STATE OF KARNATAKA Vs. VASAVAMBA STORES

JUDGEMENT

(1.) The State Government has filed these revision petitions being aggrieved by the order passed by the Karnataka Appellate Tribunal order dated 30-10-2008 made in STA Nos.204 to 208, 304 to 308, 338 and 399/2008; order dated 20-04-2010 made in STA Nos.1828-1863/2009 and order dated 30-03-2010 made in STA Nos.1200-1223/2009 setting aside the order passed by the Joint Commissioner of Commercial Taxes (Appeals)-I, Bangalore (hereinafter referred to as 'the First Appellate Authority') wherein the First Appellate Authority confirmed the order passed by the Assessing Officer under Section 39(1) of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as 'the KVAT Act'), holding that Fryums sold by the assessee is not Pappad.

(2.) Since the common question of law and facts are involved in these petitions and the issue whether the Fryums can be treated as Pappad which falls under Entry 40 of the I Schedule to the KVAT Act, all these petitions are clubbed together and disposed off by this common order.

(3.) The respondents-assessees are the registered dealers under the provisions of the KVAT Act and the assessee in STA No.89/2009 is the manufacturer of Fryums, doing business in sale of Rice, Soji and Flour and trading of Fryums and Pappad. The assessees have submitted their monthly returns. The establishments of the assesses' were inspected by the Competent Authorities and observed that the dealers are engaged in the trading of Fryums along with other commodities. On physical verification of the commodities dealt, it is noticed that they are doing business in the Fryums and claimed exemption for sale of Fryums on the ground that the Fryums are the Pappad. The Deputy Commissioner of Commercial Taxes, (Audit), noticing that the dealers have dealt with the Fryums which are taxable under Residuary Entry under Section 4(1)(b) of the Act, has wrongly classified it as exempted goods, defining it as Pappad. Further the Fryums cannot be treated as Pappad, it is a Sandige and semi-cooked food. Since the Sandige has not been defined under the Act, the assessees have to pay tax under Section 4(1)(b) of the Act. Accordingly notice was issued to them under Section 39(1) of the KVAT Act. The assessees have filed their objections to the contending that the Fryums are the Pappad in smaller shapes. It has similar taste and the characteristics of Pappad. All the ingredients of Pappad are being used for manufacturing of Fryums. However, it is only in smaller dimensions.