AI Drafter 
TaxTMI 
TaxTMI 
2019 (10) TMI 486
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....dded tax Act, 2005 (hereinafter referred to as "the VAT Act, 2005") or whether those items would be required to be dragged into residuary entry under Part IV of Schedule II of the said Act. 3. An effort was made by the assessing authorities of the Sales Tax Department to levy and assess tax under the VAT Act, 2005 upon two items, namely, rusk/toast which were either being produced or marketed by the writ petitioners. The Schedule I of the Act deals with goods which are treated as tax free goods. The rate of taxation, therefore, is zero per cent. on the items notified in the said Schedule. There is a long list of 63 items which the taxing authorities have decided not to levy tax on, Schedule II of the VAT Act, 2005 have 4 parts. The goods notified under different parts are clubbed on the basis of rate of taxation which is leviable upon them. In Part IV of Schedule II there is an entry which reads : "All other goods not included in Schedule I and in Part II and Part III of this Schedule" which is being referred to as the residuary entry. 4. The arguments on behalf of the writ petitioners who are respondents now, before the learned single judge (Kesharwani Enterprises v. State o....
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.... . . . 48. There cannot be any quarrel with the proposition that construction of the word is to be adopted to the fitness of the matter of the statute. But for determining the said question, several factors which would be relevant are required to be gone into. The trade or commercial meaning or the end-user context would, thus, be a relevant factor. . . . 56. We, therefore, are of the opinion that if there is a conflict bet ween two entries one leading to an opinion that it comes within the purview of the tariff entry and another the residuary entry, the former should be preferred.' 24. In [1992] 84 STC 414 (SC) ; [1990] 1 SCC 532, in case of Bharat Forge & Press Industries (P.) Ltd. v. Collector of Central Excise, Baroda, Gujarat, the Supreme Court in paragraph 4 has held that only such goods which cannot be brought under the various specific entries in the tariff schedule should be attempted to be brought under the residuary entry. In other words, unless the Department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort can be had to the residuary item. (e....
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....ct that a product is sold across the counters and not under a doctor's prescription does not by itself lead to the conclusion that it is not a medicament. We are also in agreement with the submission of Mr. Lakshmikumaran that merely because the percentage of medicament in a product is less does not ipso facto mean that the product is not a medicament. Generally the percentage or dosage of the medicament will be such as can be absorbed by the human body. The medicament would necessarily be covered by fillers/vehicles in order to make the product usable. It could not be denied that all the ingredients used in ban phool oil are those which are set out in the ayurveda text books. Of course the formula may not be as per the text books but a medicament can also be under a patented or proprietary formula. The main criteria for determining classification is normally the use it is put to by the customers who use it. The burden of proving that banphool oil is understood by the customers as an hair oil was on the revenue. This burden is not discharged as no such proof is adduced. On the contrary we find that the oil can be used for treatment of headache, eye problem, night blindness reel....
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....he Commissioner of Sales Tax. The intention of the Legislature is further made clear in the amended Schedule I, which was substituted by Act XXVIII of 1952, where the term "bread" in item 3 thereof includes "double roti, chapathi, kulcha and shirmal". This inclusive definition of the word "bread" negatives the contention of the learned advocate that by "bread" is only meant "double roti", and no other kind of roti. If his contention was right, there was noth ing to prevent the word "double roti" for the word "bread" nor can we justifiably infer that the exemption is only meant for the very limited class of citizens who consume "double roti" while levying the tax on vast majority of citizens who do not consume that article of food. We are, therefore, not impressed by the contention that articles for which exemption is claimed were not included in the word "bread". In our view, "bread" includes and should include all forms or kinds of bread which are prepared by moistening, kneading, baking, frying or roasting meal or flour with or without the addition of yeast, leaven or any other substance for puffing or lightening the article. . . . .' 30. Again a similar matter came ....
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....n the light of enunciation of law, as referred to above, entry 57 in Schedule C only prescribes "paper", "paper board" and "newsprint". It does not provide for any inclusions or exclusions. It further does not provide for any user test. The word "paper" used in the entry is in generic form, which will include all types of paper, which has its essential characteristics. It is not in dispute that even the tissue paper, napkin, toilet paper rolls, etc., retain the essential characteristics of paper. It is only that it is in different strength and is used for different purposes. There is no competing entry to find out whether product falls in entry A or B. The residuary entry is to be invoked in case with liberal construction to the specific entry, the product could not be found to be forming part thereof.' 32. Yet another recent decision of the Division Bench of the Delhi High Court in the matter of Samsung India Electronics Private Limited v. Government of NCT of Delhi reported in [2017] 97 VST 417 (Delhi) in paragraph Nos. 41 to 44 has held as under (pages 433 and 434 in 97 VST) : '41. In Commissioner of Sales Tax v. Agarwal & Co. [1983] 52 STC 117 (Bom) ; ....
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....ject product is not bought or sold or is not known or is dealt with in the market as denatured salt. Department's own chemical examiner after examining the chemical composition has not said that it is not denatured salt. On the other hand, after examining the chemical composition has opined that the subject-matter is to be treated as sodium chloride." 44. In Sun Export Corporation, Bombay v. Collector of Customs, Bombay reported in [1998] 111 STC 69 (SC) ; [1997] 93 ELT 641 (SC), the Supreme Court reiterated the well settled principle that if in a matter of classification of goods two views were possible, the one favouring the assessee has to be preferred.' 33. Given the aforesaid decisions by the various High Courts as well as by the honourable Supreme Court when we compare the principles laid down in the aforesaid judgments and compare them with the definition of 'bread' and definition of 'toast and rusk' and further also taking into consideration the ingredients required for the preparation of the two products, this court has no hesitation in reach ing to the conclusion that there is substantially no change in the basic physical properti....