By C. B. Thakar Advocate G. G. Goyal
Janak Vaghani Chartered Accountants
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VAT – Classification of Goods – Sale of Mango Chutney, Mango Garlic Chutney, Mango and Saffron, etc.- Are Processed Fruit and Vegetables.
VAT – Classification of Goods – Exercise Books with Cartoons to be Painted by Children – With Appropriate Colours – Are Printed Books – Exempt from Payment of Tax, Entry 3 of Schedule III and section 4 (1)(b) of The Karnataka Value Added Tax Act, 2003.
FACTS
The appellant trading in edible products and other stationery products, sold Mango Chutney Mango Garlic chutney, Mango and saffron and other processed fruit and vegetables as well as exercise books meant for young children which contain cartoons and the children have to paint it with appropriate colours. The assessing authority held that above paste items sold by the appellant are not processed fruit and vegetables and levied tax under residential entry. As regards sale of exercise books it was not considered as exempt and taxed under entry II of the First Schedule to the Act. The appellate authority allowed the appeal. The Addl. Commissioner of Sales Tax revised the appeal order and restored the assessment order. The appellant filed appeal against revision order passed by the Addl. Commissioner before the Karnataka High Court.
HELD
Entry 3 of the Third Schedule to the Act covers all processed fruit and vegetable including Fruit Jams, Pickle, Fruit Squash, Paste, Fruit Drink and Fruit Juice (whether in sealed container or otherwise). The paste items used in preparation of vegetable items are basically made out of fruit and vegetables and the said paste is processed products.
The view of revisional authority that the above paste items contain other spicy ingredients, which do not constitute fruit or vegetable and therefore, they have to be excluded from the meaning of Processed fruit and vegetables as per entry 3 is an untenable argument. What is required to be seen in a matter like this would be that, in the given items of paste in question, what is the dominant ingredient, and it may be that there would be composition of other ingredients that would be the decisive criteria. In that view, the paste in question would come within the purview of entry 3 of the Third Schedule to the Act.
With regards to exercise books, the High Court held that they are in the nature of exercise books containing cartoons. The young children are expected to colour it with appropriate colour crayons. The purpose of the said exercise books is to inculcate the basic art of painting. Therefore, the said exercise books do constitute printed books to be exempted from the tax.
Accordingly, the High court allowed the appeal.
