State of Karnataka vs M_S
Content
Main Search Advanced Search Disclaimer
Cites 11 docs [View All]
the Central Sales Tax Act, 1956
The Bihar Value Added Tax Act, 2005
Section 4(1) in the Central Sales Tax Act, 1956
Section 4 in The Bihar Value Added Tax Act, 2005
Section 39(1) in The Bihar Value Added Tax Act, 2005
Mobile View
Upto 25% off on Air Fares
Get Super Low Fares On Dom Flights Offer Valid Till 26 Jan. Book Now!
Get this document in PDF Print it on a file/printer View the actual judgment from court
User Queries
Karnataka High Court
entry tax
State Of Karnataka vs M/S.Vasavamba Stores on 5 October, 2012
VAT
Author: K.Sreedhar Rao B.Manohar
kvat act doctypes: judgments non
filing of returns
entry tax doctypes: karnataka
1
vat doctypes:judgments
handmade or not
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
vat doctypes: karnataka
kvat act doctypes:judgments
DATED THIS THE 5TH DAY OF OCTOBER 2012
advance ruling
kvat doctypes:judgments
PRESENT
308 fromdate: 112012 todate: 31
122012
THE HON'BLE MR. JUSTICE K.SREEDHAR RAO
vat
entry tax
AND
entry tax doctypes:judgments
kvat act
THE HON'BLE MR. JUSTICE B.MANOHAR
338
karnataka sales tax act
STRP.NO.6/2011 & STRP.NOS.29 - 63/2011
C/W.STRP.NO.73/2011 & STRP.NOS.170 - 192/2011
STRP.NO.89/2009
BETWEEN :
STATE OF KARNATAKA
REPRSENTED BY THE
COMMISSIONER OF COMMERCIAL TAXES,
GANDHINAGAR,
...PETITIONER
(BY SMT.S.SUJATHA, AGA )
AND:
M/S.VASAVAMBA STORES,
NO.269, OLD TARAGPET
BANGALORE-560 002.
cst
slp doctypes: karnataka
STRP.NO.6/2011 & STRP.NOS.29 - 63/2011
BANGALORE - 560 009.
KVAT
...RESPONDENT
(BY SRI.T.K.VEDAMURTHY, SR COUNSEL FOR K.J.KAMATH)
STRP FILED UNDER SEC.65(1) OF KARNATAKA
VALUE ADDED TAX, 1957, AGAINST THE JUDGMENT
DATED 20.04.2010 PASSED IN STA.NO.1828/2009 TO 1863/2009
2
ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL,
BANGALORE, ALLOWING THE APPEALS.
STRP.NO.73/2011 & STRP.NOS.170 - 192/2011
BETWEEN :
STATE OF KARNATAKA
BY THE SECRETARY,
FINANCE DEPARTMENT,
VIDHANA SOUTHA,
BANGALORE 560 001.
...PETITIONER
(BY SMT.S.SUJATHA, AGA)
AND :
M/S NATHANI ENTERPRISES
83/9, OLD THARAGUPET CROSS
BANGALORE-560 053.
...RESPONDENT
(BY SRI.T.K.VEDAMURTHY, SR COUNSEL FOR K.J.KAMATH)
STRP FILED U/S.65(1) OF KVAT ACT, AGAINST THE
JUDGMENT AND ORDER DATED: 30.03.2010 PASSED IN
STA.NO.1200 TO 1223/2009 ON THE FILE OF THE KARNATAKA
APPELLATE TRIBUNAL, BANGALORE, ALLOWING PETITION.
STRP NO.89/2009
BETWEEN:
STATE OF KARNATAKA,
BY THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALAYA,
GANDHINAGAR,
BANGALORE.
...PETITIONER
(BY SMT.S.SUJATHA, AGA)
3
AND :
M/S.TTK HEALTHCARE LIMITED
NO.17, 3RD CROSS
LALBAGH ROAD,
BANGALORE.
...RESPONDENT
(BY SRI.T.K.VEDAMURTHY, SR COUNSEL FOR K.J.KAMATH)
STRP FILED UNDER SEC.23(1) OF KARNATAKA SALES TAX
ACT, AGAINST THE JUDGMENT AND ORDER DATED: 30.10.2008
PASSED IN STA.NO.204 TO 208, 304 TO 308, 338 & 339/2008 ON THE
FILE
OF
THE
KARNATAKA APPELLATE
TRIBUNAL,
BANGALORE, PARTLY ALLOWING THE APPEALS, UNDER THE
PROVISIONS OF THE KARNATAKA SALES TAX ACT.
THESE PETITIONS ARE HAVING BEEN HEARD AND
RESERVED AND COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, B.MANOHAR.J MADE THE FOLLOWING:
ORDER
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 399/2008; order dated 20-04-2010 made in STA Nos.1828-1863/2009 and order
dated 30-03-2010 made in STA Nos.1200-1223/2009 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 KVAT Act'), holding that Fryums sold by the assessee is not Pappad.
2. 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 I Schedule to the
KVAT Act, all these petitions are clubbed together and disposed off by this common order.
3. The respondents-assessees are the registered dealers under the provisions of the KVAT Act and
the assessee in STA No.89/2009 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.
4. The Hon'ble Supreme Court in SHIVASHAKTHI GOLD FINGER v/s ASSISTANT
COMMISSIONER, COMMERCIAL TAXES, JAIPUR reported in (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.
5. 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.
