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216 Goods & Services Tax Cases - Reports [Vol. 1
trade circles is also required to be examined with reference to the instant
case and examine whether they are understood in common parlance and
in trade circles. Admittedly, the process carried out in extraction of
oleoresin, the reminiscence that would follow are, cut chilly, crushed
chilly and spent chilly and it is sold as a separate commodity and accepted
both in trade and common parlance and it does not lose its identity by
virtue of such extraction process. The originality of such commodity
remains as such. Hence, in view of the same, we are of the view that the
judgment of this Court in Habeeb Proteins would be squarely applicable
to the facts of the present case.
14. Yet another factor which requires to be considered in favour of the
assessee is the subsequent amendment brought about to the Entry No. 89
where under the Legislature in its wisdom has included crushed chilly, cut
chilly and spent chilly by adding the same after the words “dry chillies”.
Hence, we find that the Advance Ruling Authority was in error in holding
that the residuary clause viz. section 4(1)(b) of the Act was applicable to the
facts of this case viz. the commodity in question and the ruling that
the assessee is liable to pay tax at 12.5 per cent for the period 1-4-2005 to
31-3-2006.
15. In view of our discussion made herein above, we hold that crushed
chilly, spent chilly is a spice by itself which can be sold and traded in
common parlance and accordingly, tax leviable would be at the rate of 4
per cent and it comes within Entry No. 61 under the definition of “dry
chillies” and accordingly, we answer the questions of law formulated
herein above in favour of the assessee, against the revenue by holding that
the Advance Ruling Authority was in error.
Accordingly, the appeal filed by the assessee is allowed without any order
as to costs.
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GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 92
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