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of <h1>Product classified as rusk under Entry 77B instead of bread under Entry 34, penalty upheld</h1> HC upheld Tribunal's classification of petitioner's product as rusk under Entry 77B of OVAT Act, 2004, instead of bread under Entry 34. Court found the ... Violation of principles of natural justice - passing a non-speaking order without considering the submissions of the Petitioner - classification of product as 'Rusk' under Entry 77B of the Schedule of the OVAT Act, 2004, instead of classifying it as 'Bread (branded or otherwise)' under Entry 34 of Schedule A of the OVAT Act, 2004 - non-consideration of judgment of KESHARWANI ENTERPRISES VERSUS STATE OF CHHATTISGARH AND OTHERS (AND OTHER CASES) [2018 (3) TMI 1683 - CHATTISGARH HIGH COURT] - HELD THAT:- The product in question is essentially bread. However, the Odisha Act provides for two separate entries in respect of bread. When something more is done to it to result in toasted bread, it is included in the separate taxable entry. On perusal of the assessment order, the first appellate order and impugned order we do find there has been different findings on fact regarding the product. However, the Tribunal does not appear to have suffered from any confusion in finding, as the last forum to find on facts that the product is toasted bread. Though entry 77B in Schedule B includes products other than rusk, but given meaning by the entry, of rusk to be hardened bread, the Tribunal cannot be faulted for coming to a finding that petitioner’s product is hardened bread as in toast. It is a clear case of the product of bread having two applicable classifications. The decision in Kesharwani Enterprises is not applicable since the Chhattisgarh Act does not have an entry corresponding to entry 77B in Schedule B. Also, revenue’s submission regarding G. RADHAKRISHNA MURTHI & CO. AND OTHERS VERSUS COMMERCIAL TAX OFFICER-IVB, VIJAYAWADA AND OTHERS (AND OTHER APPEALS AND WRIT PETITION) [1997 (2) TMI 474 - SUPREME COURT], of a distinct and separate product said by the Supreme Court as cannot come within the entry, as cannot be expanded to accommodate it, to be inapplicable because the Odisha Act provides for two separate entries in respect of essentially the same products bread and rusk, the latter being hardened bread as in toast. Conclusion - The product in question is essentially bread. The Tribunal's classification of the product under Entry 77B and imposition of penalty is upheld. There are no substantial question of law to arise from impugned judgment of the Tribunal. The review petition is dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe judgment considered the following core legal questions:a. Whether the Tribunal was justified in passing a non-speaking order without considering the submissions of the PetitionerRs.b. Whether the Tribunal was correct in classifying the product as 'Rusk' under Entry 77B of the Schedule of the OVAT Act, 2004, instead of classifying it as 'Bread (branded or otherwise)' under Entry 34 of Schedule A of the OVAT Act, 2004Rs.c. Whether the Tribunal erred in not considering the judgment of Kesharwani Enterprises vs State of ChhattisgarhRs.d. Whether the Tribunal was correct in imposing a penalty on the PetitionerRs.2. ISSUE-WISE DETAILED ANALYSISIssue a: Non-speaking Order- Relevant legal framework and precedents: The requirement for a speaking order is rooted in principles of natural justice, ensuring that parties understand the basis of the decision.- Court's interpretation and reasoning: The Court did not find merit in the argument that the Tribunal's order was non-speaking, as the Tribunal had provided sufficient reasoning for its decision.- Conclusions: The Court concluded that the Tribunal's order was adequately reasoned and thus not a non-speaking order.Issue b: Classification of Product- Relevant legal framework and precedents: The classification of products under the OVAT Act, 2004, particularly Entries 34 in Schedule A and 77B in Schedule B.- Court's interpretation and reasoning: The Court acknowledged the existence of two separate entries for bread and rusk (hardened bread) and found that the Tribunal correctly classified the product as toasted bread under Entry 77B.- Key evidence and findings: The Court noted conflicting findings from lower authorities but found the Tribunal's classification as toasted bread to be reasonable.- Application of law to facts: The product, being toasted bread, fits within the definition of 'hardened bread' under Entry 77B.- Treatment of competing arguments: The Court rejected the Petitioner's argument that the product should be classified under Entry 34 as bread.- Conclusions: The classification under Entry 77B was upheld.Issue c: Consideration of Kesharwani Enterprises Judgment- Relevant legal framework and precedents: The applicability of the Kesharwani Enterprises judgment to the present case.- Court's interpretation and reasoning: The Court found that the Kesharwani Enterprises judgment was not applicable due to differences in the legislative framework between the Chhattisgarh and Odisha VAT Acts.- Conclusions: The Court concluded that the Tribunal was correct in not applying the Kesharwani Enterprises judgment.Issue d: Imposition of Penalty- Relevant legal framework and precedents: The provisions for penalty under the OVAT Act, particularly the mandatory nature of the penalty provision.- Court's interpretation and reasoning: The Court found that the imposition of the penalty was mandatory and justified under the circumstances.- Conclusions: The penalty was upheld as correctly imposed.3. SIGNIFICANT HOLDINGS- Preserve verbatim quotes of crucial legal reasoning: 'We do find that the product in question is essentially bread. However, the Odisha Act provides for two separate entries in respect of bread. When something more is done to it to result in toasted bread, it is included in the separate taxable entry.'- Core principles established: The classification of products under tax statutes should adhere to the specific entries provided, and the interpretation must consider the legislative intent and the nature of the product.- Final determinations on each issue: The Court dismissed the review petition, upholding the Tribunal's classification of the product under Entry 77B and the imposition of the penalty.
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