6. The assessees, being aggrieved by the order passed by the First Appellate Authority have filed
the appeals in STA Nos.1828-1863/2009; STA Nos.1200-1223/2009 and STA Nos.204 to 208,
304 to 308, 338 and 399/2008 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 SHIVASHAKTHI GOLD FINGER case
(cited supra). The Fryums contain all the ingredients of Pappad, but smaller in size and different
shapes like mini checks, buttons, short tubes, O Rings, stars and mini wheels. It is semi-cooked
food. The Fryums are required to be fried in the edible oil. It cannot be treated as Sandige, since
the Sandige has different shapes and size and contain different combination of pulses. It is hard
to eat and not like that of the Pappad. The Appellate Tribunal relying upon the order made in STA
Nos.204- 208/2008 and other connected matters disposed of on 30 th October 2008 allowed the
appeals and directed to refund the penalty as well as the interest amount recovered from the
assessees. The Appellate Tribunal held that Fryums also come within the purview of Pappad,
which falls under Entry 40 of the First Schedule and it is exempted from tax. Being aggrieved by
the order passed by the Karnataka Appellate Tribunal, the State has preferred these revision
petitions.
7. In STRP No.89/2009, the order made in STA Nos.204-208/2008 and other connected matters
disposed off by the Karnataka Appellate Tribunal on 30th October 2008 is challenged for the
assessment years 1999-2000 to 2003-2004 under the Karnataka Sales Tax Act. The assessee is
the company incorporated under the Companies Act and also registered under the KST, CST and
KTEG Act. The assessee is engaged in the manufacturing of food products and Fryums at
industrial area situated at Hosakote, Bangalore District. On verification of the books of accounts
of the said company on 07-10-2006, it was noticed that the assessee is manufacturing 'Ready to
fry Snack Pallet', which was named as Pappad mainly made of maida, starch, flavours, potato
powder and other ingredients and it is named as Fryums and not Pappad. The assessee has paid
tax at the rate of 1% whereas he was liable to pay tax at the rate of 10%. Accordingly, issued notice
under Section 12-A(1) of the Karnataka Sales Tax Act for the assessment months from assessment
years 1999- 2000 to 2003-2004.
8. The assessee failed to file their objections to the said proceedings. Accordingly, the Assessing
Authority passed an order on 07-11-2011 and issued demand notice to pay tax with penalty and
interest. Being aggrieved by the said order, the assessee preferred an appeal before the First
Appellate Authority under Section 20 of the KST Act. The First Appellate Authority after
considering the matter in detail dismissed the appeal confirming the order passed by the
Assessing Authority. Being aggrieved by the same, the assessee preferred appeals before the KAT
in STA Nos.204-208/2008 and other connected appeals contending that no opportunity has been
given to the assessee to defend the case. Further in view of the judgment in SHIVASHAKTHI
GOLD FINGER case, the shapes and size cannot be taken into consideration. Hence, the Fryums
are the Pappad and the issue raised is covered by the said judgment and sought for allowing the
same by setting aside the order passed by the First Appellate Authority as well as the Assessing
Authority.
9. The Karnataka Appellate Tribunal after considering the matter in detail, by its order dated
30th October 2008 allowed the appeals in part setting aside the reassessment order as well as the
order passed by the First Appellate Authority and remanded the matter to the Assessing
Authority with a direction to pass fresh reassessment order in accordance with law after giving
opportunity to the assessee. The Karnataka Appellate Tribunal allowed the other two appeals
filed by the assessees on the basis of the order made in STA Nos.204-208/2008 and other
connected cases. When the said order has been passed by the Karnataka Appellate Tribunal, the
order made in STA Nos.204-208/2008 is pending consideration before this Court. The State
Government filed these revision petitions with the following substantial question of law:
a) Whether, on facts and circumstances of the case, can it be held that the orders dated
30-10-2008, 30-03-2010 and 20-04-2010 passed by the Karnataka Appellate Tribunal
allowing the appeals is correct and in accordance with law?
b) Whether, on the facts and circumstances of the case, the Karnataka Appellate
Tribunal is justified in holding that the Fryums was Pappad in the light of the Apex
Court judgment wherein Fryums was held not to be Pappad.?
10. Smt.S.Sujatha, learned Additional Government Advocate appearing for the State Government
contended that the order passed by the Karnataka Appellate Tribunal is contrary to law and error
apparent on the face of the record. The State Government with a view to encourage cottage
industries has given exemption of tax to Happala in Kannada which is also known as Pappad. The
Pappad or Happala has definite shape and taste and it was made of different cereals and also rice
and Jack fruits. The products manufactured and sold by the assessees cannot be treated as
Pappad. In fact, the assessee in STRP No.89/2009 earlier filed an application before the
Authority for Clarification and Advance Ruling under Section 60 of the KVAT Act seeking
clarification with regard to the rate of tax on Fryums. He also contended that the Fryums falls
under Entry 40 of the First Schedule to the Act.
11. The Advance Ruling Committee after considering the matter held that Fryums cannot be
treated as Pappad and it falls under the Residuary clause and by its order dated 30-3-2007 held
that the assessees had to pay tax at the rate of 12.5% under Section 4(1)(b) of the Act. Being
aggrieved by the order passed by the ACAR, the assessees have filed STA No.11/2007 before this
challenging the order dated 30-3-2007 passed by the ACAR. The Division Bench of this Court
dismissed the said appeal holding that the eatable commodity manufactured by the assessees fall
under Section 4(1)(b) of the Act and liable to pay tax at the rate of 12.5%. The order passed by the
Division Bench of this court has been questioned in SLP No.450/2008 before the Hon'ble
Supreme Court. Subsequently, the said SLP was withdrawn with liberty to move the Assessing
Authority under Section 60 of the KVAT Act. Since the order passed by this court has become
final, it is not open to the Karnataka Appellate Tribunal to hold that Fryums are the pappad and it
is exempted from the tax. Further, Hon'ble Supreme Court in a judgment reported in (2007) 11
SCC 796 in the case of COMMISSIONER OF COMMERCIAL TAXES, INDORE v/s T.T.K.
