M/S. Shriya Enterprises vs. Commissioner Commercial Taxes, Uttarakhand, [2012] 51 VST (Uttara).

FACTS
The dealer had purchased Potato chips from M/S. Pepsico India Holdings (P) Ltd. by paying 4% VAT thereon and paid 4% vat on sales made by him. The assessing authorities levied tax @12.5% by treating ‘Potato Chips’ covered by residual entry attracting 12.5% tax. The appellate authority including Tribunal confirmed the assessment order levying 12.5% tax on sale of potato chips. The dealer filed revision petition against the impugned order of the Tribunal confirming the assessment order before the Uttarakhand High Court,

HELD
Entry 6 of Schedule II (B) of the Act, indicates that all processed and preserved vegetables would be covered by it and taxable at 4%. 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 not be had to the residual category and if there is a conflict between entries, then the residuary category should not be taken into consideration. The High Court further held that it can not be disputed that potato is a vegetable after going thorough the process of slicing, frying and spicing the potato chips does not cease to be a vegetable. It is irrelevant as to whether it becomes a snack item or not. A processed vegetable can also be a snack item but then it does not take the snack item outside the entry of processed vegetables. Accordingly, the High Court allowed the revision petition filed by the dealer. The assessing authority was directed to levy tax on sale of Potato Chips at 4%