In a ruling delivered on Monday, the Himachal Pradesh High Court has held that the product “rusk” shall be treated as “Bread” for the purpose of the Himachal Pradesh VAT Act for granting tax exemption.
A bench of Justice Tarlok Singh Chauhan & Justice Chander Bhusan Barowalia was considering a bunch of writ petition filed by various food manufacturers relating to the classification adopted by the petitioners on sale of ‘Bread-Rusk’ under Entry 9 of Schedule B under the HPVAT Act as “Bread”, exempted from VAT.
Shri Ajay Vaidya, learned Senior Additional Advocate General, relied upon a recent judgment in M/s Saj Food Products Pvt. Ltd. vs. State of Meghalaya & Ors., wherein it was held that product rusk is bread or the VAT exemption available to bread in the State must be extended to rusk.
After considering the rival submissions, the division bench observed that it is now well settled principle of law that in interpreting different entries, attempts shall be made to find out as to whether the same answers the description of the contents of the basic entry and only in the event it is not possible to do so, recourse to the residuary entry should be taken by way of last resort.
Allowing the petitions, the High Court held that “Having gone through the aforesaid judgment, we are unable to subscribe to the view taken therein. Once the Court agrees that the raw material as also the manufacturing process for Bread and Rusk is same and thereafter only the moisture is extracted, would not term that activity to be falling within the meaning of “manufacturer” as used in the Act, for the reasons as stated in paras 12 to 18 and in view of the precedent as taken note of in paras 19 to 26 here-in-above. Consequently, we find merit in these writ petitions and the same are allowed.”
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