HEALTH CARE LIMITED has held that Fryums are the semi- cooked food and it cannot be
treated as cooked food and set aside the order passed by the Madhya Pradesh High Court and
restored the order passed by the Assessing Authority, wherein the Assessing Authority held that
the Fryums were neither namkin nor cooked food nor pappad nor cereals, therefore, they are
taxable under the Residuary entry. In view of the said order, the order passed by the Karnataka
Appellate Tribunal cannot be sustained and sought for allowing the revision petitions restoring
the order passed by the First Appellate Authority.
12. On the other hand, Sri.N.Venkataraman, learned Senior Counsel appearing for Sri.K.J.Kamat
and Sri.T.N.Keshava Murthy appearing for the assessees argued in support of the order passed by
the KAT and contended that after lapse of 8 years, the proceedings are initiated for reassessment
which is barred by limitation. The assessees have not suppressed anything and they have paid the
tax at the rate of 1% and reiterated the contentions taken before the First Appellate Authority as
well as the Assessing Authority. Further contended that the issues raised in these revision
petitions are covered by SHIVASHAKTHI GOLD FINGER case, wherein the Hon'ble Supreme
Court 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., has to be treated as Pappad and entitled for
exemption. Further, the order passed by the Division Bench of this court in STA No.11/2007 is
not binding on the respondents-assessees. Liberty has been reserved to reagitate the matter
under Section 60 of the KVAT Act, since the State Government itself has extended the benefit of
tax exemption to the Sandige by amending Act No.6 of 2007. Since, the assessees have not
collected the tax from the customers, the question of paying tax at the rate of 12.5% does not arise
and sought for dismissing the revision petitions.
13. We have carefully considered the arguments addressed by the learned counsel for the parties
and perused the orders passed by the Karnataka Appellate Tribunal, First Appellate Authority as
well as Assessing Authority.
14. The records clearly disclose that the assessee in STRP Nos. 6 & 29-63 and STRP 73 & 170192/2001 are the dealers in the commodity in question known as Fryums. The respondent in
STRP No.89/2009 is the manufacturer and dealer of the food articles popularly known as
Fryums. The commodity manufactured by the assessee was taxed at 2% as Pappad under KST
and CST Acts. After coming into force of KVAT Act, the pappad was brought under Entry No.40
of the First Schedule to the Act. Further, the respondent/assessee i.e. M/s. TTK Health Care filed
an application before the Advance Ruling Committee under Section 60 of the KVAT Act seeking
for clarification with regard to the rate of tax in respect of the Fryums manufactured by the
assessees. The Advance Ruling Committee by its order dated 30-3-2007 held that the Fryums
cannot be treated as Pappad, which falls under Entry 40 of the First Schedule to the Act. The
shape, taste and ingredients of the Fryums are nothing but Sandige and falls under Section 4(1)
(b) of the KVAT Act and are liable to pay tax at the rate of 12.5%. Being aggrieved by the order
passed by the Advance Ruling Committed, M/s. TTK Health Care Limited who is the respondent
in STRP No.89/2009 filed STA No.11/2007 before this Court. The Division Bench of this court
dismissed the appeal confirming the order passed by the Advance Ruling Authority. Being
aggrieved by the said order, a Special Leave Petition in SLP No. 450/2008 was filed before the
Hon'ble Supreme Court. Subsequently, the said SLP was withdrawn with liberty to agitate the
matter before the Assessing Authority in view of the amendment brought in by Act No.6 of 2007
to the KVAT Act.
15. It appears that, subsequent to the order passed by the Advance Ruling Authority, the
Assessing Authority initiated proceedings of reassessment under Section 39(1) of the KVAT Act
and under Section 12A(1) of the Karnataka Sales Tax Act and has passed an order holding that the
assessees are liable to pay tax under Section 4(1)(b) of the Act. The appeal filed by the assessees
before the First Appellate Authority against the order passed by the Assessing Authority was
dismissed and thereafter the appeals were filed before the Karnataka Appellate Tribunal. The
Karnataka Appellate Tribunal allowed the said appeals holding that the Fryums are pappad falls
under Entry 40 of the First Schedule to the Act and exempted from payment of tax. Being
aggrieved by the same, the above revision petitions are filed.
16. The main contention urged by the Revenue is that the Fryums are not Pappad. It falls under
the Residuary entry under Section 4(1)(b) of the KVAT Act. Further the Hon'ble Supreme Court
in a judgment reported in (2007) 11 SCC 796 cited supra, has held that the Fryums are not
Pappad. Hence, they are liable to pay higher tax. The issue is fully covered by the judgment of the
Hon'ble Supreme Court. On the other hand, the respondents-assessees contended that the
Fryums are the smaller size of the Pappad. It was made in different size and type in order to
attract the customers. The Fryums contain all the ingredients of Pappad and is of the same taste.
