2019 (3) TMI 1817 - HC - VAT and Sales Tax

'Frooti' Taxable as Non-Alcoholic Beverage under Chhattisgarh Entry Tax Act

Parle Agro Pvt. Ltd., Mr. Praveen Shrivastava S/o Shri NS Shrivastava Aged Versus Commercial Tax Officer Circle - V, Raipur, (6) Chhattisgarh., Deputy Commissioner (Revision), The Commissioner Of Commercial Tax, State Of Chhattisgarh Through Secretary

The Court held that 'Frooti' is taxable under Entry 14 of Schedule II of the Chhattisgarh Entry Tax Act, 1976 at a rate of 2%. The appeal was dismissed, ... Classification of goods - taxability - widely known drink 'Frooti' - inclusion under Entry 14 of Schedule II of the Chhattisgarh Entry Tax Act, 1976 at the rate of 2% or not? - HELD THAT:- The Court is not moved or impressed by looking into those entries under those legislations because interpretation is required to be given in relation to the legislation which is subject matter of adjudication and/or interpretation before the Court - Merely because the Legislature did not show fruit juices as a separate Entry or have not mentioned the word 'including fruit juices' in Entry 14 of Schedule-II of the Act, 1976, it does not mean that 'Frooti' ceases to be a non-alcoholic drink or a beverage. The Entry existing in the Act, 1976 as it stands today, in our opinion will also encompass fruit juices like 'Frooti' under Entry 14 and it has to be taxed at the rate indicated in the said Entry. The learned Single Judge has rightly taken note of judicial precedents as well as the principle of such interpretation and has rightly come to a conclusion that only items or goods which cannot be fitted into the broad entries into the schedule of the taxing statute or definition, is required to be taken to the residuary entry or else it is the duty of the Court as also should be to endeavor to read such goods into the broad entries which has been provided by the Legislatures in the taxing Schedule - Entry 14 of Schedule-II of the Act, 1976 as it stands today will also include drinks like 'Frooti' and it is not required to be taken to the Residuary Entry on the argument that it is a fruit product. Further, any reliance placed on the Fruit Products Order, 1955 would be required to be understood within the ambit and object of such legislation. Since the interpretation is in relation to a taxing statute vis-a-vis an Entry therein, even though other legislations or similar legislations could have shown fruit juices by name in a particular entry, non mention of the same will in no manner can compel this Court to accept the line of argument of the Appellants that 'Frooti' by virtue of being a fruit product is not required to be treated as a non-alcoholic drink or beverage. Appeal has no merit and is dismissed - decided against appellant. Issues Involved:1. Taxability of 'Frooti' under the Chhattisgarh Entry Tax Act, 1976.2. Classification of 'Frooti' under Entry 14 of Schedule II versus the Residuary Entry.3. Interpretation of tariff entries in tax statutes.4. Applicability of the Fruit Products Order, 1955 in determining the taxability of 'Frooti'.Issue-wise Detailed Analysis:1. Taxability of 'Frooti' under the Chhattisgarh Entry Tax Act, 1976:The primary issue was whether 'Frooti,' a fruit drink manufactured by the Appellant-Company, should be taxed under Entry 14 of Schedule II of the Chhattisgarh Entry Tax Act, 1976 at the rate of 2%, or under the Residuary Entry at 1%. The Assessing Authority had included 'Frooti' under Entry 14, which was contested by the Appellants.2. Classification of 'Frooti' under Entry 14 of Schedule II versus the Residuary Entry:The Appellants argued that 'Frooti' being a fruit product should fall under the Residuary Entry and be taxed at 1%. The learned Single Judge examined whether 'Frooti' could be classified under Entry 14, which includes 'All kinds of non-alcoholic drinks and beverages, ice-cream, kulfi and ice candy' taxed at 2%. The Court referred to various judicial precedents, emphasizing that only items that cannot be classified under any specific entry should be placed under the Residuary Entry.3. Interpretation of tariff entries in tax statutes:The judgment cited several Supreme Court cases to outline principles for interpreting tariff entries. The Court highlighted the importance of classifying goods under specific entries unless it is impossible to do so. The burden of proof lies on the Revenue to establish that a product falls under a specific entry. The Court reiterated that if two views are possible, the one favoring the assessee should be adopted.4. Applicability of the Fruit Products Order, 1955 in determining the taxability of 'Frooti':The Appellants referenced the Fruit Products Order, 1955, arguing that 'Frooti' should be classified as a fruit product. However, the Court was not persuaded by this argument, stating that interpretation should be based on the specific legislation in question. The Court noted that the absence of 'fruit juices' in Entry 14 does not exclude 'Frooti' from being classified as a non-alcoholic drink or beverage.Conclusion:The Court concluded that 'Frooti' falls under Entry 14 of Schedule II of the Act, 1976, and should be taxed at 2%. The learned Single Judge's interpretation was upheld, emphasizing that 'Frooti' is a non-alcoholic drink or beverage and does not belong in the Residuary Entry. The appeal was dismissed, affirming the taxability of 'Frooti' under Entry 14.Final Judgment:The appeal was dismissed, and the impugned judgment was upheld, confirming that 'Frooti' is taxable under Entry 14 of Schedule II of the Chhattisgarh Entry Tax Act, 1976 at the rate of 2%. The Court found no merit in the Appellants' arguments and affirmed the learned Single Judge's reasoning and interpretation.