STATE OF KERALA Vs. K P GIRIJAKUMARI

JUDGEMENT

(1.) These connected revision cases are filed by the State challenging the order of the Sales-tax Appellate Tribunal which held that white oats sold by the respondent in air tight containers attract tax under entry 173 of the first schedule of the KGST Act which provides tax at 4% on flour of all cereals. The case of the revenue is that oats is a good preparation sold in air tight containers and therefore the same was rightly assessed @ 12% under entry 62 of the first schedule of the KGST Act. The assessments involved are 2003-04 and 2004-05. The First Appellate Authority reversed the assessment declaring the rate at 4% under entry 173 of the first schedule of the KGST Act which was confirmed by the Tribunal against which revisions are filed.

(2.) We heard learned Government Pleader appearing for the State and the counsel appearing for the respondent. Learned Government Pleader has referred to the Tribunals order and contended that the Tribunals conclusion is based on the finding that the item is not sold in air tight containers. According to him, white oats are sold by the respondent in air tight containers made of polycarbonate and assumption of the Tribunal that the containers are not air tight is incorrect. Counsel for the respondent produced sample of the product contained in polycarbonate container which is sealed air tight. It is his contention that even if item sold is in air tight containers, the same would not fall under entry 62 but will come under entry 173 as held by the Tribunal. In order to appreciate the contention we have to refer to the relevant entries which are extracted hereunder: Tax rate 62. Food including vegetable or animal preparations sold in air tight containers and food colours, essences of all kinds and powders or tablets used for making food preparations. 12% 173. All kinds of flour of cereals, pulses and their mixtures whether packed in airtight containers or not. 4%

(3.) Before proceeding to examine the appropriate classification of item we have to examine the broad classification of cereals, pulses and their products for the purpose of tax. Oats as such is not covered by any entry in any of the schedules to the KGST Act. However oats in the form of coarse grain is exempted from tax under entry 12(3) of the first scheduled to the KVAT Act which has taken the place of Sales tax Act from 1.4.2006. Under entry 9 of the second schedule to the KGST Act, all cereals including paddy, rice, jower, bajra, maize, ragi, kodon, kutki and barli were taxable only @ 1%. Similarly under entry 9A of the said schedule wheat was also taxable @ only 1%. Even though cereals as such under entry 9 are taxable at a lower rate of 1%, products of wheat that is Maida, Atta, Suji were subject to tax under entry 172 @ 4%. Entry 173 provides for tax on flour of cereals, pulses and their mixtures whether packed in air tight containers or not. It is obvious from these entries that even prior to the introduction of VAT scheme KGST Act provided for taxation of cereals pulses and their variants in products form at low rates ranging from 1% to 4%. In this context we have to examine whether oats which is also a cereal when sold in the form of flakes in air tight containers is taxable @ 4% provided in entry 173 or at 12% under Entry 62.