However, it was made in different sizes and shapes, such as mini checks, buttons, short tubes, O
Rings, stars and mini wheels. It is the semi-cooked food and it has to be deeply fried in the edible
oil. Then only it can be eaten. Further Pappad can be used by deep frying as well as by flame
frying. Further the Hon'ble Supreme Court in a judgment reported in SHIVASHAKTHI GOLD
FINGER case has clearly held that all varieties of the Pappad whether they are circular or flat in
shape consisting of all ingredients whether it is pulse, rice, maida etc., entitled for exemption. The
Hon'ble Supreme Court examined the matter under Rajastan Sales Act, whether Gole Pappad
manufactured out of maida, salt and starch are the Pappad or not. The Hon'ble Supreme Court
clearly held that size or shape is irrelevant. The pappad of all shapes and sizes are covered under
the Entry "Pappad". Paragraphs 2 to 4 of the judgment reads as under:
2. The respondent State exercising the power under Section 4(2) of the Rajasthan
Sales Tax Act, 1954 (29 of 1954), (for short, 'the Act') by a notification dated 9.3.1970
had exempted Papad and Badi, i.e., Mangori from sales tax. When the appellant made
an application for exemption of Gole Papad manufactured out of Maida, Salt Starch,
Papad Soda, Alum and food colour from sales tax under the above notification, the
Additional Commissioner by proceedings dated 27-8-1982 held that Gole Papad was
not covered by the notification. When the appeal came to be filed, the Sales Tax
Tribunal by its order dated 17-3-1986 allowed the appeal and held that the notification
would govern all varieties of Papad, whether they are circular or flat in shape
consisting of all the ingredients whether it is pulses, rice, maida, etc. when the State
carried the matter in revision, it came to be allowed by the High Court and it held that
the appellant is not entitled to the exemption. Thus this appeal by special leave.
3. It is seen that the notification clearly mentions that the word ' Papad" has been used
a genus and its species are made from pulses, rice, maida, potato, sago etc. In the
notification the words "Papad and Badi", i.e., Mangori have been used while in entry
No.3 of the notification after the words "letterhead pads" the words "other stationery
articles made of handmade paper" have been used meaning thereby that entry No.3 is
not restricted to only invitation cards, envelopes, file covers, letterhead pads but also
includes other stationery articles made of handmade paper. The question is: whether
the ingredients of Papad are exclusively composed of pulses or maida or rice, etc.?
When the notification mentions Papad and Badi, i.e., Mangori it would appear that
they did not intend to differentiate between gole or flat Papad made of any ingredient.
4. Under those circumstances it appears that the interpretation given by the High
Court is not correct and that of the Tribunal is correct.
17. The contention of the State that the issue as to whether the Fryums is Pappad or not is covered
by the judgment of the Supreme Court in TTK Health Care case reported in 2007 11 SCC 796
cannot be acceptable. In the said case, the Hon'ble Supreme Court has examined whether the
Fryums are cooked food or not?. The Assessing Authority held that the Fryums are not cooked
food. On an appeal, the Mahdhya Pradesh High Court held that the Fryums are cooked food and
liable to be taxed under Entry 4 of Part-I of Schedule-I of Madhya Pradesh Sales Tax Act. On an
appeal filed by the Commissioner of Commercial Taxes, the Hon'ble Supreme Court examined the
matter and held as under in paragraphs 3, 5 and 12 of the judgment:
3. On 12.3.1996 the Assistant Commissioner, Indore, assessed sale of "fryums" at 8% sales tax
under the residuary entry referred to above. He demanded tax of Rs.1.33 lakhs (rounded off) for
Assessment Year 1.4.1992 to 31.3.1993. The Commissioner of Commercial Tax, in an application
made under Section 68 of the 1994 Act held that "fryums" were neither namkeen nor "cooked
food" nor "papad" nor "cereals"
and therefore, they were taxable under the above residual entry of Part VII of Schedule II of the
1994 Act. On 20.6.1997 the appellate authority dismissed the appeal. The matter was carried in
revision.
The revision was also dismissed.
5. Aggrieved by the aforestated decision in respect of the above two years the assessee moved the
Madhya Pradesh High Court in writ petition under Articles 226/227 of the Constitution praying
for a declaration that "fryums" be held as "cooked food" liable to tax under Entry IV of Part I of
Schedule II of the 1958 Act corresponding to Entry 2 of Part I of Schedule II of the 1994 Act.
After hearing both the parties the learned Single Judge came to the conclusion that "fryums" are
"cooked food" liable to be assessed under Entry 2, Part I of Schedule II to the 1994 Act.
12. In the present case we have quoted the definition of term "cooked food". It is an inclusive
definition. It includes sweets, batasha, mishri, shrikhand, rabari, doodhpak, tea and coffee but
excludes ice cream, kulfi, ice candy, cakes, pastries, biscuits, chocolates, toffees, lozenges and
mawa. That the item "cooked food" is inclusive definition which indicates by illustration what the
legislature intended to mean when it has used the term "cooked food". Reading of the above
inclusive part of the definition shows that only consumables are sought to be included in the term
"cooked food". In the case of "fryums" there is no dispute that the dought/base is a semi-food.
There is also no doubt that in the case of "fryums" a further cooking process was required. It is
not in dispute that the "fryums" came in plastic bags. These "fryums" were required to be fried
depending on the taste of the consumer. In the circumstances we are of the view that "fryums"
were like seviyan. "Fryums" were required to be fried in edible oil. That oil had to be heated.
There was certain process required to be applied before "fryums" become consumable. In these
circumstances the item "fryums" in the present case will not fall within the term "cooked food"
under Item 2, Part I of Schedule II to the 1994 Act. It will fall under the residuary item "all other
goods not included in any part of Schedule I"
18. In the said judgment, the Hon'ble Supreme Court has not declared that the Fryums are not
the Pappad. On the other hand, the judgment of the SHIVASHAKTHI GOLD FINGER covers the
issue. The Hon'ble Supreme Court clearly held that the shape of the Pappad is not a relevant
consideration when the ingredients are the same. In view of the authoritative pronouncement of
the Hon'ble Supreme Court, we find that there is no infirmity or irregularity in the order passed
by the Karnataka Appellate Tribunal. The petitioners have not made out a case to interfere with
the order passed by the Karnataka Appellate Tribunal. Issues framed in these revision petitions
are held in favour of the assessees. Accordingly, all the revision petitions are dismissed.
