAT Act. Petitioner objected to the proposal by placing reliance on Annexure A order passed under the Central Excise Act and Annexure B order dismissing the Civil Appeal thereon. They also contended that the product, being a fruit juice, falls under entry 71 of SRO No.82/06. However, these contentions O.T.Revn.No.114/13 : 2 :
were rejected and assessment was finalised as per Annexure C order, levying 20% tax. This order was confirmed by the First Appellate Authority and the Tribunal. It is in this background, the revision is filed.
3. We heard the learned counsel for the revision petitioner and also the learned Government Pleader appearing for the respondent.
4. The only question that arises for consideration is whether the product Appy Fizz is a fruit juice, a commodity under entry 71(2) of the list of goods notified by the Government as per SRO No.82/2006 attracting tax @12.5% as claimed by the petitioner or whether it is an aerated branded soft drink, assessable to tax @20%, being a product falling under Section 6 (1)(a) of the KVAT Act.
5. Section 6(1)(a) of the KVAT Act, as it stood at the relevant period, viz., 2009-10, reads thus;
"(a) in the case of goods specified in the Second and Third Schedules at the rates specified therein and at all points of sale of such goods within the State and in the case of aerated branded soft drinks excluding soda at O.T.Revn.No.114/13 : 3 :
the rate of twenty per cent at all points of sale within the State."
6. Reading of Clause (a) to Section 6(1) shows that in the case of goods specified in Second and Third schedules, the rate of tax leviable thereon shall be at the rate indicated thereon. It is also stated that in the case of aerated branded soft drinks, excluding soda, the rate of tax shall be 20% at all points of sale within the State.
7. Entry 71 of the list of goods notified by the Government by SRO No.82/2006 dated 21/1/2006 reads thus;
Sl.No. Description of goods HSN Code
(1) (2) (3)
Non-alcoholic beverages and their powders, 71 concentrates and tablets in any form including; (1) aerated water, soda water, mineral water, water sold in sealed containers or pouches (2) fruit juice, fruit concentrates, fruit squash, fruit syrup 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
8. If as contended by the learned counsel for the petitioner, the product in question Appy Fizz is a fruit juice, the tax leviable thereon is 12.5%. To substantiate this contention, O.T.Revn.No.114/13 : 4 :
learned counsel for the petitioner referred us to the statutory provisions.
9. The provisions of section 6(1)(a) at the relevant time indicate that the product which is included therein is aerated branded soft drink, excluding soda. This provision also shows that HSN code, which was originally incorporated in the section, was subsequently omitted.
10. The manner in which an entry should be understood in a case where HSN code is not incorporated in the statute is indicated in the Rules of Interpretation as contained in the Schedule to the KVAT Act. The relevant portion of this provision reads thus;
"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 O.T.Revn.No.114/13 : 5 :
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."
(emphasis supplied) From this, it is evident that those commodities in respect of which HSN Code number is not given, should be interpreted, as in common parlance or commercial parlance.
11. Having said so, we should now make reference to the provisions contained in Entry 71 of SRO No.82/2006, which has been extracted above. According to the assessee, Appy Fizz is a fruit juice included in Entry 71 (2) of SRO No.82/06. Going by the materials produced before this Court, the product in question is an aerated soft drink consisting of fruit juice also and the content of the fruit juice is only 12.7%. In other words, the product is an aerated soft drink and the fruit juice is added as a flavouring agent, which cannot alter the character of the product. In Entry 71(1) of SRO 82/06, the aerated products included are aerated O.T.Revn.No.114/13 : 6 :
water and soda water. Fruit juice included in entry 71(2) and soft drinks included in entry 71(3) are all products which are not aerated. This, therefore, makes it clear that aerated products, except those which are specifically included in entry 71, are outside the purview of SRO No.82/06 and consequently, the product in question has to be treated as an aerated branded soft drink coming within the purview of Section 6(1)(a) of the KVAT Act.
12. As we have already stated, Section 6(1)(a), while listing out the products and indicating the rate of tax applicable, did not mention the HSN code. Going by the Rules of Interpretation, when the HSN number is not indicated in the statute or the notification issued thereunder, the interpretation should be on the basis of common parlance or commercial parlance. If the items listed out in Section 6(1)(a) are so interpreted, the only conclusion that is possible is that Appy Fizz, the product marketed by the petitioner, is an aerated soft drink as contemplated under Section 6(1)(a) of the KVAT Act.
13. In so far as Annexure A1 order relied on by the learned counsel for the petitioner is concerned, that is an order passed in O.T.Revn.No.114/13 : 7 :
a dispute arising under the Central Excises and Salt Act, which is governed by the HSN Code numbers. Since HSN Code numbers are not relevant for the purpose of this case, interpretation given to similar entries in the context of the provisions contained in the Customs Tariff Act or the Central Excise Act cannot be called in aid to resolve a dispute of this nature, especially in the light of the Rules of Interpretation contained in the Appendix to the KVAT Act. Therefore, we are not in a position to place any reliance on Annexures A or B orders of the Tribunal or the Apex Court.
14. In view of the above, conclusion is irresistible that the finding of the Tribunal confirming the orders passed by the Assessing Officer and the First Appellate Authority does not call for any interference.
O.T.Revn. is accordingly dismissed.
Sd/-
ANTONY DOMINIC JUDGE Sd/-
ANIL K. NARENDRAN JUDGE Rp //True Copy// PA to Judge