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of <h1>Court affirms 12.5% tax on Industrial Bakery Margarine under Entry 64 of SRO 82/2006</h1> <h3>Soudamini Sivadas Versus State of Kerala and others</h3> Soudamini Sivadas Versus State of Kerala and others - [2015] 77 VST 1 (Ker) Issues Involved:1. Classification of Industrial Margarine or Bakery Margarine under the Kerala Value Added Tax Act, 2003.2. Applicability of the Harmonised System of Nomenclature (HSN) codes to Margarine.3. Interpretation of statutory provisions and the application of the ejusdem generis principle.4. Validity of Exhibits P1 and P1(a) issued under Section 94 of the KVAT Act.Detailed Analysis:1. Classification of Industrial Margarine or Bakery Margarine:The primary issue was whether Industrial Margarine or Bakery Margarine should be treated as an edible oil under Entry 38(19)(d) of the III Schedule, taxable at 4%, or as Margarine per se under Entry 64 of SRO 82/2006, taxable at 12.5%. The court concluded that Margarine, including Industrial or Bakery Margarine, falls under Entry 64 of SRO 82/2006 and is taxable at 12.5%. The court emphasized that Margarine is a distinct product with its own classification under HSN Code 1517.10, and it should not be classified under the general category of edible oils.2. Applicability of HSN Codes:The appellant argued that Bakery Margarine should be classified under HSN Code 1516, which includes hydrogenated vegetable oils. However, the court noted that HSN Code 1517 specifically includes Margarine, excluding liquid margarine, and thus, Margarine should be classified under this code. The court rejected the argument that Bakery Margarine should fall under HSN Code 1516, emphasizing that Margarine has a specific classification under HSN Code 1517.10.3. Interpretation of Statutory Provisions:The court discussed the principles of statutory interpretation, including the ejusdem generis principle. It highlighted that the principle applies when general words follow specific words in a statute, and the general words should be interpreted in the context of the specific words. However, in this case, the court found that HSN Codes 1516 and 1517 have distinct enumerations, and Margarine is explicitly classified under HSN Code 1517.10. The court emphasized that interpretative aids should not create ambiguities where none exist and that the plain language of the statute should prevail.4. Validity of Exhibits P1 and P1(a):The appellant challenged Exhibits P1 and P1(a) issued under Section 94 of the KVAT Act, arguing that they were ultra vires the issuing authority. The court, however, did not find it necessary to delve into the validity of these exhibits, as the primary issue of classification was resolved based on the statutory provisions and HSN codes.Conclusion:The court dismissed the writ appeal, affirming that Industrial or Bakery Margarine is taxable at 12.5% under Entry 64 of SRO 82/2006, as it falls under HSN Code 1517.10. The court emphasized the importance of adhering to the specific classifications provided in the statutory provisions and HSN codes, and rejected the appellant's arguments for reclassification under a different entry.
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