Sd/JUDGE Sd/JUDGE mpk/-*
Cites 11 docs [View All]
the Central Sales Tax Act, 1956
The Bihar Value Added Tax Act, 2005
Section 4(1) in the Central Sales Tax Act, 1956
Section 4 in The Bihar Value Added Tax Act, 2005
Section 39(1) in The Bihar Value Added Tax Act, 2005
Mobile View
Upto 25% off on Air Fares
Get Super Low Fares On Dom Flights Offer Valid Till 26 Jan. Book Now!
Get this document in PDF Print it on a file/printer View the actual judgment from court
User Queries
Karnataka High Court
entry tax
State Of Karnataka vs M/S.Vasavamba Stores on 5 October, 2012
VAT
Author: K.Sreedhar Rao B.Manohar
kvat act doctypes: judgments non
filing of returns
entry tax doctypes: karnataka
1
vat doctypes:judgments
handmade or not
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
vat doctypes: karnataka
kvat act doctypes:judgments
DATED THIS THE 5TH DAY OF OCTOBER 2012
advance ruling
kvat doctypes:judgments
PRESENT
308 fromdate: 112012 todate: 31
122012
THE HON'BLE MR. JUSTICE K.SREEDHAR RAO
vat
entry tax
AND
entry tax doctypes:judgments
kvat act
THE HON'BLE MR. JUSTICE B.MANOHAR
338
karnataka sales tax act
STRP.NO.6/2011 & STRP.NOS.29 - 63/2011
C/W.STRP.NO.73/2011 & STRP.NOS.170 - 192/2011
STRP.NO.89/2009
BETWEEN :
STATE OF KARNATAKA
REPRSENTED BY THE
COMMISSIONER OF COMMERCIAL TAXES,
GANDHINAGAR,
...PETITIONER
(BY SMT.S.SUJATHA, AGA )
AND:
M/S.VASAVAMBA STORES,
NO.269, OLD TARAGPET
BANGALORE-560 002.
cst
slp doctypes: karnataka
STRP.NO.6/2011 & STRP.NOS.29 - 63/2011
BANGALORE - 560 009.
KVAT
...RESPONDENT
(BY SRI.T.K.VEDAMURTHY, SR COUNSEL FOR K.J.KAMATH)
STRP FILED UNDER SEC.65(1) OF KARNATAKA
VALUE ADDED TAX, 1957, AGAINST THE JUDGMENT
DATED 20.04.2010 PASSED IN STA.NO.1828/2009 TO 1863/2009
2
ON THE FILE OF THE KARNATAKA APPELLATE TRIBUNAL,
BANGALORE, ALLOWING THE APPEALS.
STRP.NO.73/2011 & STRP.NOS.170 - 192/2011
BETWEEN :
STATE OF KARNATAKA
BY THE SECRETARY,
FINANCE DEPARTMENT,
VIDHANA SOUTHA,
BANGALORE 560 001.
...PETITIONER
(BY SMT.S.SUJATHA, AGA)
AND :
M/S NATHANI ENTERPRISES
83/9, OLD THARAGUPET CROSS
BANGALORE-560 053.
...RESPONDENT
(BY SRI.T.K.VEDAMURTHY, SR COUNSEL FOR K.J.KAMATH)
STRP FILED U/S.65(1) OF KVAT ACT, AGAINST THE
JUDGMENT AND ORDER DATED: 30.03.2010 PASSED IN
STA.NO.1200 TO 1223/2009 ON THE FILE OF THE KARNATAKA
APPELLATE TRIBUNAL, BANGALORE, ALLOWING PETITION.
STRP NO.89/2009
BETWEEN:
STATE OF KARNATAKA,
BY THE COMMISSIONER OF COMMERCIAL TAXES,
VANIJYA THERIGE KARYALAYA,
GANDHINAGAR,
BANGALORE.
...PETITIONER
(BY SMT.S.SUJATHA, AGA)
3
AND :
M/S.TTK HEALTHCARE LIMITED
NO.17, 3RD CROSS
LALBAGH ROAD,
BANGALORE.
...RESPONDENT
(BY SRI.T.K.VEDAMURTHY, SR COUNSEL FOR K.J.KAMATH)
STRP FILED UNDER SEC.23(1) OF KARNATAKA SALES TAX
ACT, AGAINST THE JUDGMENT AND ORDER DATED: 30.10.2008
PASSED IN STA.NO.204 TO 208, 304 TO 308, 338 & 339/2008 ON THE
FILE
OF
THE
KARNATAKA APPELLATE
TRIBUNAL,
BANGALORE, PARTLY ALLOWING THE APPEALS, UNDER THE
PROVISIONS OF THE KARNATAKA SALES TAX ACT.
THESE PETITIONS ARE HAVING BEEN HEARD AND
RESERVED AND COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, B.MANOHAR.J MADE THE FOLLOWING:
ORDER
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 399/2008; order dated 20-04-2010 made in STA Nos.1828-1863/2009 and order
dated 30-03-2010 made in STA Nos.1200-1223/2009 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 KVAT Act'), holding that Fryums sold by the assessee is not Pappad.
2. 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 I Schedule to the
KVAT Act, all these petitions are clubbed together and disposed off by this common order.
3. The respondents-assessees are the registered dealers under the provisions of the KVAT Act and
the assessee in STA No.89/2009 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.
4. The Hon'ble Supreme Court in SHIVASHAKTHI GOLD FINGER v/s ASSISTANT
COMMISSIONER, COMMERCIAL TAXES, JAIPUR reported in (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.
5. 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.
