A two-judge bench of the Chhattisgarh High Court has held that the tendu leaves are not ‘Minor Forest Produce’ and therefore, the concessional rate of 5% is not leviable on the same.
The State Government issued notification power under Section 15-B of the Chhattisgarh Value Added Tax Act, 2005 wherein the tax rate on minor forest produce was reduced to 5%. The issue before the bench comprising Chief Justice Ajay Kumar Tripathi and Justice Parth Prateem Sahu was that whether the reduced tax rate is applicable to Tendu leaves by treating them as a minor forest produce despite the Tendu leaves having been separately shown as a taxable item in Part III of Schedule II.
While considering the writ petition, the Court held that Tendu leaves are minor forest produce and the reduced tax rate of 5% as per the said notification is applicable.
On appeal, the bench held that Since the notification extending benefit of 5% VAT has been issued by the State only for minor forest produce and the entry ‘Tendu leaves’ stands untouched as an item of highest incidence of tax and has been clubbed with some such goods like diesel, petrol, aviation fuel, etc., entries in Part III of Schedule II cannot be pulled out and read into a general notification with the object of extending benefit of the said notification.
“We are satisfied that serious error of interpretation has been committed by the learned Single Judge by treating the Tendu leaves as a minor forest produce to allow benefit of reduced rate of tax at 5% when the said Schedule in VAT Act still stands and the incidence of tax shown therein is 25%,” the bench said.
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