PepsiCo India Holdings Pvt. Ltd. v. Commissioner of Commercial Taxes, Ezhilagam, Chepauk, Chennai & Ors.
Case at a glance
- Decided
- 10 Nov 2009
Outcome
Allowed
For all these reasons, the writ appeal is allowed
Provisions considered
Key paragraphs
- Para 88. In our view, as far as the present case is concerned, once aclarification is given by the Commissioner of Commercial Taxes, that will bind the subordinate assessing authorities and one cannot expecta different order from the assessing officers. In these circumstances, no fruitful purpose…
- Para 99. For all these reasons, the writ appeal is allowed. The order of the learned single Judge is quashed and set aside. The directionas sought for in the writ petition is granted. There shall be no order as to costs. Consequently, M.P. No.1 of 2009…
Judgment
IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 10.11.2009C O R A MTHE HONOURABLE MR. H.L. GOKHALE, CHIEF JUSTICEANDTHE HONOURABLE MR. JUSTICE N. PAUL VASANTHAKUMARWrit Appeal No.551 of 2009 PepsiCo India Holdings Pvt. Ltd.,Rep. by its Regional Commercial ManagerT. Venkat Ramesh, 3rd Floor, Wellington Plaza,90, Anna Salai, Chennai-2. ..Appellantversus1. Commissioner of Commercial Taxes, Ezhilagam, Chepauk, Chennai-5.
The Asst. Commissioner, Fast Track Assessment Circle-I, Office of the Asst. Commissioner (CT), PAPJM Building, Greams Road, Chennai-6.
Sri Raghavendra Enterprises, Plot No.153, M.G.R. Street, Kaveri Rangan Nagar, Saligramam, Chennai-98.
Rouch Fancy Store, 209, D. Ramasamy Salai, Chennai. (Not necessary party – Given up) ..RespondentsPrayer : Writ Appeal filed under Clause 15 of the Letters Patentagainst the order passed by a learned single Judge of this Courtdated 6.3.2009 in Writ Petition No.23824 of 2007. Writ Petition filed under Article 226 of the Constitution of India, praying for a Writ ocCertiorarified Mandamus to call for the records of the firstrespoondent containing the impugned clarification bearing Ref. Vatcell/7342/2007 (VCC 225) dated 29.3.2007 issued by the 1st respondent holding that branded chips are taxable at 12.5% under part C of first schedule to the Tamil Nadu Value Added Tax Act, 2006, quash the same as ultra vires the provisions of the Tamilnadu Value Added Tax Act,2006 and consequently direct the 1st respondent to classify “Potato https://hcservices.ecourts.gov.in/hcservices/ Chips” sold under a brand name as taxable under Entry 107 of Part Bof First Schedule of the Tamilnadu Value Added Tax Act, 2006 as the determination to the contrary by the first respondent is ultra viresthe provisions of the said Act.
For Appellant : Mr. C.S. Loda for Mr. R. Raghavan For Respondents-1 & 2 : Mr. Haja Naziruddin, Spl. Govt. Pleader (Taxes)J U D G M E N T( By The Honourable The Chief Justice )Heard Mr. C.S. Loda, learned counsel appearing on behalf ofMr. R. Raghavan in support of this appeal. Mr. Haja Naziruddin, learned Special Government Pleader (Taxes) appears for respondents 1and 2. The appeal seeks to challenge the order passed by the learned single Judge on 6.3.2009, whereby the learned single Judge has dismissed the writ petition filed by the appellant herein. 2. The appellant is a manufacturer of potato chips which are sold under the brand names "Lays" and "Uncle Chips". They had filed the writ petition seeking twofold orders. One was that the clarification dated 29.3.2007 issued by the first respondent-Commissioner of Commercial Taxes, Tamil Nadu, holding that branded chips are taxable at 12.5% under Part-C of Schedule-I to the Tamil Nadu Value Added TaxAct, 2006 be quashed and set aside.
The second prayer was that the first respondent be directed to classify 'Potato Chips' sold under abrand name as taxable under Entry 107 of Part-B of Schedule-I to the Tamil Nadu Value Added Tax Act, 2006.3. Mr. C. Loda, learned counsel appearing on behalf of the appellant submitted that there is a specific entry under No.107 in Part-B of Schedule-I to the Tamil Nadu Value Added Tax Act, 2006.The said entry reads as follows :-"Entry 107 of Part-B of Schedule-I107. Processed fruits and vegetables including fruit jam, jelly, [*****]1, fruit squash, paste, fruit drink and fruit juice (whether in sealed containers or otherwise), other than those specified in the Fourth Schedule. " It is submitted that there is also a residuary entry, which is EntryNo.69 of Part-C of Schedule-I to the Act, which is to apply to anyother goods not specified in any of the Schedules. As far as EntryNo.107 is concerned, the tax payable would be at the rate of 4%,whereas under Entry No.69, the tax payable would be at the rate of12.5%. The case of the appellant is that what they are selling are1The word 'pickle' was omitted w.e.f.