6. The assessees, being aggrieved by the order passed by the First Appellate Authority have filed
the appeals in STA Nos.1828-1863/2009; STA Nos.1200-1223/2009 and STA Nos.204 to 208,
304 to 308, 338 and 399/2008 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 SHIVASHAKTHI GOLD FINGER case
(cited supra). The Fryums contain all the ingredients of Pappad, but smaller in size and different
shapes like mini checks, buttons, short tubes, O Rings, stars and mini wheels. It is semi-cooked
food. The Fryums are required to be fried in the edible oil. It cannot be treated as Sandige, since
the Sandige has different shapes and size and contain different combination of pulses. It is hard
to eat and not like that of the Pappad. The Appellate Tribunal relying upon the order made in STA
Nos.204- 208/2008 and other connected matters disposed of on 30 th October 2008 allowed the
appeals and directed to refund the penalty as well as the interest amount recovered from the
assessees. The Appellate Tribunal held that Fryums also come within the purview of Pappad,
which falls under Entry 40 of the First Schedule and it is exempted from tax. Being aggrieved by
the order passed by the Karnataka Appellate Tribunal, the State has preferred these revision
petitions.
7. In STRP No.89/2009, the order made in STA Nos.204-208/2008 and other connected matters
disposed off by the Karnataka Appellate Tribunal on 30th October 2008 is challenged for the
assessment years 1999-2000 to 2003-2004 under the Karnataka Sales Tax Act. The assessee is
the company incorporated under the Companies Act and also registered under the KST, CST and
KTEG Act. The assessee is engaged in the manufacturing of food products and Fryums at
industrial area situated at Hosakote, Bangalore District. On verification of the books of accounts
of the said company on 07-10-2006, it was noticed that the assessee is manufacturing 'Ready to
fry Snack Pallet', which was named as Pappad mainly made of maida, starch, flavours, potato
powder and other ingredients and it is named as Fryums and not Pappad. The assessee has paid
tax at the rate of 1% whereas he was liable to pay tax at the rate of 10%. Accordingly, issued notice
under Section 12-A(1) of the Karnataka Sales Tax Act for the assessment months from assessment
years 1999- 2000 to 2003-2004.
8. The assessee failed to file their objections to the said proceedings. Accordingly, the Assessing
Authority passed an order on 07-11-2011 and issued demand notice to pay tax with penalty and
interest. Being aggrieved by the said order, the assessee preferred an appeal before the First
Appellate Authority under Section 20 of the KST Act. The First Appellate Authority after
considering the matter in detail dismissed the appeal confirming the order passed by the
Assessing Authority. Being aggrieved by the same, the assessee preferred appeals before the KAT
in STA Nos.204-208/2008 and other connected appeals contending that no opportunity has been
given to the assessee to defend the case. Further in view of the judgment in SHIVASHAKTHI
GOLD FINGER case, the shapes and size cannot be taken into consideration. Hence, the Fryums
are the Pappad and the issue raised is covered by the said judgment and sought for allowing the
same by setting aside the order passed by the First Appellate Authority as well as the Assessing
Authority.
9. The Karnataka Appellate Tribunal after considering the matter in detail, by its order dated
30th October 2008 allowed the appeals in part setting aside the reassessment order as well as the
order passed by the First Appellate Authority and remanded the matter to the Assessing
Authority with a direction to pass fresh reassessment order in accordance with law after giving
opportunity to the assessee. The Karnataka Appellate Tribunal allowed the other two appeals
filed by the assessees on the basis of the order made in STA Nos.204-208/2008 and other
connected cases. When the said order has been passed by the Karnataka Appellate Tribunal, the
order made in STA Nos.204-208/2008 is pending consideration before this Court. The State
Government filed these revision petitions with the following substantial question of law:
a) Whether, on facts and circumstances of the case, can it be held that the orders dated
30-10-2008, 30-03-2010 and 20-04-2010 passed by the Karnataka Appellate Tribunal
allowing the appeals is correct and in accordance with law?
b) Whether, on the facts and circumstances of the case, the Karnataka Appellate
Tribunal is justified in holding that the Fryums was Pappad in the light of the Apex
Court judgment wherein Fryums was held not to be Pappad.?
10. Smt.S.Sujatha, learned Additional Government Advocate appearing for the State Government
contended that the order passed by the Karnataka Appellate Tribunal is contrary to law and error
apparent on the face of the record. The State Government with a view to encourage cottage
industries has given exemption of tax to Happala in Kannada which is also known as Pappad. The
Pappad or Happala has definite shape and taste and it was made of different cereals and also rice
and Jack fruits. The products manufactured and sold by the assessees cannot be treated as
Pappad. In fact, the assessee in STRP No.89/2009 earlier filed an application before the
Authority for Clarification and Advance Ruling under Section 60 of the KVAT Act seeking
clarification with regard to the rate of tax on Fryums. He also contended that the Fryums falls
under Entry 40 of the First Schedule to the Act.
11. The Advance Ruling Committee after considering the matter held that Fryums cannot be
treated as Pappad and it falls under the Residuary clause and by its order dated 30-3-2007 held
that the assessees had to pay tax at the rate of 12.5% under Section 4(1)(b) of the Act. Being
aggrieved by the order passed by the ACAR, the assessees have filed STA No.11/2007 before this
challenging the order dated 30-3-2007 passed by the ACAR. The Division Bench of this Court
dismissed the said appeal holding that the eatable commodity manufactured by the assessees fall
under Section 4(1)(b) of the Act and liable to pay tax at the rate of 12.5%. The order passed by the
Division Bench of this court has been questioned in SLP No.450/2008 before the Hon'ble
Supreme Court. Subsequently, the said SLP was withdrawn with liberty to move the Assessing
Authority under Section 60 of the KVAT Act. Since the order passed by this court has become
final, it is not open to the Karnataka Appellate Tribunal to hold that Fryums are the pappad and it
is exempted from the tax. Further, Hon'ble Supreme Court in a judgment reported in (2007) 11
SCC 796 in the case of COMMISSIONER OF COMMERCIAL TAXES, INDORE v/s T.T.K.
