Anurupa Pal
Published On: March 16, 2022 at 18:26 IST
The Meghalaya High Court stated that the Value Added Tax (VAT) Exemption Granted to Bread in the State cannot be extended to Rusk as Rusk is Different from Bread.
The Bench of Chief Justice Sanjib Banerjee and Justice W Diengdoh noted that the Petitioner-Company Subjects Bread to further Manufacturing Activity to Prepare Rusk and hence adding Value to attract Value Added Tax.
“The same ingredients that go into the Manufacture of Bread may, doubtless, be used by the Petitioner but upon bread being Manufactured by the Petitioner, the Petitioner subjects such Bread to a further process of Manufacturing activity to arrive at its finished Product of Rusk,” the Court said.
Hence proving the point that Bread is Bread whereas Rusk is only Rusk and both cannot be Proved Wrong.
The Bench upheld the Income Tax Appellate Tribunal’s Judgment and The Meghalaya Revenue Board’s orders under challenge as it saw No ground to Interfere with the Same.
On the Merits of the Case, the High Court observed that the Argument of the Petitioner was that since Rusk is merely a Form of Bread slightly modified to the extent that it is dried, it is Entitled it to the Value Added Tax Exemption that Bread enjoys in Meghalaya.
The Bench then relied on the Supreme Court Decision in Vasantham Foundry.
The Final Products were not cast iron but the cast iron produced by the Assessee was subjected to a further process of manufacture to be converted into pipes or manhole covers or bends.
The Supreme Court in that Judgement had held that cast iron casting could not be regarded as cast iron since the manufactured cast iron was subjected to a further process of manufacture to be converted into cast iron castings.
The same applies to Bread and Rusk as well, the Court said.
“It cannot be said that the Petitioner’s product rusk is bread or the Value Added Tax Exemption available to bread in the State must be Extended to rusk … Upon applying the Common Parlance test in this Case, the question that arises is whether a person desirous of buying bread would ask for rusk or whether a person who goes to a shop and asks for rusk would be given bread in its place. The answer is obvious: bread is bread and rusk is rusk and never may the twain be Equated,” The Court said.
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