Orissa High Court
M/S. Parle Agro Pvt. Ltd vs Additional Commissioner Of ..... ... on 6 January, 2025
Author: Arindam Sinha
Bench: Arindam Sinha, M.S.Sahoo
IN THE HIGH COURT OF ORISSA AT CUTTACK
STREV No.49 of 2024
M/s. Parle Agro Pvt. Ltd., ..... Petitioner
Bhubaneswar
versus-
Additional Commissioner of ..... Opposite Party
Sales Tax (Appeal), Odisha,
Cuttack
Advocates appeared in this case:
For petitioner : Mr. Bharat Raichandani, Advocate
Mr. M. Raichandani, Advocate
For Opposite Party : Mr. Sunil Mishra, Standing Counsel
Mr. S. Das, Addl. Standing Counsel
CORAM:
THE HON'BLE MR. JUSTICE ARINDAM SINHA
AND
THE HON'BLE MR. JUSTICE M.S.SAHOO
JUDGMENT
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Date of hearing and judgment : 6th January, 2025
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ARINDAM SINHA, J.
1. Mr. Raichandani, learned advocate appears on behalf of
petitioner. He submits, the petition for revision be admitted on
questions suggested in additional affidavit dated 2nd January, 2025.
The suggested questions are reproduced below.
STREV no.49 of 2024
"a. Whether, in the facts and circumstances of the present
case, the Hon'ble Tribunal was correct and justified in passing
a non-speaking order without considering the submissions of
the Petitioner?
b. Whether, in the facts and circumstances of the present case,
the Hon'ble Tribunal was correct in classifying the product as
"Rusk" (hardened bread) under Entry 77B of the Schedule of
the OVAT Act, 2004, instead of classifying it as "Bread
(branded or otherwise)" under Entry 34 of Schedule A of the
OVAT Act, 2004?
c. Whether, in the facts and circumstances of the present case,
the Hon'ble Tribunal was correct in not considering the
judgment of Kesharwani Enterprises vs State of
Chhattisgarh - 2019 (28) GSTL 397 (Chhattisgarh)?"
d. Whether, in the facts and circumstances of the present case,
the Hon'ble Tribunal was correct in imposing penalty on the
Petitioner?"
2. He submits, the dispute is regarding classification of his
client's product. It is toasted bread. Being bread it is to be classified
under entry 34 in Schedule A of Orissa Value Added Tax Act,
2004. His client duly disclosed particulars of the product, marketed
STREV no.49 of 2024
and sold, in its accounts. There were conflicting findings on fact by
the Assessing Officer (AO), the Commissioner (Appeals) and the
Tribunal. The adjudicating authorities suffered from confusion in
seeking to classify his client's product under entry 77B in Schedule
B. Clear case of his client before the authorities and particularly in
the Tribunal was upon reliance of, inter alia, opinions obtained from
experts, who all unanimously opined that the product is bread. As
such, value added tax was not paid on the product. By impugned
order dated 26th September, 2024, the Full Bench of the Orissa Tax
Tribunal, Cuttack erroneously classified the product as coming
under entry 77B in Schedule B, thereby levying the tax and twice
the amount as penalty per un-amended sub-section (5) in section 42.
3. Mr. Raichandani submits further, the confusion apparent
from the several orders, beginning with the assessment order, will
show that the authorities considered his client's product to be
'namkeen'. Entry 77B in Schedule B relates to exactly those items
that have been mentioned therein. His client's product is nowhere
near being a 'namkeen'. It is bread and therefore did not and does
not attract levy nor collection of value added tax.
STREV no.49 of 2024
4. He cites view taken by a learned single Judge in the High
Court of Chhattisgarh on judgment dated 5th March, 2018 in
Kesharwani Enterprises v. State of Chhattisgarh available at
2018 SCC OnLine Chh 988. He relies on several paragraphs in the
judgment. Reproduced below is paragraph-34 from it.
"34. Under the factual circumstances, this court is also of
the opinion that the term "bread" under Schedule I, entry
7 has to be construed as a generic entry made and it has to
be given the widest interpretation that could be given,
subject to the condition that the ingredients being
substantially the same. Thus, this court holds that rusk
and toast also would fall within entry 7 of Schedule I of
the VAT Act and it cannot be considered to be one which
would come under the residuary entry."
