Sales Tax Revision Petition Nos. 6 and 29 to 63 of 2011 connected with Sales Tax Revision Petition Nos. 73 and 170 to 192 of 2011 and 89 of 2009. Case: State of Karnataka Vs Vasavamba Stores, Bangalore. High Court of Karnataka (India)
| Case Number | Sales Tax Revision Petition Nos. 6 and 29 to 63 of 2011 connected with Sales Tax Revision Petition Nos. 73 and 170 to 192 of 2011 and 89 of 2009 |
| Counsel | For the Appellant: Smt. S. Sujatha, Additional Government Advocate and For the Respondent: Sri T.K. Vedamurthy, Senior Counsel for Sri K.J. Kamath, Advocate |
| Judges | K. Sreedhar Rao and B. Manohar, JJ. |
| Issue | Karnataka Value Added Tax Act, 2003 - Sections 39(1), 4(1)(b) and 62(6) |
| Citation | 2013 (75) KarLJ 82 |
| Judgement Date | October 05, 2012 |
| Court | High Court of Karnataka (India) |
Order:
B. Manohar, J., (At Bangalore)
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The State Government has filed these revision petitions being aggrieved by the order passed by the Karnataka Appellate Tribunal order dated 30-10-2008 made in STA Nos. 204 to 208, 304 to 308, 338 and 399 of 2008; order dated 20-4-2010 made in STA Nos. 1828 to 1863 of 2009 and order dated 30-3-2010 made in STA Nos. 1200 to 1223 of 2009 setting aside the order passed by the Joint Commissioner of Commercial Taxes (Appeals-I), Bangalore (hereinafter referred to as 'the First Appellate Authority') wherein the First Appellate Authority confirmed the order passed by the Assessing Officer under Section 39(1) of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as 'the KV AT Act'), holding that Fryums sold by the assessee is not Pappad.
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Since the common question of law and facts are involved in these petitions and the issue whether the Fryums can be treated as Pappad which falls under Entry 40 of the First Schedule to the KVAT Act, all these petitions are clubbed together and disposed off by this common order.
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The respondents-assessees are the registered dealers under the provisions of the KVAT Act and the assessee in STA No. 89 of 2009 is the manufacturer of Fryums, doing business in sale of Rice, Soji and Flour and trading of Fryums and Pappad. The assessees have submitted their monthly returns. The establishments of the assesses' were inspected by the Competent Authorities and observed that the dealers are engaged in the trading of Fryums along with other commodities. On physical verification of the commodities dealt, it is noticed that they are doing business in the Fryums and claimed exemption for sale of Fryums on the ground that the Fryums are the Pappad. The Deputy Commissioner of Commercial Taxes (Audit), noticing that the dealers have dealt with the Fryums which are taxable under Residuary Entry under Section 4(1)(b) of the Act, has wrongly classified it as exempted goods, defining it as Pappad. Further the Fryums cannot be treated as Pappad, it is a Sandige and semi-cooked food. Since the Sandige has not been defined under the Act, the assessees have to pay tax under Section 4(1)(b) of the Act. Accordingly notice was issued to them under Section 39(1) of the KVAT Act. The assessees have filed their objections to the contending that the Fryums are the Pappad in smaller shapes. It has similar taste and the characteristics of Pappad. All the ingredients of Pappad are being used for manufacturing of Fryums. However, it is only in smaller dimensions.
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The Hon'ble Supreme Court in Shiv Shakti Gold Finger v Assistant Commissioner, Commercial Taxes, Jaipur (1996)9 SCC 514 has held that "all varieties of Pappad, whether they are circular or flat in shape consisting of all ingredients, whether it is pulse, rice or maida, etc." Hence, the Fryums has to be treated as Pappad for the purpose of payment of tax whereas, Sandige is a dense, solid of small diameter and substantially thick. After frying, the Sandige has to be chewed whereas the Fryums after frying become crunchy wafers and it melts into fine paste. The Fryums sold by the respondents had been dealt by the Central Excise and Service Tax Appellate Tribunal, Bangalore and held the commodity as a Pappad. In the market also it was sold as Pappad round, Pappad twist and Pappad trikone. Further, it was in different shapes such as mini checks, buttons, short tubes, stars, mini wheels and O Rings. However, contain all ingredients of Pappad and sought for dropping the proceeding initiated under Section 39(1) of the KVAT Act. The Assessing Authority after considering the objections filed by the assessees held that the Fryums cannot be treated as Pappad and it is in the nature of Sandige. Since the Sandige has not been defined under the Act, the assessees have to pay tax under Section 4(1)(b) of the KVAT Act. Accordingly reassessed and imposed penalty under Section 72(2) and interest under Section 36 of the Act.
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The assessees being aggrieved by the reassessment order passed by the Assessing Authority preferred appeals before the First Appellate Authority for the different assessment years from 1999-2000 to May 2008 under Section 62(6) of the Act. The First Appellate Authority, after considering the matter in detail dismissed the appeals upholding the reassessment order passed by the Assessing Authority.
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The asses sees, being aggrieved by the order passed by the First Appellate Authority have filed the appeals in STA Nos. 1828 to 1863 of 2009; 1200 to 1223 of 2009 and 204 to 208, 304 to 308, 338 and 399 of 2008 before the Karnataka Appellate Tribunal contending that the order passed by the First Appellate Authority confirming the reassessment order passed by the Assessing Authority is contrary to law. It is further contended that the issue raised by the Assessing Authority is fully covered by the judgment in Shiv Shakti Gold Finger's case. The Fryums contain all the ingredients of Pappad, but smaller in size and different shapes like mini...
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