Pizza and Sandwich are ‘Cooked Foods’, not ‘Baked Branded Products’: Rajasthan HC allows Exemption Benefit beyond 5% VAT [Read Order]

The Rajasthan High Court has held that Pizza and Sandwich qualify as ‘Cooked Foods’ for claim of exemption beyond 5% Value Added Tax (VAT) and not ineligible for exemption as ‘Baked Branded Products’, allowing consequential relief to the assessee.

It was noted by the Bench that, “However, with the advent of time and change in societal eating norms, the reasoning of Tax Board that ‘pizza’ or ‘sandwich’ cannot be considered ‘meals’ does not entirely hold true. In any case, since the finding of the Tax Board is not based on cogent evidence, the same cannot be sustained.“

The question pertained to classification of ‘pizza’ and ‘sandwich’ under the Rajasthan Value Added Tax Act (RVAT), 2003. The common issue for consideration of the Rajasthan High Court, in a bunch of revision petitions was whether ‘pizza’ and ‘sandwich’ fall within the ambit of “cooked food” to claim benefit of exemption notification dated 09.03.2010.

Counsel for the petitioner-assessee submitted that the Tax Board had erred in law and in fact by holding that ‘pizza’ and ‘sandwich’ are ‘baked branded products’ and not ‘food’.

For the petitioner-assessee, it was submitted that there was no dispute with regard to the fact that the restaurants run by the petitioner-assessee are below 3 star category and that ‘pizza’ is prepared by the process of baking, which is one of the various process of cooking.

It was submitted that ‘pizza’ is a complete food which provides valuable nutrients required by the human body viz. carbohydrates, fats, vitamins, proteins, minerals, etc.

Similarly, a sandwich is also prepared by cutting the bread loaf, which is also prepared in the restaurant, into half and then by adding either vegetable patty or non-vegetarian items like meat and chicken (the fillings), which are prepared by frying and heating. The sandwich also contains various fresh vegetables and sauces and is in itself a complete meal having high nutritional value and nourishment, which is cooked by the petitioner-assessee and sold to various customers.

The first contention of the petitioner-assessee was that the revenue has not discharged its onus to prove that ‘pizza’ and ‘sandwich’ are not cooked foods. It is submitted that neither any expert/technical opinion was sought nor any evidence was brought on record to prove their point. Rather, the revenue had relied upon definitions provided on ‘Wikipedia’ and even then have misconstrued the definition therein, the petitioner counsel argued

The second contention of the petitioner-assessee was that notification dated 09.03.2010 has used the term “food cooked by him” and the ‘pizza’/‘sandwich’ sold by the petitioner-assessee is

covered within the four corners of the said notification.

It was also submitted that as per settled position of law, onus or burden to show that a product falls within a particular tariff item is always on the revenue and since the revenue has failed to discharge its onus, the reference ought to be allowed in the favour of the petitioner-assessee.

It was also added that both the lower authorities have relied upon judgments delivered by different Courts prior to the introduction of ‘pizza’ and ‘sandwich’ in the Indian food market. It is stated that both the authorities have relied upon the traditional/conservative meaning of the term

‘Food’ when in-fact the concept of food is not static and has changed continuously over the course of time having regard to newly developing techniques of preparation of food.

The Rajasthan High Court Bench noted that, “it appears that the Additional Commissioner arrived at the conclusion that ‘pizza’ is not ‘cooked food’ based on the following observations:

(i) Cooked food is prepared by using oil/ghee and spices with application of heat by mainly through chulha or gas burner.

(ii) Cooked food only contains fresh ingredients and no preservatives, whereas the toppings used in the preparation of ‘pizza’ contains preservatives;

(iii) Preparation of cooked food takes time whereas ‘pizza’ can be prepared in considerably less time;

(iv) Since topping and bread base are preheated and precooked, ‘pizza’ would fall under the category of ‘fast food’ and not ‘cooked food’;

(v) Cooked food is necessarily served with traditional cutlery, whereas the same is not required with ‘pizza’ and ‘sandwich’;

(vi) Pizza is not distinguishable from pizza base, which is a  baked product covered under Serial No. 154 of Schedule IV appended to the RVAT Act;

(vii) In India, pizza is not treated as ‘wholesome food’ but is treated as ‘snacks’.”

The Bench further observed that, “After considering the above, and relying on definition from Wikipedia, the Additional Commissioner determined that the product sold by the petitioner company was a ‘branded bakery product’ and hence liable to be taxed at 14%.”

In the opinion of this Court, both the authorities below have relied on extraneous, unsound, specious, and ill-founded factors and have therefore reached a perverse conclusion, the Single Bench of Justice Sameer Jain observed.

Answering the issue in favour of the petitioner-assessee and against the respondent-revenue, the SIngle Bench of Rajasthan High Court ruled that, “‘pizza’ and ‘sandwiches’ are held to be ‘cooked foods”, directing the revenue to grant consequential reliefs to the assessee within 90 days.

To Read the full text of the Order CLICK HERE

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