Processed maize retaining its identity remains within the cereal exemption; seizure and penalty orders were set aside.

Processed maize products that retain the identity of the original commodity without appreciable chemical change remain covered by the entry applicable to that commodity, and sales tax does not attach merely because the goods have been boiled or parched. On the facts, 'makka poha' was treated as a cereal within the exempt schedule entry because no material showed that it had acquired a commercially distinct identity as cornflakes or inferior cornflakes. The seizure, penalty and revisional orders were therefore held unsustainable and were set aside.

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Issues: Whether "makka poha" is a cereal falling under item No. 14 of Schedule I to the West Bengal Sales Tax Act, 1994 and exempt from tax; and whether the seizure and penalty orders treating it as taxable cornflakes of inferior quality were sustainable.

Analysis: The goods were shown to be a product of maize obtained by boiling and parching, without addition of ingredients or appreciable chemical change. The distinction drawn between maize in processed edible form and a separate commercial commodity was tested on the principle that sales tax attaches to distinct commercial commodities and not to mere processing or finishing of the same goods. Applying that principle, the Tribunal held that where the identity of the commodity is retained, a further tax incidence on the processed form is not warranted. The Tribunal also held that the taxing authority had produced no material to establish that "makka poha" had acquired a commercially distinct identity as cornflakes or inferior cornflakes. The exemption entry for cereals was interpreted broadly, and the processed maize product was treated as within that entry.

Conclusion: "Makka poha" was held to be a cereal within item No. 14 of Schedule I and exempt from tax. The seizure and the consequential penalty and revisional orders were held unsustainable and were set aside.

Ratio Decidendi: A processed food product that retains the identity of the original commodity, without appreciable chemical change or proof of a commercially distinct identity, remains taxable or exempt under the entry applicable to that original commodity, and the burden lies on the taxing authority to prove otherwise.

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