1st January, 2007 by Section 9(3) of the Amendment Act (21 of 2007). https://hcservices.ecourts.gov.in/hcservices/ only potato chips which are fried chips made out of potatoes and they would fall under the head 'processed vegetables'. It is submitted that even as far as unbranded items are concerned, the tax payable is4% under Entry 51 of Part-B of Schedule-I. That entry reads as follows :-"Entry 107 of Part-B of Schedule-I"Foods and food preparations and mixes including instant foods, coconut milk powder, pickles, sweets, cheese, confectionery, chocolates, toffees and savouries like chips and popcorn sold without a brand-name other than those specified in the Fourth Schedule. " The short submission of the learned counsel for the appellant is that when there is a specific entry, one has to follow only that and one is not expected to go to the residuary item. 4. As far as this submission is concerned, there have been anumber of judgments on this point.
For a ready reference, one may refer to the judgment of the Apex Court in Bharat Forge & PressIndustries (P) Ltd. vs. Collector of Central Excise reported in 1990(45) E.L.T. 525 (SC), where the Apex Court has clearly held in paragraph 3 that under a residuary entry, only such goods are covered which cannot be brought under the various specific entries in the tariff. 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 cannot be had to theresiduary item. Recently, a similar view has been taken by the ApexCourt in Mauri Yeast India Private Limited vs. State of Uttar Pradeshreported in (2008) 5 S.C.C. 680. That was in the context of the Uttar Pradesh Trade Tax Act, 1948 and the entries thereunder.
We have also been shown the judgment of a Division Bench of the Guwahati High Court in Pepsico India Holdings Pvt. Ltd. vs. Stateof Assam reported in (2009) 25 V.S.T. 41 (Gauhati). In that matter, the potato chips sold by the appellant under the same brand name"Lays" and "Uncle Chips" are held to be classifiable as processed vegetables and not to come under a residuary entry. The product is under the same brand name and that is how the judgment is rendered with respect to the relevant entries under the Assam Value Added TaxAct, 2003. Learned counsel for the appellant, therefore, submits that the impugned clarification by the Commissioner of CommercialTaxes was totally erroneous and the second prayer which was made by the appellant ought to have been entertained. The learned singleJudge having rejected these submissions, the present appeal has been filed.
The learned single Judge has taken a view in paragraph 25 of his judgment that these chips could not be classified as processed https://hcservices.ecourts.gov.in/hcservices/ vegetables. According to the learned single Judge, processed vegetables will not include vegetables fried in oil. This finding does not stand to reason. The term 'processing' would take within its ambit any such process which would include frying, apart from cutting of the potatoes.
Mr. Haja Naziruddin, learned Special Government Pleader(Taxes), on the other hand, submitted that the better course that can be adopted is that the appellants could go in for the alternative remedy of assessment and thereafter, if they are aggrieved, they may take further steps. He has referred to the judgment of a DivisionBench of the Punjab and Haryana High Court in the case of the present appellants reported in Pepsico India Holdings (P.) Ltd. vs. State of Punjab reported in (2006) 148 S.T.C. 30 (P & H).
In our view, as far as the present case is concerned, once aclarification is given by the Commissioner of Commercial Taxes, that will bind the subordinate assessing authorities and one cannot expecta different order from the assessing officers. In these circumstances, no fruitful purpose would be served by directing the appellant to go for an assessment and for that reason, not to entertain the writ petition. That apart, in the present case, for the very branded products, there is a well reasoned Division Benchjudgment of another High Court. It is a settled proposition that in tax matters, when there is a Division Bench judgment of another HighCourt on a similar provision, it has to be treated with due respect and in the instant case, since the Guwahati High Court has taken aview, which is according to us also otherwise correct, there is no reason for us to take a different view.
Operative part
For all these reasons, the writ appeal is allowed. The order of the learned single Judge is quashed and set aside. The directionas sought for in the writ petition is granted. There shall be no order as to costs. Consequently, M.P. No.1 of 2009 is closed. Sd/Asst. Registrar/true copy/Sub Asst. Registrarab To1.The Commissioner of Commercial Taxes, Ezhilagam, Chepauk, Chennai-5. https://hcservices.ecourts.gov.in/hcservices/
2. The Asst. Commissioner, Fast Track Assessment Circle-I,Office of the Asst. Commissioner (CT),PAPJM Building, Greams Road, Chennai-6.+ 1 c.c. to Mr. R. Raghavan, Advocate. S.R.No.60432.+ 1 c.c. to The Special Government Pleader (Taxes). S.R.No.60349.Writ Appeal No.551 of 2009PA (CO)GSK 16.12.2009.
Questions this judgment answers
What did the Court decide in this case?
The Court recorded the following disposition: For all these reasons, the writ appeal is allowed
Which statutory provisions did this judgment involve?
Constitution of India — art. 226; Tamil Nadu Value Added Tax Act, 2006; Tamilnadu Value Added Tax Act, 2006; Part-B of Schedule-I to theTamil Nadu Value Added Tax Act, 2006; Schedule-I to the Tamil Nadu Value Added Tax Act, 2006; Amendment Act, 2007 — s. 9(3).
Which court decided this case, and when?
Madras High Court, on 10 Nov 2009.
Precedent status how later indexed judgments have treated this case
No known negative treatment found in the Courts & Cases corpus.
This is a result about the indexed corpus, not a finding that the judgment remains good law. Coverage may be incomplete.