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210 Goods & Services Tax Cases - Reports [Vol. 1
[2010] 1 GST 210 (KAR.)
HIGH COURT OF KARNATAKA
Tropical Flavours (P.) Ltd.
v.
State of Karnataka*
K.L. MANJUNATH AND ARAVIND KUMAR, JJ.
STA NO. 20 OF 2006
DECEMBER 10, 2009
CLASSIFICATION OF GOODS - Chillies - Assessee was engaged in extraction
of chilly oleoresin from dry chillies - Whether cut chillies, spent
chillies, crushed chillies and chilly seeds remaining after extraction of
chilly oleoresin from dry chillies is a spice by itself, which can be sold and
traded in common parlance - Held, yes - Whether, therefore, above
goods would fall under entry No. 61 of Third Schedule to Act under
definition of ‘dry chillies’ - Held, yes [Section 4 of the Karnataka Value
Added Tax Act, 2003]
FACTS
The assessee was engaged in extraction of chilly oleoresin from dry
chillies. It submitted an application before the advance ruling authority
for clarification on the rate of tax applicable to the cut chillies, spent
chillies, crushed chillies and chilly seeds remaining after extraction of
chilly oleoresin from dry chillies. The said authority held that the above
goods having not been included in entry No. 61 of the Third Schedule to
the Act, which reads as : ‘Spices in all forms including jeera, ...... and dry
chillies’, the said goods would attract tax at the rate of 12.5 per cent under
section 4(1)(b) for the period from 1-4-2005 to 31-3-2006 inasmuch as the
residuary clause was applicable to the goods in question and with effect
from 1-4-2006, the above goods were eligible to be taxed at the rate of 4 per
cent in view of entry No. 89 of the Third Schedule to the Act, which reads
as : ‘Spices in all forms including jeera, ......... tamarind and dry chillies
including cut chillies, spent chillies and chilly seeds, but excluding ....’. The
Third Schedule to the Act was substituted by the new Schedule with effect
from 1-4-2006 and the spices were specified at serial No. 89.
On appeal to the High Court :
HELD
In entry No. 61 of the Third Schedule to the Act, spices in all forms including
the dry chillies find a place. The Legislature in its wisdom having intro-
*In favour of assessee.
GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 86
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