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Issues: (i) Whether vermicelli or semiya fell within entry No. 13 of List-C as a cereal and was therefore taxable at 4 per cent; (ii) Whether vermicelli or semiya fell within entry No. 1 of List-C as atta, maida and suji and was therefore taxable at 4 per cent, or was assessable under the residuary entry at 8 per cent.
Issue (i): Whether vermicelli or semiya fell within entry No. 13 of List-C as a cereal and was therefore taxable at 4 per cent.
Analysis: The relevant scheme under section 5(1) of the Orissa Sales Tax Act, together with the notification prescribing the List-C entries, showed that entry No. 13 covered cereals other than the specifically excluded grains. Vermicelli is prepared from maida, which in turn is derived from wheat, but it is a processed article and not a cereal in the sense in which the entry was framed. The grouping of atta, maida and suji in a separate entry and the specific separate treatment of wheat indicated that vermicelli could not be brought within the cereal entry.
Conclusion: Vermicelli was not covered by entry No. 13 and this contention failed.
Issue (ii): Whether vermicelli or semiya fell within entry No. 1 of List-C as atta, maida and suji and was therefore taxable at 4 per cent, or was assessable under the residuary entry at 8 per cent.
Analysis: Applying the commercial parlance test, the decisive question was how the commodity was understood by dealers and consumers. Vermicelli, though made from maida, is a commercially distinct article from maida itself. A dealer dealing in atta, maida and suji would not ordinarily be understood as dealing in vermicelli, and the two are not interchangeable in trade. The article therefore did not answer to the description of atta, maida or suji and was left to the residuary category.
Conclusion: Vermicelli was not covered by entry No. 1 and was taxable under the residuary entry No. 101 at 8 per cent, in favour of the Revenue.
Final Conclusion: The tax assessment was upheld and the writ petition was dismissed because semiya was held to be a commercially distinct commodity falling outside the specific concessional entries in List-C.
Ratio Decidendi: In construing entries in a taxing statute, goods must be understood in commercial parlance, and a processed commodity that is commercially distinct from the raw material from which it is made cannot be treated as identical with that raw material or as falling within a concessional entry meant for it.
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