By C. B. Thakar Advocate G. G. Goyal JanaK Vaghani Chartered Accountants
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VAT- Rate of Tax-Entry in Schedule-Tomato Sauce-Is Processed Vegetables-Taxable at Four Percent, Entry 6 of Sch. II (B) of The Uttarakhand Value Added Tax Act, 2005
Facts
The respondent company had paid tax @ 4% under the Uttarakhand Vat Act on sale of tomato sauce being all kinds of processed vegetables and covered by entry 6 of the Schedule II(B) of the Act. The assessing authority levied tax of 12.5% based on circular issued by commissioner clarifying rate of tax on sale of tomato sauce as 12.5%. The company filed writ petition before the Uttarakhand High Court against the assessment order and the single judge allowed the writ petition filed by the company and quashed the circular and directed that the rate of 12.5% should not be recovered from the company on sale of tomato sauce. The revenue filed appeal before the division bench of High Court against the judgment of single judge.
Held
Under entry 6 of Schedule II(B), tax is payable at 4% on sale of all processed and preserved vegetables, vegetable mushrooms and fruits including fruit jams, jellies, fruit squash, paste, fruit drinks and fruit juices and achar (whether in sealed container or otherwise). Botanically, the tomato is a fruit but for the purpose of trade it is classified as a vegetable. It is common that tomatoes are widely used as canned vegetable in the form of juice, sauces, pastes and ketchup. Tomato sauce refers to tomato concentrate with salt, pepper, onion/garlic, sugar, spices and preservatives. It is a processed item, normally marketed in bottles and Cannes before being served as a dish. The tomato sauce being a processed and preserved vegetable is covered under entry 6 of schedule II(B) of the act liable to tax @ 4%. Accordingly, the High Court dismissed the appeal filed by the revenue and confirmed the order of single judge.