(emphasis supplied)
5. He then relies on judgment of the Supreme Court in G.
Radhakrishna Murthy and Company v. Commercial Tax
Officer-IVB, Vijayawada, reported in (1997) 8 SCC 37. He
submits, the question answered by the Supreme Court was
regarding whether 'aggarbatti' was a perfume. The concerned entry
was in First Schedule of the Andhra Pradesh General Sales Tax Act,
providing for cosmetics and toilet preparations to include, inter alia,
STREV no.49 of 2024
perfumes. Burning of aggarbattis releasing a scent, the question
arose for answer on whether it was covered by the entry. The
Supreme Court answered the question in the negative to say, the
entry under heading of "cosmetics and toilet preparations" giving
meaning of perfumes cannot be expanded to include aggarbattis. In
his client's case exactly that has happened. Entry 77B in Schedule
B has been expanded to include his client's product, which falls
under entry 34 in the Schedule A. The appeal be admitted on
substantial questions of law as suggested.
6. Mr. Mishra, learned advocate, Standing Counsel appears on
behalf of revenue and vehemently opposes admission of the
revision. He submits, there is entry 34 in Schedule A and entry 77B
in Schedule B. They are distinct and separate entries. While entry
34 in Schedule A exempts products under classification bread,
toasted bread falls under taxable entry 77B in Schedule B.
7. On Kesharwani Enterprises (supra) Mr. Mishra submits, it
is not applicable to the case. The Chhattisgarh Value Added Tax
Act, 2005 does not have any entry corresponding to entry 77B in
Schedule B of Orissa Value Added Tax Act, 2004. In the
circumstances, view taken in relation to relevant entry in the local
STREV no.49 of 2024
Act was of wider meaning given to product bread, to include all its
modifications, as not falling under the residuary entry. So far as G.
Radhakrishna Murthy (supra) is concerned, the Supreme Court
was dealing with a distinct product, to answer the question that the
entry on perfumes could not be expanded to include aggarbatti. In
this case, the product is a modification on bread and there is
separate entry provided in the Odisha Act, classifying it.
8. In reply Mr. Raichandani submits, it will appear from
impugned order that his client acted bona fide in disclosing and
thereafter responding to the notice. In the circumstances, admission
of the revision is required also on the question of imposition of
twice the amount of penalty. Mr. Mishra submits, the provision for
imposition is mandatory by use of the word 'shall'.
9. Entries 34 in Schedule A and 77 B in Schedule B of Orissa
Value Added Tax Act, 2004 are reproduced below.
Schedule A
"34. [Bread (branded or otherwise)]
Schedule B
[77B. Mixture, bhujia, namkin, farshan and rusk, that is,
hardened bread]"
STREV no.49 of 2024
10. We do find that the product in question is essentially bread.
However, the Odisha Act provides for two separate entries in
respect of bread. When something more is done to it to result in
toasted bread, it is included in the separate taxable entry. On perusal
of the assessment order, the first appellate order and impugned
order we do find there has been different findings on fact regarding
the product. However, the Tribunal does not appear to have suffered
from any confusion in finding, as the last forum to find on facts that
the product is toasted bread. Though entry 77B in Schedule B
includes products other than rusk, but given meaning by the entry,
of rusk to be hardened bread, the Tribunal cannot be faulted for
coming to a finding that petitioner's product is hardened bread as in
toast. It is a clear case of the product of bread having two applicable
classifications.
11. We accept submission made on behalf of revenue that
Kesharwani Enterprises (supra) is not applicable since the
Chhattisgarh Act does not have an entry corresponding to entry 77B
in Schedule B. Also, revenue's submission regarding G.
Radhakrishna Murthy (supra), of a distinct and separate product
said by the Supreme Court as cannot come within the entry, as
cannot be expanded to accommodate it, to be inapplicable because
STREV no.49 of 2024
the Odisha Act provides for two separate entries in respect of
essentially the same products bread and rusk, the latter being
hardened bread as in toast.
12. In view of aforesaid, we do not find a substantial question of
law to arise from impugned judgment of the Tribunal. The review
petition is dismissed.
(Arindam Sinha )
Judge
( M.S. Sahoo )
Judge
Jyostna/Radha
asant
STREV no.49 of 2024
