By C. B. Thakar | Advocate
G. G. Goyal, Janak Vaghani | Chartered Accountants
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Rate of tax — Margarine — Hydrogenated oil — Vanaspati — Taxable at 4% — Schedule Entry C-100 of Maharashtra Value Added Tax Act, 2002.
Facts:
The Additional Commissioner of Sales Tax, Maharashtra, filed an appeal to the Bombay High Court, against the decision of the Maharashtra Sales Tax Tribunal, dated July, 9 2010, holding that margarine sold under the brand name ‘Lotus Margarine’ is vanaspati within the meaning of Schedule Entry C-100 of the MVAT Act, 2002 and is taxable at 4%. The High Court dismissed the appeal and confirmed the decision of the Tribunal.
Held:
(i) As per the opinion of the expert, margarine is a food in plastic form or liquid emulsion containing not less than 80% fat oil, vanaspati and margarine, all are essentially mixed triglycerides of the fatty acid. Oil and vanaspati contained moisture only in trace quantities, whereas margarine being formulated product contained about 12 to 16% moisture and other additives. Margarine is formulated using hydrogenated vegetable oil.
(ii) The High Court took in to account the fact that the margarine produced by other manufacturers viz., Kamani or Godrej is taxable at 4%, so under the principle of parity margarine which is produced by the respondent is rightly made taxable at 4% by the Tribunal.
(iii) Further, during the period from 2006 to 2008 the margarine produced by the respondent was classified in Schedule C, Entry 100 as vanaspati and was taxable at 4% till the decision of the AO, so there is no need to change the view.
(iv) Accordingly, the High Court affirmed the view taken by the Tribunal holding that margarine is vanaspati to be classified under Schedule C, Entry 100 of the MVAT Act, 2002 and taxable at 4%.