HEALTH CARE LIMITED has held that Fryums are the semi- cooked food and it cannot be
treated as cooked food and set aside the order passed by the Madhya Pradesh High Court and
restored the order passed by the Assessing Authority, wherein the Assessing Authority held that
the Fryums were neither namkin nor cooked food nor pappad nor cereals, therefore, they are
taxable under the Residuary entry. In view of the said order, the order passed by the Karnataka
Appellate Tribunal cannot be sustained and sought for allowing the revision petitions restoring
the order passed by the First Appellate Authority.
12. On the other hand, Sri.N.Venkataraman, learned Senior Counsel appearing for Sri.K.J.Kamat
and Sri.T.N.Keshava Murthy appearing for the assessees argued in support of the order passed by
the KAT and contended that after lapse of 8 years, the proceedings are initiated for reassessment
which is barred by limitation. The assessees have not suppressed anything and they have paid the
tax at the rate of 1% and reiterated the contentions taken before the First Appellate Authority as
well as the Assessing Authority. Further contended that the issues raised in these revision
petitions are covered by SHIVASHAKTHI GOLD FINGER case, wherein the Hon'ble Supreme
Court 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., has to be treated as Pappad and entitled for
exemption. Further, the order passed by the Division Bench of this court in STA No.11/2007 is
not binding on the respondents-assessees. Liberty has been reserved to reagitate the matter
under Section 60 of the KVAT Act, since the State Government itself has extended the benefit of
tax exemption to the Sandige by amending Act No.6 of 2007. Since, the assessees have not
collected the tax from the customers, the question of paying tax at the rate of 12.5% does not arise
and sought for dismissing the revision petitions.
13. We have carefully considered the arguments addressed by the learned counsel for the parties
and perused the orders passed by the Karnataka Appellate Tribunal, First Appellate Authority as
well as Assessing Authority.
14. The records clearly disclose that the assessee in STRP Nos. 6 & 29-63 and STRP 73 & 170192/2001 are the dealers in the commodity in question known as Fryums. The respondent in
STRP No.89/2009 is the manufacturer and dealer of the food articles popularly known as
Fryums. The commodity manufactured by the assessee was taxed at 2% as Pappad under KST
and CST Acts. After coming into force of KVAT Act, the pappad was brought under Entry No.40
of the First Schedule to the Act. Further, the respondent/assessee i.e. M/s. TTK Health Care filed
an application before the Advance Ruling Committee under Section 60 of the KVAT Act seeking
for clarification with regard to the rate of tax in respect of the Fryums manufactured by the
assessees. The Advance Ruling Committee by its order dated 30-3-2007 held that the Fryums
cannot be treated as Pappad, which falls under Entry 40 of the First Schedule to the Act. The
shape, taste and ingredients of the Fryums are nothing but Sandige and falls under Section 4(1)
(b) of the KVAT Act and are liable to pay tax at the rate of 12.5%. Being aggrieved by the order
passed by the Advance Ruling Committed, M/s. TTK Health Care Limited who is the respondent
in STRP No.89/2009 filed STA No.11/2007 before this Court. The Division Bench of this court
dismissed the appeal confirming the order passed by the Advance Ruling Authority. Being
aggrieved by the said order, a Special Leave Petition in SLP No. 450/2008 was filed before the
Hon'ble Supreme Court. Subsequently, the said SLP was withdrawn with liberty to agitate the
matter before the Assessing Authority in view of the amendment brought in by Act No.6 of 2007
to the KVAT Act.
15. It appears that, subsequent to the order passed by the Advance Ruling Authority, the
Assessing Authority initiated proceedings of reassessment under Section 39(1) of the KVAT Act
and under Section 12A(1) of the Karnataka Sales Tax Act and has passed an order holding that the
assessees are liable to pay tax under Section 4(1)(b) of the Act. The appeal filed by the assessees
before the First Appellate Authority against the order passed by the Assessing Authority was
dismissed and thereafter the appeals were filed before the Karnataka Appellate Tribunal. The
Karnataka Appellate Tribunal allowed the said appeals holding that the Fryums are pappad falls
under Entry 40 of the First Schedule to the Act and exempted from payment of tax. Being
aggrieved by the same, the above revision petitions are filed.
16. The main contention urged by the Revenue is that the Fryums are not Pappad. It falls under
the Residuary entry under Section 4(1)(b) of the KVAT Act. Further the Hon'ble Supreme Court
in a judgment reported in (2007) 11 SCC 796 cited supra, has held that the Fryums are not
Pappad. Hence, they are liable to pay higher tax. The issue is fully covered by the judgment of the
Hon'ble Supreme Court. On the other hand, the respondents-assessees contended that the
Fryums are the smaller size of the Pappad. It was made in different size and type in order to
attract the customers. The Fryums contain all the ingredients of Pappad and is of the same taste.
