Product classification under sales tax depends on specific description and composition, not predominant use or ingredient weight.

Sales tax classification turns on the product's composition and specific tariff description, not its incidental or alternative use. Fat paste cream was treated as a sweet or other food product and placed within entry 7 of the Third Schedule, because its possible use as an ingredient did not remove it from that entry and the brand-name exclusion did not apply. Choco paste was classified under the cocoa-specific entry for chocolates and other food preparations containing cocoa, since cocoa need not be the dominant ingredient and the product contained cocoa powder. The result was different tax treatment for the two products on separate statutory footing.

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Issues: (i) Whether fat paste cream is classifiable as bakery products, sweets, confectionery or other food products under entry 7 of the Third Schedule to the Kerala Value Added Tax Act, or taxable at the higher rate under SRO No. 82/2006. (ii) Whether choco paste is classifiable under entry 7 of the Third Schedule or under entry 19 of SRO No. 82/2006 as a food preparation containing cocoa.

Issue (i): Whether fat paste cream is classifiable as bakery products, sweets, confectionery or other food products under entry 7 of the Third Schedule to the Kerala Value Added Tax Act, or taxable at the higher rate under SRO No. 82/2006.

Analysis: Entry 7 covers unbranded bakery products, sweets, confectionery and other food products. Fat paste cream was found to be essentially a sweet and, in any event, a food product. Its possible use as an ingredient in making ice-cream or toffees did not take it outside the entry, because the nature of use may vary and the product remains capable of direct use by consumers. The exclusion relating to registered brand names did not apply.

Conclusion: Fat paste cream falls under entry 7 of the Third Schedule and is taxable at 4 per cent.

Issue (ii): Whether choco paste is classifiable under entry 7 of the Third Schedule or under entry 19 of SRO No. 82/2006 as a food preparation containing cocoa.

Analysis: Entry 19 specifically covers chocolates and other food preparations containing cocoa, and is an exception to the broader entry 7. Choco paste contained cocoa powder as an ingredient and was also used as a spread and in manufacture of chocolates. The provision does not require cocoa to be the predominant ingredient. The Tribunal's view that cocoa powder was a waste material was rejected.

Conclusion: Choco paste falls under entry 19 of SRO No. 82/2006 and is taxable at 12.5 per cent.

Final Conclusion: The classification was upheld in part and altered in part, resulting in modification of the orders below and revision of the tax treatment of the two products on different footing.

Ratio Decidendi: For sales tax classification, the specific entry governing a product's composition and description prevails over the general entry, and a food product containing cocoa falls within the cocoa-specific entry even if cocoa is not the major ingredient.

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