SC
rules that ‘Appy Fizz’ is classifiable as “fruit juice based drink” under Entry
71 of Notification issued u/s 6(1)(d) of Kerala VAT Act, liable to VAT at 12.5%
(now 14.5%); Rejects Revenue’s reliance on Kerala HC order in case of Trade
Lines which applied the common parlance test to classify said product as
“aerated branded soft drink” taxable at 20% u/s 6(1)(a); Perusing legislative
history of said provisions, SC states that Section 6(1)(a) always covered
'aerated branded soft drinks' excluding ‘soda' with tax liability of 20% while
inclusion of fruit juice based drinks in Entry 71 clearly proved that such
drinks were never treated to be included in “aerated branded soft drinks”;
Goods enumerated u/s 6(1)(a) are tobacco based goods, pan masala, other manufactured
tobacco and manufactured tobacco substitutes, and Legislature has indicated
that higher rate of tax has been fixed for those goods which are harmful for
environment and health; SC observes that State Govt.’s delegated legislative
power to notify goods taxable at 12.5% u/s 6(1)(d) is restricted and can be
exercised only when they do not fall u/s 6(1)(a) or 6(1)(c), whie stating that
Rules of Interpretation annexed to the VAT Act are for interpreting items in
Schedules I, II and III, not for Section 6(1)(a) or Entry 71 of Notification
(S.R.O. No. 119 of 2008) issued in exercise of power u/s 6(1)(d); Holds that
Committee of Jt. Commissioners and HC clearly erred in brushing aside
certificates produced under Food Safety and Standards (Food Products Standards
& Food Additives) Regulations, 2011 and Institute of Chemical Technology
which clearly indicated that, product 'Appy Fizz' does not undergo aeration or
carbonation but is thermally processed with carbon dioxide (CO2) which helps in
preserving Apple Juice concentrate otherwise perishable in nature; Accepts
assessee’s plea that doctrine of 'noscitur a sociis' is fully attracted in
interpreting Item No. 5 of Entry 71 as ‘Appy Fizz’ is a fruit juice based drink
more akin to other commodities included therein (i.e. fruit juice, fruit
concentrates, fruit squash, fruit syrup and pulp, and fruit cordial) other than
what is included u/s 6(1)(a); Observes, by Notification S.R.O. No. 119 of 2008,
residuary entry “similar other products not specifically mentioned under any
other entry in this list” was added, which is potent enough to include fruit
juice based drinks and it is clear that such drinks are subsumed in Item No. 5
of Entry 71 after the amendment; Further observes, “Aerated branded soft drinks
which are referred to in Section 6(1)(a) cannot be drinks which are health
drinks. Fruit juice based drinks can be regarded as health drinks as compared
to other aerated branded soft drinks like pepsi cola, coca cola, etc”; SC
criticizes HC for wrongly discarding scientific and expert opinion w.r.t.
manufacturing process and contents of product, and orders of Food Safety
Authority which were relevant for considering nature and contents of
product : SC
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