Revision jurisdiction and goods classification: feed supplement treated under the First Schedule, not the Third Schedule.

Revisional interference under section 64 of the Karnataka Value Added Tax Act is confined to orders that are both erroneous and prejudicial to Revenue; a revision cannot be sustained merely because the revisional authority prefers a different view where the first appellate order follows binding precedent. On classification, di-calcium phosphate (animal feed grade) is treated as a feed supplement used in animal feed manufacture, assessed by common parlance and functional character. Because it is not specifically covered by the Third Schedule entry relied on by Revenue, the First Schedule entry for animal feed and feed supplements applies, and the earlier appellate classification granting exemption was restored.

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Issues: (i) Whether the revisional authority could invoke section 64 of the Karnataka Value Added Tax Act, 2003 to interfere with the first appellate order. (ii) Whether di-calcium phosphate (animal feed grade) falls under the First Schedule as animal feed and feed supplements or under the Third Schedule as phosphinates/phosphonates.

Issue (i): Whether the revisional authority could invoke section 64 of the Karnataka Value Added Tax Act, 2003 to interfere with the first appellate order.

Analysis: The revisional power is available only where the order revised is both erroneous and prejudicial to the interests of the Revenue. The first appellate authority had followed the binding legal position on classification and had granted relief on that basis. Where the appellate order adopts a view supported by binding precedent and there is no misreading of the law, the order cannot be treated as erroneous merely because the revisional authority prefers a different view. Interference under revision on a mere difference of opinion is impermissible.

Conclusion: The revisional authority was not justified in exercising power under section 64, and the revisional order was without jurisdiction.

Issue (ii): Whether di-calcium phosphate (animal feed grade) falls under the First Schedule as animal feed and feed supplements or under the Third Schedule as phosphinates/phosphonates.

Analysis: The product was found to be a feed supplement used only in the manufacture of animal feed and purchased for that specific function. Classification was required to be determined in common parlance and by the functional character of the article. The product was not specifically named in the Third Schedule entry relied upon by the Revenue, and the notification dealing with industrial inputs and packing materials did not fit a product used as an animal feed supplement. The First Schedule entry covering animal feed and feed supplements therefore governed the product, and the contrary view taken in revision resulted from a misreading of the binding classification rulings.

Conclusion: Di-calcium phosphate (animal feed grade) falls under the First Schedule as a feed supplement and not under the Third Schedule.

Final Conclusion: The assessee was entitled to relief, the revisional order was set aside, and the first appellate classification in favour of exemption was restored.

Ratio Decidendi: Revisional interference is impermissible where the appellate order is not both erroneous and prejudicial to revenue, and classification of goods must follow their common parlance and functional identity when the tariff entry does not specifically cover the product.

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