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2009 DIGILAW 875 (KAR)

SAKTHI MASALA (P) LTD. v. STATE OF KARNATAKA.

2009-11-17

ARAVIND KUMAR, K.L.MANJUNATH

body2009
JUDGMENT K. L. MANJUNATH, J. - Challenging the legality and correctness of the order passed by the Advance Ruling Committee's order dated August 21, 2006 the present appeal is filed entertaining a doubt in regard to entry 61 of the Third Schedule to the Karnataka Value Added Tax Act, 2003. The appellant approached the Advance Ruling Authority seeking clarification in regard to duty collected by it on garam masala, curry powder, sambar powder and rasam powder. The dispute is with regard to the period from April 1, 2005 to March 31, 2006. It is not in dispute that pursuant to the substitution by Karnataka Value Added Tax Act 27 of 2005 which has come into effect from June 7, 2005 entry 89 reads as hereunder : "89. Spices in all forms including jeera (cumin seeds), methi, poppy seeds (kaskas), coriander (dhaniya), shajeera, somph, katha, azwan, kabab chini, bhojur phool, tejpatha, japatri, nutmeg (marathamoggu), kalhoovu, aniseed, turmeric, cardamom, pepper, cinnamon, dal chinny, cloves, tamarind and dry chillies; wet dates; hing (asafoetida)." Prior to that entry 61 was in existence which reads as hereunder : "61. Spices in all forms including jeera (cumin seeds) methi, poppy seeds (kaskas), coriander (dhaniya), shajeera, somph, katha, azwan, kabab chini, bhojur phool, tejpatha, japatri, nutmeg (marathamoggu), kalhoovu, aniseed, turmeric, cardamom, pepper, cinnamon, dal chinny, cloves, tamarind and dry chillies." The appellant contended entry 89 includes the masala powder, instant mixes or other mixtures containing more than one spice or spices with any other material with effect from April 1, 2006. Entry 89 of the Third Schedule appended to the Act will include cut chillies, spent chillies and chilly seeds, but excluding spices in the form of masala powder, instant mixes or other mixtures containing more than one spice or a spice with any other material. Therefore there is no dispute with regard to payment of VAT with effect from April 1, 2006 in respect of the product manufactured by the assessee like garam masala, curry powder, sambar powder and rasam powder, at 12.5 per cent. But the dispute is in regard to the earlier period, i.e., from April 1, 2005 to March 31, 2006. Therefore there is no dispute with regard to payment of VAT with effect from April 1, 2006 in respect of the product manufactured by the assessee like garam masala, curry powder, sambar powder and rasam powder, at 12.5 per cent. But the dispute is in regard to the earlier period, i.e., from April 1, 2005 to March 31, 2006. Since entry 89 did not include the form of masala powder, instant mixes, etc., the Advance Ruling Committee after considering the arguments advanced by the representative of the assessee came to the conclusion that the spices in the form of masala powder, instant mixes or other mixtures containing more than one spice or a spice with any other material are not included under entry 89 and attract the tax at 12.5 per cent. Being aggrieved by the same, the present appeal is filed. We have heard the learned counsel for the appellant and the learned Government Advocate for the Revenue. The learned counsel for the appellant relying upon Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394 and the judgment of the Supreme Court in Manickam and Co. v. State of Tamil Nadu [1977] 39 STC 12; AIR 1977 SC 518 contends that the Advance Ruling Committee has committed a serious error when entry 89 stood as on April 1, 2005 to March 31, 2006 had included the spices in all forms included in entry 89 which includes all variety of masala powder as different combination of spices includes masala powder. Therefore the order of the Advance Ruling Committee is bad in law. According to him, taking us through Karnataka Act of 2006 while considering entry 89 to the Third Schedule when the State has excluded the spices in the form of masala powder other mixes containing more than one spice or any other material would only show that entry 89 as stood prior to April 1, 2005 is deemed to have included the masala powder and other mixes. In the circumstances he requests this court to set aside the order of the Advance Ruling Committee and to hold that entry 89 as on April 1, 2005 includes the masala powder and other mixes and requests the court to answer the substantial question of framed in favour of the appellant. In the circumstances he requests this court to set aside the order of the Advance Ruling Committee and to hold that entry 89 as on April 1, 2005 includes the masala powder and other mixes and requests the court to answer the substantial question of framed in favour of the appellant. Per contra, learned counsel for the Revenue relying upon the judgment of the Supreme Court in A.P. Products v. State of A.P. [2007] 8 VST 373; [2007] 6 SCC 365 contends that the point involved in this case is no more res integra as the masala powder is altogether a different product other than the spice as ruled by the Supreme Court. She further contends that the judgment in Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394 (SC) relied upon by the appellant has also been considered by the Supreme Court in A.P. Products [2007] 8 VST 373 (SC); [2007] 6 SCC 365 and therefore she requests this court to dismiss the appeal. Having heard the learned counsel for the appellant, we have to consider whether garam masala, curry powder, sambar powder and rasam powder falling under section 4(1)(b) of the Act are liable to tax at 12.5 per cent for the period April 1, 2005 to March 31, 2006 and does it fall under entry 89 of the Third Schedule. By reading of paragraph 7 of entry 89, it is clear that either under entry 89 or entry 61, paragraph 6 the words "masala instant mixes, or other mixtures containing more than one spice or a spice with any other material" have not been included. As it is a different product and it is a recipe formed by the appellant or other manufacturer of similar masala powder by inclusion of other form of spice. Therefore, the Legislature by its wisdom under entry 89 prior to Act of 4 of 2006 has not included masala powder or instant mixes and other mixtures containing one spice or a spice with any other material. Therefore, the Legislature by its wisdom under entry 89 prior to Act of 4 of 2006 has not included masala powder or instant mixes and other mixtures containing one spice or a spice with any other material. However, we are of the view that under the Act 4 of 2006 which has come into effect from April 1, 2006 in order to clarify the doubts the Legislature thought it fit to clarify the position to hold that masala is not included in entry 89 which attracts the tax at 12.5 per cent considering entries 61 and 89 as stood prior to Karnataka Act No. 4 of 2006, we are of the view that the word masala powder is not included therein and therefore, it is clear that masala powder come under the residuary clause traceable to section 4 of the Karnataka Value Added Tax Act, 2003. As rightly pointed out by the Government Advocate, the Supreme Court while considering the case of A.P. Products [2007] 8 VST 373; [2007] 6 SCC 365, has referred to Alladi Venkateswarlu's case [1978] 41 STC 394 (SC) and has come to the conclusion that the word "spice" is different from masala. Therefore we see no reason to interfere with the order of the Advance Ruling Committee. Accordingly, we answer the substantial question of law in favour of the Revenue and against the assessee. The appeal is dismissed.