In a significant ruling, the Allahabad High Court has upheld the finding of the Commercial Tax Tribunal holding that “vitamins and minerals pre-mix” are unclassified goods, do not fall under “ores and minerals”, “drugs and medicines” or “chemicals” under Schedule II of the U.P. Value Added Tax Act, 2008.
Sarswat Peroxides Private Ltd, the revisionist-assesee argued that the department had been treated “vitamins and minerals pre-mix” as “chemicals” and were consequently taxing it at 4% under Entry 29 of Schedule II of the Act. Since dispute arose regarding classification of “vitamins and minerals pre-mix”, revisionist approached the Commercial Tax Tribunal under Section 59 of the Act seeking its opinion on the classification.
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The Commissioner, Commercial Tax rejected the application and held that “”vitamins and minerals pre-mix” does not fall under the Entry 89 under the heading “ores and minerals” inasmuch as “ores and minerals” pertain to “raw material” and “vitamins and minerals pre- mix” could not fall under the category of Entry 89. It was held that “vitamins and minerals pre-mix” would be categorized as “unclassified goods” liable to be taxed @ 12.5%.”
The Revisionist-assesee approached the High Court claiming that “vitamins and minerals pre-mix” produced by the revisionist are mineral preparations which include chemicals like Calcium Carbonate, Di-calcium Phosphate, Potassium, Iodine, Sodium Banzol etc and liable to be taxed under “chemicals”.
Rejecting the arguments of the revisionist-assesee, Justice Alok Mathur held that the tax levied is not on the raw materials (chemicals) used in making the pre-mix but is levied on the final product which is the “vitamins and minerals pre-mix”.
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The Court observed that in common parlance “drugs” and “medicines” are synonymously used. It was observed that Entry 41 defines products which are alleviate any disease or its symptoms. The Court held that no material had been produced before the Court to show that “vitamins and minerals pre-mix” fall under the category “drugs and medicines”.
A single bench of Justice Alok Mathur observed that Entry 89 which defines “ores and minerals” only mentions raw ores and minerals and not pre-mix. Therefore, it has been held that “vitamins and minerals pre-mix” do not fall under Entry 89.
While dismissing the revision application, the court upheld the decision of the Commercial Tax Tribunal that “vitamins and minerals pre-mix” is an unclassified item under the UPVAT Act.
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