The Gujarat High Court (Ahmedabad Bench) has clarified that where a product can be reasonably brought within a specific entry, recourse to a residuary entry is impermissible. Accordingly, the Court held that Mint Orange 2022 is rightly classifiable under Entry 226 of aromatic chemicals and compounds under Entry 42A of Schedule II to the Gujarat VAT Act & not under the residuary Entry 87.
The Division Bench comprising Justice A S Supehia and Justice Pranav Trivedi noted that the documentary evidence, including laboratory reports and certificates establishing that the product was custom-made for industrial use and seldom used for household purposes, had not been doubted by the Revenue Department.
Thus, relying on the decision of the Supreme Court in Mayuri Yeast India Pvt Ltd. v. State of Uttar Pradesh [(2008) 5 S.C.C. 680], the Bench reiterated the settled principle that where a product can be reasonably brought within a specific entry, recourse to a residuary entry is impermissible.
Since the composition and industrial use of the product clearly brought it within the specific entry for aromatic chemicals and compounds, the Bench concluded that no substantial question of law arose for consideration.
Briefly, the dispute arose from an advance ruling wherein the Commissioner of Commercial Tax (Legal) had classified the product as a residuary good under Schedule II, Entry 87, taxable at about 12.5% plus about 2.5% additional tax. The respondent contended that “Mint Orange 2022” was an industrial flavour comprising a mixture of odoriferous substances of aromatic chemicals and compounds, used in industries such as pharmaceuticals, beverages, cosmetics and ice-cream, and therefore classifiable under Entry 226 of the list of industrial inputs under Entry 42A of Schedule II.
The Tribunal, relying on laboratory reports and certificates produced by the respondent, which were not disputed by the Revenue/ Appellant, held that the product was an industrial input falling under the specific entry relating to aromatic chemicals and compounds. Aggrieved, the Appellant proposed substantial questions of law as to whether the product was liable to be taxed under the residuary entry or under the specific industrial input entry.
Appearances:
AGP Tanushree Shrimal, for the Appellant/ Revenue
Advocate Uchit N Sheth, for the Respondent/ Taxpayer
