2018 (3) TMI 1326 - HC - VAT and Sales Tax

Court upholds tax assessment for Samosa as cooked food, not sweets/namkeen. Legal questions not substantial.

Sarva Shri Neeraj Misthan Bhandar Versus The Commissioner, Commercial Tax, Uttarakhand

The court upheld the tax assessment of Samosa at 8% for the initial period and 4% for the subsequent period. It determined that Samosa qualifies as cooked ... Rate of tax - samosa - whether the rate of tax on Samosa should be 8% or 5%? - Held that: - the legislative intention is clearly to tax cooked food on the one hand and sweetmeats and namkeen as different items. Cooked food is taxed at a higher rate under the statute in question, as compared to sweetmeats and namkeen. There cannot be any generalization and the Court would necessarily have to find assistance of the statute, in question - samosa is certainly cooked food and since it satisfies requirement of cooked food otherwise in a broad sense and since the other alternative is to tax it under namkeen which does not appeal to us, in the absence of any material or finding in the orders, we are inclined to not overturn the order of the authorities, as confirmed by the Tribunal which is undoubtedly the fact finding authority as samosas are to be taxed at the rate of 8% for the first six months and, for the next six months, at the rate of 4%, on the basis that cooked food under the VAT Act attracted 4% - decided in favor of Revenue. When this Court is called upon to decide the matter in terms of the substantial question of law, it has to decide the question as to what the law is and not on the basis of the treatment accorded to another dealer. There can be no scope for such consideration in revision which can be maintained only on the basis of substantial question of law. Revision dismissed. Issues Involved:1. Justification of statements made by the son of the proprietor.2. Determination of the tax rate for Samosa.3. Consistency in tax standards for adjacent shops.Issue-wise Detailed Analysis:1. Justification of Statements Made by the Son of the Proprietor:The revisionist questioned whether the statements made by the son of the proprietor, rather than an employee, were justified. The court concluded that this issue does not constitute a substantial question of law. Therefore, it was not treated as a question of law.2. Determination of the Tax Rate for Samosa:The primary contention was whether Samosa should be taxed at 8% as 'cooked food' or at 5% under the entry of 'Sweets and Namkeen.' The revisionist argued that Samosa should be taxed at 5%, similar to sweets and namkeen, based on common parlance and understanding. The State representative countered that Samosa, unlike namkeen, has a shorter shelf-life and should be consumed immediately, qualifying it as cooked food.The court examined various precedents and legislative entries. Under the U.P. Trade Tax Act, 'cooked food' attracted an 8% tax, while 'sweets and namkeen' attracted a 5% tax. Under the VAT Act, 'cooked food' initially attracted 4%, and later Samosa was taxed at 4%. The court referred to several judgments, including:- Annapurna Biscuit Manufacturing Co. Vs. Commissioner of Sales Tax, U.P., Lucknow: Biscuits were not considered cooked food.- Commissioner of Commercial Tax, Indore Vs. T.T.K. Health Care Ltd.: Fryums were not considered cooked food as they required further cooking.- Commissioner of Trade Tax Uttar Pradesh vs. Associated Distributors Limited: Bubblegum was not considered sweetmeat.The court concluded that Samosa, being ready to eat without further cooking, qualifies as cooked food. It was noted that Samosa is not similar to namkeen, which has a longer shelf-life and is often consumed over a longer period. Therefore, Samosa was to be taxed at 8% for the first six months and 4% for the subsequent six months under the VAT Act.3. Consistency in Tax Standards for Adjacent Shops:The revisionist argued that the tax authorities applied different standards to adjacent shops, which was unjust. The court held that this issue does not raise a substantial question of law. The court emphasized that tax treatment accorded to another dealer cannot influence the legal interpretation of the tax entry. The court must decide based on the substantial question of law, not on the treatment of other dealers.Conclusion:The court dismissed the revisions, upholding the tax assessment of Samosa at 8% for the first period and 4% for the subsequent period. The court found no merit in the arguments regarding the statements made by the son of the proprietor or the inconsistency in tax standards for adjacent shops. The revisions were dismissed without any order as to costs.