The Gujarat High Court recently held that the chicory roots are ‘tubers’ and are subject to sales tax under the Gujarat Sales Tax Act.
Appellant- Firm is engaged in the business of selling of Chicory roots (tuber) and duly registered under the Gujarat Sales Tax Act, 1969. The appellants purchase chicory directly from the farmers as agricultural crops and to sell it outside the State of Gujarat without carrying out any process of cutting and drying the roots.
The Revenue passed an order against the appellants by holding that the said goods are subject to sales tax. The department was of the view that no process of cutting or drying the roots was done and therefore, the corollary to the same was the produce would fall under the Entry No.23 of the First Schedule of the Gujarat Sales Tax Act.
However, the appellants maintained that the goods are exempted from tax. They relied upon the decision of the Supreme Court in Hindustan Lever Limited vs Commissioner of Sales Tax, Gujarat wherein it was held that even the chicory roots, cut and dried, would also fall under the Entry No.23 of the First Schedule of the Gujarat Sales Tax Act and therefore, would be exempted from levy of Sales Tax.
On second appeal, the Gujarat VAT Tribunal held that the chicory roots were not liable to tax either under the GST Act or under the CST Act. Since there was no tax to be levied, the question of charging any interest also would not arise, the Tribunal said.
After hearing both the sides, Justice A J Desai observed that in the above case, the Apex Court has held that Entry No.23 refers to that which may germinate.
“The entry refers to flower, fruit, vegetable seed, lucerne grass and hemp and bulbs which all fall in the same category. This would also mention ‘tubers and plants other than orchids’ and therefore since the chicory roots are tubers they would fall within the ambit of Entry No.23 and must be subjected to tax accordingly,” the Court said.
It was noted that the “Tribunal has held clearly that the essential character of chicory roots does not change by reason of slicing, cutting and drying and hence they are not liable to tax either under the GST Act or under the CST Act and therefore, no outstanding amount remains.”