IMPORTANT POINTS
The word “other” used in sub-entries or sub-sub-entries of the Kerala Value Added Tax Act, 2003 have to be construed by adopting the doctrine of ejusdem generis.
Residuary Entry applies only when goods are not covered under any other Entry of the List or in the Schedules.
Ujala Supreme and Ujala Stiff and Shine are not taxable under 2003 Act. However VAT already paid will not be refundable.

Headnote:(a) Kerala Value Added Tax Act, 2003 – Section 6, clauses (a) and (d) – Notified goods would be taxed at the rate of 12.5% – Goods not falling under Clause (a), mentioned in Second and Third Schedule, the rate of tax would be 12.5% – It does not necessarily mean that exempted goods would be taxable by virtue of Clause (d). (Para 17)
       (b) Interpretation of statute – Kerala Value Added Tax Act, 2003 – Commodities with and without HSN numbers – The word “other” used in sub-entries or sub-sub-entries have to be construed by adopting the doctrine of ejusdem generis – Provisions of HSN as adopted by the Customs Tariff Act, 1975 have to be followed – Interpretation of the Third Schedule – In the light of entries in the Customs Tariff Act, 1975 as also the judgments applicable to the corresponding entries in the Customs Tariff Act. (Para 19, 22)
       (2008) 15 VST 10 (SC); (1995) 3 SCC 454; (2005) 2 SCC 460 – Relied upon
       (c) Kerala Value Added Tax Act, 2003 – Residuary Entry 103 – Residuary Entry applies only when goods are not covered under any other Entry of the List or in the Schedules – In case the goods are covered, the rates as applicable would apply. (Para 25)
       (d) Kerala Value Added Tax Act, 2003 – Entry 155(8)(d), 118(5) and HSN Code 3204.12.94 – Ujala Supreme and Ujala Stiff and Shine – Goods produced by diluting AVP – No new product manufactured – Fall under Entry 155(8)(d) and not 118(5) – AVP covered under HSN Code 3204.12.94 – Residuary Entry 103 not attracted – Not question of manufacture but classification based upon the HSN number is relevant for the purposes of 2003 Act – VAT not payable on the goods – However, the VAT already paid would not be refundable. (Para 38, 39, 40)
       2007 (217) ELT 161 (SC) – Relied upon
       1994 (72) ELT 669; (2007) (78) RLT 276 – Referred
       Facts of the case:
       There was an issue relating to rate of tax applicable to the two products, “Ujala Supreme” and “Ujala Stiff and Shine”, the appellant filed an application for clarification before the Commissioner of Commercial Taxes, Thiruvananthapuram. The Commissioner clarified the position which is in the nature of advance ruling by opining that the items “Ujala Supreme” and “Ujala Stiff and Shine” are commercially known as instant whiteners and the consumers who are purchasing the manufactured goods which are subjected to certain processes and are marketed as a commercially different commodity, “instant whitener”, in the brand name “Ujala’”, which is used as a “laundry whitener” at the end point. After so observing, the Commissioner referred to SRO 82/06 wherein the Government has notified list of commodities coming under 12.5% category and laundry whiteners have been brought under this category vide Entry No. 27. On that basis, the Commissioner held that as there is a specific Entry for the commodities, it would fall under the said Entry and the taxable rate would be 12.5%.
       The appellant filed an appeal. The High Court remitted the matter
       The Commissioner opined that the products “Ujala Supreme” and “Ujala Stiff and Shine” are classifiable under Entry 103 of SRO 82/2006 and would attract tax at the rate of 12.5%.
       The High Court dismissed the appeal.
       Finding of the Court:
       Impugned judgment is not sustainable.
       Result: Appeal allowed.

JUDGMENT

Dipak Misra, J.

The appellant, M/s. M.P. Agencies, is a registered dealer under the Kerala Value Added Tax Act, 2003 (for brevity, ‘the 2003 Act’) and is a wholesale distributor for “Ujala Supreme” and “Ujala Stiff and Shine”, which are manufactured by M/s. Jyothy Laboratories Ltd. “Ujala Supreme” is a fabric whitener and “Ujala Stiff and Shine” is a liquid fabric stiffener. The product “Ujala Supreme” is described as fabric whitener for supreme whiteness of clothes, and “Ujala Stiff and Shine” is given the description, liquid fabric whitener for crisp and shining clothes.

2. As there was an issue relating to rate of tax applicable to the two products, the appellant filed an application for clarification before the Commissioner of Commercial Taxes, Thiruvananthapuram. The Commissioner vide order no. C7.34151/06/CT dated 25.10.2006 clarified the position which is in the nature of advance ruling by opining that the items “Ujala Supreme” and “Ujala Stiff and Shine” are commercially known as instant whiteners and the consumers who are purchasing the manufactured goods which are subjected to certain processes and are marketed as a commercially different commodity, “instant whitener”, in the brand name “Ujala’”, which is used as a “laundry whitener” at the end point. After so observing, the Commissioner referred to SRO 82/06 wherein the Government has notified list of commodities coming under 12.5% category and laundry whiteners have been brought under this category vide Entry No. 27. On that basis, the Commissioner held that as there is a specific Entry for the commodities, it would fall under the said Entry and the taxable rate would be 12.5%.

3. Being aggrieved by the aforesaid clarificatory order, the appellant filed an appeal being O.T.A No. 13 of 2006 which was disposed of on 7.6.2007. The High Court remitted the matter by holding, inter alia,:-

“In the instant case, the Commissioner without even adverting to any one of the evidence produced by the assessee, by merely relying upon how the commodity is understood in the commercial circles, has proceeded to observe that the sale of the products by the assessee requires to be taxed at 12.5%. This view of the Commissioner is contrary to sub-section (2) of Section 94 of the Act.

The orders passed by the Commissioner under Section 94 of the Act is not only binding on the assessee, but also binding on the assesses who are similarly placed. Further, it is binding on the assessing authority. In cases of this nature, it is expected of the Commissioner to deal with the subject which is before him for clarification in detail and then offer his opinion by way of an order. In the instant case, the Commissioner has not done that exercise. This action of the Commissioner, in our opinion, is arbitrary, illegal and improper. Therefore, the order passed by the Commissioner requires to be set aside and the matter requires to be remitted back to the Commissioner for a fresh decision, keeping in view the observations made by us in the course of the order.”

4. After the matter was remitted, the Commissioner considered all the materials furnished by the appellant and heard the matter at length. It was contended by the appellant that the scheme of VAT is materially different from that of KGST principally with respect to classification of goods for the purpose of levy of sales tax based on Harmonized System of Nomenclature (HSN), rate of tax applicable to different goods, etc. and resort to common parlance/commercial parlance test could be made only in respect of those goods, which have no reference to HSN. It was further urged that once a commodity is listed in Third Schedule along with its HSN under List A, it has to be included in that entry only.

5. The crucial question, as the Commissioner perceived, was that the determination of classification of a particular commodity would be whether the s

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2015 Supreme(SC) 221

Cases Referred (5)