However, it was made in different sizes and shapes, such as mini checks, buttons, short tubes, O
Rings, stars and mini wheels. It is the semi-cooked food and it has to be deeply fried in the edible
oil. Then only it can be eaten. Further Pappad can be used by deep frying as well as by flame
frying. Further the Hon'ble Supreme Court in a judgment reported in SHIVASHAKTHI GOLD
FINGER case has clearly held that all varieties of the Pappad whether they are circular or flat in
shape consisting of all ingredients whether it is pulse, rice, maida etc., entitled for exemption. The
Hon'ble Supreme Court examined the matter under Rajastan Sales Act, whether Gole Pappad
manufactured out of maida, salt and starch are the Pappad or not. The Hon'ble Supreme Court
clearly held that size or shape is irrelevant. The pappad of all shapes and sizes are covered under
the Entry "Pappad". Paragraphs 2 to 4 of the judgment reads as under:
2. The respondent State exercising the power under Section 4(2) of the Rajasthan
Sales Tax Act, 1954 (29 of 1954), (for short, 'the Act') by a notification dated 9.3.1970
had exempted Papad and Badi, i.e., Mangori from sales tax. When the appellant made
an application for exemption of Gole Papad manufactured out of Maida, Salt Starch,
Papad Soda, Alum and food colour from sales tax under the above notification, the
Additional Commissioner by proceedings dated 27-8-1982 held that Gole Papad was
not covered by the notification. When the appeal came to be filed, the Sales Tax
Tribunal by its order dated 17-3-1986 allowed the appeal and held that the notification
would govern all varieties of Papad, whether they are circular or flat in shape
consisting of all the ingredients whether it is pulses, rice, maida, etc. when the State
carried the matter in revision, it came to be allowed by the High Court and it held that
the appellant is not entitled to the exemption. Thus this appeal by special leave.
3. It is seen that the notification clearly mentions that the word ' Papad" has been used
a genus and its species are made from pulses, rice, maida, potato, sago etc. In the
notification the words "Papad and Badi", i.e., Mangori have been used while in entry
No.3 of the notification after the words "letterhead pads" the words "other stationery
articles made of handmade paper" have been used meaning thereby that entry No.3 is
not restricted to only invitation cards, envelopes, file covers, letterhead pads but also
includes other stationery articles made of handmade paper. The question is: whether
the ingredients of Papad are exclusively composed of pulses or maida or rice, etc.?
When the notification mentions Papad and Badi, i.e., Mangori it would appear that
they did not intend to differentiate between gole or flat Papad made of any ingredient.
4. Under those circumstances it appears that the interpretation given by the High
Court is not correct and that of the Tribunal is correct.
17. The contention of the State that the issue as to whether the Fryums is Pappad or not is covered
by the judgment of the Supreme Court in TTK Health Care case reported in 2007 11 SCC 796
cannot be acceptable. In the said case, the Hon'ble Supreme Court has examined whether the
Fryums are cooked food or not?. The Assessing Authority held that the Fryums are not cooked
food. On an appeal, the Mahdhya Pradesh High Court held that the Fryums are cooked food and
liable to be taxed under Entry 4 of Part-I of Schedule-I of Madhya Pradesh Sales Tax Act. On an
appeal filed by the Commissioner of Commercial Taxes, the Hon'ble Supreme Court examined the
matter and held as under in paragraphs 3, 5 and 12 of the judgment:
3. On 12.3.1996 the Assistant Commissioner, Indore, assessed sale of "fryums" at 8% sales tax
under the residuary entry referred to above. He demanded tax of Rs.1.33 lakhs (rounded off) for
Assessment Year 1.4.1992 to 31.3.1993. The Commissioner of Commercial Tax, in an application
made under Section 68 of the 1994 Act held that "fryums" were neither namkeen nor "cooked
food" nor "papad" nor "cereals"
and therefore, they were taxable under the above residual entry of Part VII of Schedule II of the
1994 Act. On 20.6.1997 the appellate authority dismissed the appeal. The matter was carried in
revision.
The revision was also dismissed.
5. Aggrieved by the aforestated decision in respect of the above two years the assessee moved the
Madhya Pradesh High Court in writ petition under Articles 226/227 of the Constitution praying
for a declaration that "fryums" be held as "cooked food" liable to tax under Entry IV of Part I of
Schedule II of the 1958 Act corresponding to Entry 2 of Part I of Schedule II of the 1994 Act.
After hearing both the parties the learned Single Judge came to the conclusion that "fryums" are
"cooked food" liable to be assessed under Entry 2, Part I of Schedule II to the 1994 Act.
12. In the present case we have quoted the definition of term "cooked food". It is an inclusive
definition. It includes sweets, batasha, mishri, shrikhand, rabari, doodhpak, tea and coffee but
excludes ice cream, kulfi, ice candy, cakes, pastries, biscuits, chocolates, toffees, lozenges and
mawa. That the item "cooked food" is inclusive definition which indicates by illustration what the
legislature intended to mean when it has used the term "cooked food". Reading of the above
inclusive part of the definition shows that only consumables are sought to be included in the term
"cooked food". In the case of "fryums" there is no dispute that the dought/base is a semi-food.
There is also no doubt that in the case of "fryums" a further cooking process was required. It is
not in dispute that the "fryums" came in plastic bags. These "fryums" were required to be fried
depending on the taste of the consumer. In the circumstances we are of the view that "fryums"
were like seviyan. "Fryums" were required to be fried in edible oil. That oil had to be heated.
There was certain process required to be applied before "fryums" become consumable. In these
circumstances the item "fryums" in the present case will not fall within the term "cooked food"
under Item 2, Part I of Schedule II to the 1994 Act. It will fall under the residuary item "all other
goods not included in any part of Schedule I"
18. In the said judgment, the Hon'ble Supreme Court has not declared that the Fryums are not
the Pappad. On the other hand, the judgment of the SHIVASHAKTHI GOLD FINGER covers the
issue. The Hon'ble Supreme Court clearly held that the shape of the Pappad is not a relevant
consideration when the ingredients are the same. In view of the authoritative pronouncement of
the Hon'ble Supreme Court, we find that there is no infirmity or irregularity in the order passed
by the Karnataka Appellate Tribunal. The petitioners have not made out a case to interfere with
the order passed by the Karnataka Appellate Tribunal. Issues framed in these revision petitions
are held in favour of the assessees. Accordingly, all the revision petitions are dismissed.
Sd/JUDGE Sd/JUDGE mpk/-*
