Civil Appeal Nos. 6468-69 of 2017 (Arising out of SLP (C) Nos. 14697-14698 of 2016), Civil Appeal Nos. 6471-72 of 2017 (Arising out of SLP (C) Nos. 24460-61 of 2016) and Civil Appeal No. 6470 of 2017 (Arising out of SLP (C) No. 9467 of 2016). Case: Parle Agro (P) Ltd. and Ors. Vs Commissioner of Commercial Taxes, Trivandrum and Ors.. Supreme Court (India)
| Case Number | Civil Appeal Nos. 6468-69 of 2017 (Arising out of SLP (C) Nos. 14697-14698 of 2016), Civil Appeal Nos. 6471-72 of 2017 (Arising out of SLP (C) Nos. 24460-61 of 2016) and Civil Appeal No. 6470 of 2017 (Arising out of SLP (C) No. 9467 of 2016) |
| Counsel | For Appearing Parties: K.K. Venugopal, Arvind P. Datar, Jaideep Gupta, Sr. Advs., L. Charnya, Aditya Bhattacharya, Premjit Nagendran, Ashwati Balraj, Dharmadhikari, Victor Das, Lalita Phadke, M.P. Devanath, Ramesh Babu M.R., G. Prakash, Jishnu M.L., Priyanka Prakash, Beena Prakash, Manu Srinath, Anindita Mitra and Rajesh Kumar, Advs. |
| Judges | A.K. Sikri and Ashok Bhushan, JJ. |
| Issue | Kerala Value Added Tax Act, 2003 - Sections 6, 6(1), 94, 94(1), 94(1A), 94(4); Central Excise Tariff Act, 1975; Kerala Finance Act, 2007; Customs Tariff Act, 1975; Punjab General Sales Tax Act, 1948; Food Safety and Standards Act, 2011; Food Safety and Standards (Food Products Standards & Food Additives) Regulations, 2011 |
| Judgement Date | May 09, 2017 |
| Court | Supreme Court (India) |
Judgment:
Ashok Bhushan, J.
1. Leave granted.
2. The issues raised in these appeals being inter-related have been heard together and the appeals are being disposed of by this common judgment.
3. Civil Appeals arising out of SLP(C) Nos. 14697-98 of 2016 are being treated as leading case, the facts of which case shall be noted in detail for deciding these cases.
4. Civil Appeals arising out of SLP(C) Nos. 14697-98 of 2016 and SLP(C) No. 9467 of 2016 are between the same parties whereas Civil Appeals arising out of SLP(C) Nos. 24460-61 of 2016 have been filed by different Appellants.
Civil Appeals arising out of SLP(C) Nos. 14697-98 of 2016
5. The Appellant-M/s. Parle Agro (P) Ltd. is a dealer engaged in fruit juice based drink known as 'Appy Fizz' which has obtained certificate of registration under Kerala Value Added Tax Act, 2003 (hereinafter referred to as "Act, 2003"). The Appellant was classifying the product as fruit juice based drink under Entry 71 of the notification issued Under Section 6(1)(d) of Act, 2003 till 2007 and was paying @ 12.5% VAT. One M/s. Trade Lines (a distributor of Appellant Company) was assessed by the authorities under the Act, 2003 holding that M/s. Trade Lines is liable to pay tax @ 20% on the product. M/s. Trade Lines filed OT Revision No. 114/2013 in the High Court of Kerala against the order passed by Kerala Value Added Appellate Tribunal dismissing the appeal. The High Court vide its judgment and order dated 17th November, 2014 dismissed the revision upholding the order passed by the Assessment Officer and the First Appellate Authority. Special Leave Petition was filed by M/s. Trade Lines against the judgment of Kerala High Court which was, however, permitted to be withdrawn by order dated 19th January, 2015 of this Court. On 4th August, 2015 the assessment notices were issued to the Appellant for Assessment Year 2009-15 proposing classification of 'Appy Fizz' Under Section 6(1)(a) of the Act, 2003 as "aerated branded soft drink" and tax liability @ 20% After receipt of the notices Appellant filed an application dated 24th August, 2014 Under Section 94 of the Act, 2003 seeking clarification of product 'Appy Fizz'. In the clarification application the Appellant claimed that product 'Appy Fizz' had rightly been clarified as 'fruit juice based drink' and which has tax liability of 12.5%. Along with the clarification application Appellant has filed certificates and expert opinions. Writ Petition No. 26279/2015 was filed by the Appellant before Kerala High Court seeking direction to the Commissioner of Commercial Taxes to consider and pass order on the application for clarification within a specified time and the proceedings initiated by the Commissioner of Commercial Taxes by different notices be kept in abeyance. Learned Single Judge by its judgment and order dated 31st August, 2015 disposed of the writ petition directing the Commissioner of Commercial Taxes to consider and pass orders on the clarification application within a period of one month from the date of receipt of the judgment and liberty was given to the Appellant to produce all material on which it intends to place reliance to substantiate its clarification with regard to the classification of the product, further proceedings in various notices were kept in abeyance. The Assistant Commissioner and Commissioner of Commercial Taxes filed a writ appeal against the judgment of the learned Single Judge before Division Bench of the Kerala High Court. The Division Bench of Kerala High Court vide its judgment dated 5th October, 2015 dismissed the writ appeal by affirming the decision of the learned Single Judge.
