‘Kurkure’ And ‘Cheetos’ Classifiable As ‘Namkeen’, Not ‘Snacks’ Under VAT Act: Rajasthan High Court

The Rajasthan High Court has held that ‘Kurkure’ and ‘Cheetos’ are classifiable as ‘namkeen’, not 'snacks' under the VAT Act.

The bench of Justice Sameer Jain observed that the department neither sought any technical or expert opinion nor brought any evidence on record to prove their point. It appears that the Tax Board merely relied on a basic Google search result wherein the goods, namely ‘Kurkure’ and 'Cheetos', were described as Namkeen snacks.

The petitioner-assessee is in the sale of various food products, including the goods in question, i.e., ‘Kurkure’ and ‘Cheetos’. The petitioner-assessee is also engaged in the sale of branded potato chips, which are sold under the brand names ‘Lays’ and ‘Uncle Chips’.

The petitioner-assessee was self-classifying the goods along with the branded potato chips under Entry 131 [Sweetmeat Deshi (including Gajak & Revri), bhujiya, branded and unbranded namkeens] of Schedule IV to the RVAT Act and paying tax at the rate of 4% or 5%.

A survey was conducted at the business premises of the petitioner-assessee for the assessment year 2011–2012, which ultimately resulted in the passing of the assessment order. The department classified the goods along with the branded potato chips under residual entry under Schedule V of the RVAT Act, attracting tax at a rate of 12.5% to 14%. The differential tax and interest were imposed on the petitioner.

The appeal against the assessment order was partly allowed by the first appellate authority to the extent of the classification of branded potato chips being covered under Entry 107 of Schedule IV to the RVAT Act. Therefore, the differential tax and interest on the branded potato chips were deleted, but the classification of ‘Kurkure’ and ‘Cheetos’ under the residual entry of Schedule V to the RVAT Act was maintained.

The Rajasthan Tax Board also dismissed the appeal filed by the assessee and maintained the levy of additional tax and interest by classifying ‘Kurkure’ and ‘Cheetos’ under residual Entry No. 78 of Schedule V to the RVAT Act.

The assessee contended that the department has not discharged its onus to prove that the goods in question, i.e., ‘Kurkure’ and 'Cheetos', could not be considered ‘namkeen’ and covered under Entry 131 of Schedule IV to the RVAT Act. The FSSAI license also classified the goods as namkeen.

The department contended that the goods classified as ‘namkeen’ pertain to the Excise Act and have no application in the instant case, more so when the goods in question are ‘namkeen snacks’ and not ‘namkeen’.

The court has held that the department has failed to discharge its obligation to establish that the goods in question would fall under the general, residual, orphan entry and not the specific entry. No cogent reason has been assigned to hold the goods in question as 'snacks'. The goods in question have been classified as namkeen as per the FSSAI license.

Counsel For Petitioner: Rohan Shah

Counsel For Respondent: Punit Singhvi

Case Title: Ms Pepsico India Holdings Private Ltd. Versus Assistant Commissioner

Case No.: S.B. Sales Tax Revision / Reference No. 119/2020

Click Here To Read The Order