IN THE HIGH COURT OF KERALA AT ERNAKULAM
OT.Appeal.No. 1 of 2006()
1. M/S.THOMSON PAPER PRODUCTS,
... Petitioner
Vs
1. THE COMMISSIONER, COMMERCIAL TAXES,
... Respondent
2. COMMERCIAL TAX OFFICER,
For Petitioner :SRI.K.I.MAYANKUTTY MATHER
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice V.K.MOHANAN
Dated :11/06/2008
O R D E R
C.R.
C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ.
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O.T.A. No.1 of 2006,
WP(C) Nos.36213 of 2007 & 415 of 2008
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Dated, this the 11th day of June, 2008
J U D G M E N T
Ramachandran Nair, J.
The only issue arising in all the three cases filed by the same
assessee pertains to the tax liability on assessee’s product, ‘white
oats’, under the Kerala Value Added Tax Act, 2003. On application
filed under Section 94 of the Act, the Commissioner of Commercial
Taxes, vide Annexure-A order produced in O.T.A.No.1/2006,
clarified that ‘white oats’ falls under the residual entry taxable at
12.5%. While petitioner is challenging the clarification in the O.T.A,
in the connected two cases, challenge is against assessments at the
higher rate of tax at 12.5%.
2. We have heard learned counsel appearing for the
assessee and learned Government Pleader appearing for the
respondent.
3. The first question to be considered is whether ‘white
oats’ sold by the assessee under the name “Shantis” is exempted
from tax under Original Entry 9 renumbered as 12 of the 1st
schedule to the Act and if not, the appropriate rate applicable to the
O.T.A.No.1/06, WP(C) Nos.36213/07 & 415/08
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product under the other schedules to the Act. Learned counsel
appearing for the assesee has referred to the word used ‘Oats’ in
Entry 12(3) of the 1st schedule (previously item 9(3) of the same
schedule) and contended that ‘Oats’ in all forms are exempted from
tax. In order to appreciate the contention, we have to refer to the
relevant entry, which is extracted hereunder.
“12. Coarse grains other than rice and wheat
(1) Rye
(2) Barley
(3) Oats
(4) Maize (Corn)
(5) Grain Sorghum
(6) Buckwheat
(7) Millet including Jawar, Bajra, Ragi.
(8) Canary seed
(9) Paddy and Paddy Chaff
(10) Other cereals”
The question to be considered is whether ‘white oats’ marketed by
the assessee under the name “Shantis” can be treated as ‘Oats’ as
referred in the above entry. We have seen the product produced in
the Court, which is prepared oats flakes sold in a sealed container
made of plastic or poly carbonate. It is noticed from the product
description that no additives are used by the assessee in the
preparation and the product is 100% oats. It is stated in the
O.T.A.No.1/06, WP(C) Nos.36213/07 & 415/08
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attached label that the item can be consumed after cooking in milk
or water for 5 minutes. It is obvious from the nature of the product
and the product description that it is not ‘Oats’ grain pure and
simple, but is a preparation made of it. It may probably be
comparable to rice flakes made from rice or corn flakes made from
corn. Entry heading of Item 12 of 1st schedule makes it clear that
the items intended to be covered under the group heading are
‘coarse grains’. The assessee’s product is not ‘coarse grain’ but a
refined product made out of coarse grain ‘oats’. Moreover, items 1
to 9 arrayed under Entry 12 of 1st schedule are not any product of
the grain named therein, but are grains of various types in the pure
and simple form. We, therefore, reject assessee’s claim that the
product is exempted from tax under item 12(3) of the 1st schedule
to the Act.
4. The next question to be considered is whether the item
falls under any entry of any of the other schedules to the Act to
justify the clarification and assessment under the residual entry at
12.5%. Learned counsel for the assessee has referred to items
contained in Entries 48 & 49 of the 3rd schedule to the Act, which
provide for levy of tax on various forms of grains and food products.
For easy reference, we extract hereunder Entries 48 & 49 of the 3rd
O.T.A.No.1/06, WP(C) Nos.36213/07 & 415/08
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schedule to the Act.
“48. Flour, Atta, Maida, Suji, Besan and dough
(1) Wheat or meslin flour
(2) Rye flour
(3) Maize (corn) flour
(4) Rice flour (puttu podi and the like)
(5) Other cereal flour
(6) Flour, meal and powder of the dried leguminous
vegetables
(7) Wet mix.
49. Food products like pickles, corn flakes, savouries, sweets
made of groundnuts, gingelly, other than those sold under brand
name registered under the Trade Marks Act, 1999.
(1) Pickles
(2) Savories like chips, popcorn, murukku, achappam,
pakoda, mixture, chikky items, kuzhalappam and
similar preparations.
(3) Corn flakes
(4) Sweets made of groundnuts or gingily.”
Obviously ‘oats’ is not an item covered by Entry 48. However, it is
a food product like corn flakes, which is covered by Entry 49. Even
though learned Government Pleader pointed out that only four
items are covered by Entry 49, which does not prescribe ‘oats’
specifically, we find item (2) of Entry 49 refers to similar
preparations. Since Entry 49 provides for food products, we are of
the view that food products other than those mentioned elsewhere
O.T.A.No.1/06, WP(C) Nos.36213/07 & 415/08
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will come under ‘similar preparations’ referred to in Entry 49(2) of
the 3rd schedule. We, therefore, hold that ‘white oats’ other than
those sold under brand name registered under the Trade Marks Act
1999, will be taxable at 4% under Entry 49(2) of the 3rd schedule to
the KVAT Act. It is for the Assessing Officer to examine whether
the appellant has obtained a trade mark registration for the product
and if not to assess the product at 4%. In view of the above
findings, we allow O.T.A.No.1/2006 in part by holding that ‘white
oats’ is taxable under Entry 49(2) of the 3rd schedule @ 4%, if the
assessee does not have a registered brand name under the Trade
Marks Act, 1999. In view of the above, we direct the Assessing
Officer to revise the assessments made up to date at 4% but forfeit
excess collection of tax after date of clarification.
The O.T.A and the writ petitions are allowed to the extent
indicated above.
(C.N.RAMACHANDRAN NAIR, JUDGE)
(V.K.MOHANAN, JUDGE)
jg