6. After the above judgment of the Division Bench dated 5th October, 2015, the Committee of Joint Commissioner passed the clarification order dated 6th November, 2015 classifying the product as 'aerated branded soft drinks', at the rate of 20%. Against the order passed Under Section 94 of Act, 2003, the Appellant filed O.T. Appeal No. 7 of 2015 in the Kerala High Court. The Division Bench by its judgment and order dated 5th February, 2016 dismissed the appeal filed by the Appellant upholding the order dated 6th November, 2015. A review application was also filed by the Appellant to review the judgment dated 5th February, 2016 which has been dismissed on 23rd March, 2016.
7. Civil Appeals arising out of SLP(C) No. 14697-98 of 2016 have been filed against the aforesaid order dated 5th February, 2016 and the review order dated 23rd March, 2016 by the Appellant.
Civil Appeal arising out of SLP(C) No. 9467 of 2016
8. The Assistant Commissioner (Assessment) and the Commissioner of Commercial Taxes have filed this appeal challenging the judgment dated 5th October, 2015 by which writ appeal filed by the Assistant Commissioner(Assessment) and Anr. against the direction of the learned Single Judge dated 31st August, 2015 has been dismissed.
Civil Appeals arising out of SLP(C) Nos. 24460-61 of 2016
9. M/s. We Six Traders Etc. Etc. is a dealer in fruit juices and other drinks manufactured by M/s. Parle Agro (P) Ltd. Assessment Commissioner has issued notices for assessment years 2010-11 to 2013-14 and April to June 2015 proposing to classify the product 'Appy Fizz' as 'aerated branded soft drink' @ 20% VAT. After the judgment of the High Court dated 5th February, 2016 in the case of M/s. Parle Agro (P) Ltd. order of assessment was issued against which the Assessee filed appeal before Kerala Value Added Tribunal in which appeal the Tribunal directed the Assessee to deposit 30% as pre-condition to hear the matter on merits. The Assessee filed writ petition in the High Court challenging the aforesaid order passed by the Tribunal on the stay petition. The Assessee submitted before the High Court that against the judgment of the High court dated 5th February, 2016 in the case of M/s. Parle Agro (P) Ltd. SLP has already been filed, hence, the Assessee should not have been called to remit the entire amount. The High Court vide its judgment and order dated 14th July, 2016 disposed of the writ petition directing the demand made in the above cases shall remain stayed till disposal of the appeals on condition of Assessee depositing 50% of the amount involved. Civil Appeals arising out of SLP(C) Nos. 24460-61 of 2016 have been filed against the aforesaid judgment and order of the Kerala High Court dated 14th July, 2016.
10. We have heard Shri K.K. Venugopal, learned senior Counsel for the Assessee. Shri Jaideep Gupta, learned senior Counsel has appeared for the Revenue.
11. Shri K.K. Venugopal, learned senior Counsel, submits that both High Court and Committee of Commissioners erred in not classifying the product of 'Appy Fizz' under Entry 71 of S.R.O. No. 119 of 2008. Classification of the product as 'aerated branded soft drinks, excluding soda' Under Section 6(1)(a) is not the correct classification. It is submitted that the Revenue itself till 2007 has classified the product under Entry 71 with tax liability of 12.5%. He submits that judgment of Division Bench of Kerala High Court in M/s. Trade Lines cannot be binding precedent since the said judgment was rendered in the revision proceedings in which Appellant was not a party and the revision proceedings were confined to the assessment order on the basis of facts on the record of that case. Prior to 2007 the product was covered under Entry 71. When in 2008 Entry 71 was amended, there was no amendment to the Schedule Under Section 6(1) (a). He submits that had the intention of the legislation was to pick up the certain products earlier covered under Entry 71 and place them in Schedule Under Section 6, then entry 'aerated branded soft drinks, excluding soda' which earlier did not cover the said product, would also have been amended at the same time. He submits that if prior to 2007, 'Appy Fizz' could not be considered as an 'aerated branded soft drink' then there is no identifiable logic that the product would be so covered after 2007. Especially, there was no indication that the said product had been removed/ejected from Entry 71 after the amendment in 2007.
12. Further, he submits that common parlance test which has been applied by the High Court is not the correct test to determine the classification to include the product, as entries under the VAT Act are technical or scientific in nature. Soft drinks under Kerala VAT would be those drinks that are synthetic whether or not aerated. The product in question is not a synthetic product. It contains more than 10% fruit juice. It is fruit juice based drink and not covered by Section 6(1)(a). A fruit juice based drink is more akin to fruit juice than soft drink. Sub-clause (5) of Entry 71 covers similar other products not specifically mentioned under any other entry in this list or any other schedule. The product is fully covered under alone entry. He further submits that Food Safety Authorities have recognized the product as a 'fruit drink'.
13. Shri Venugopal has placed reliance on the order dated 18.03.2008 of the Customs, Excise and Service Tax Appellate Tribunal where classification of the product was upheld as 'fruit based drink' and the Revenue's appeal was dismissed by this Court on 18th July, 2009. Shri Vanugopal further submits that neither the Committee of Commissioners nor the High Court has adverted to the technical evidence and certificate filed by the Appellant along with proceedings Under Section 94 of Act, 2003. The scientific evidence fully proved that products do not undergo aeration or carbonation; the product is thermally processed with CO2 which help in preserving the Apple Juice concentrate which is otherwise perishable in nature. The certifications fully proved the product as 'Thermally processed fruit juice based drink'.
14. Learned Counsel further submitted that products which are covered Under Section 6(1)(a) are all those products which are dangerous to health. They have deliberately been...
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