2014 (3) TMI 80 - HC - VAT and Sales Tax

High Court affirms Tribunal's decision classifying 'ToxiwinES' as poultry feed under VAT Act; State's appeal dismissed.

The High Court upheld the Tribunal's decision, affirming the classification of the product 'ToxiwinES' as poultry feed under Entry 48 of the Gujarat Value ... Classification of goods - Whether the product manufactured and marketed by the respondentassessee in the name of “ToxiwinES” would fall under Entry 48 Schedule I as a “Poultry Feed” or under Entry 51 Schedule II as “Minerals and Ores” - Held that:- the product in question was a 'poultry feed' and would fall under Entry 48 of Schedule I. It may be that one of the main ingredients of the product was 'Zeolite', which itself was an ore. Nevertheless, many processes were undertaken before the final product comes into existence and the same was prepared solely for the purpose of using the same as animal feed. This is clear from the voluminous record. As pointed out by the assessee, after extracting the 'Zeolite' from the mines, the same is subjected to detailed procedure for removing the impurities and separating the pure material. The same is also subjected to grinding and pulverizing and various additives such as Protein, Minerals, Vitamins, Amino acids, etc. are added. By no stretch of imagination, it can be said that the product remained in original form of 'Zeolite', which by itself is an ore. An attempt on the part of the State to bring the product within Entry 51 as “Minerals and Ores” simply cannot be accepted - Decided against Revenue. Issues:1. Interpretation of entry 48 of Schedule I and entry 51 of Schedule II of the Gujarat Value Added Tax Act, 2003.2. Classification of the product 'ToxiwinES' as either 'Poultry Feed' under Entry 48 or 'Minerals and Ores' under Entry 51.Issue 1 - Interpretation of Tax Act Entries:The State appealed the Gujarat Value Added Tax Tribunal's judgment, questioning the interpretation of entries in the tax act. The main contention was whether the Tribunal correctly interpreted Entry 48 and Entry 51 of the Gujarat Value Added Tax Act, 2003. The State believed that the product should fall under Entry 51 due to the presence of the mineral 'Zeolite,' while the respondent argued that the product was purely poultry feed, despite Zeolite being a primary ingredient.Issue 2 - Classification of 'ToxiwinES' Product:The core issue revolved around the classification of the product 'ToxiwinES' as either 'Poultry Feed' or 'Minerals and Ores.' The Department argued that Zeolite being the main ingredient should classify it under Entry 51. In contrast, the respondent asserted that after a complex refining process and addition of feed additives, the final product was solely for animal feed purposes, emphasizing its classification as poultry feed under Entry 48.The Tribunal analyzed the manufacturing process and product composition, considering the product's usage, labeling, and certificates provided by the respondent. It noted the inclusion of various feed additives in the product, such as organic acids, minerals, and vitamins. The Tribunal referenced relevant legal judgments and certificates, ultimately concluding that the product qualified as poultry feed under Entry 48 due to its nature as an essential supplement for animal feed, supported by expert opinions and analysis certificates.In its decision, the Tribunal emphasized the extensive processing involved in transforming Zeolite into the final product, tailored specifically for animal feed purposes. The Tribunal highlighted the certifications and analysis reports supporting the product's classification as poultry feed under Entry 48, rejecting the State's attempt to categorize it as minerals and ores under Entry 51. The Tribunal's detailed assessment and reliance on legal precedents and expert opinions led to the dismissal of the Tax Appeal, affirming the product's classification as poultry feed.Therefore, the High Court upheld the Tribunal's decision, emphasizing the comprehensive manufacturing process, product composition, and expert certifications supporting the classification of 'ToxiwinES' as poultry feed under Entry 48 of the Gujarat Value Added Tax Act, dismissing the appeal and related civil application for stay.