Amway India Enterprises Private Limited Vs Commissioner (Delhi High Court)
Coconut Oil sold as Hair Oil was wrongly classified as Edible Oil under under Entry No. 25 of the Third Schedule of DVAT Act
Conclusion: Since the coconut oil was sold by assessee in small packs; was displayed in the category of hair care; the manner in which it was to applied on hair; and the purpose for which it was purchased by the consumer leave no manner of doubt that the coconut oil sold by assessee was classifiable in a residual entry attracting tax at the rate of 12.5% .
Held: Assessee-company having TIN No. 07170192778 was engaged in the business of re-sale of goods by “Direct Selling Method”. One of the products that assessee dealt in was Coconut Oil, labelled as “Persona Coconut Oil 100% pure edible oil”. The issue, therefore, to be considered was whether the coconut oil sold by assessee, for the reason of it being used and purchased for cosmetic purposes, was to be classified in a residual entry attracting tax at the rate of 12.5% and not as an edible oil falling under Entry No. 25 of the Third Schedule attracting 5% tax. It was held that in the case of Ganesh Trading Co. v. State of Haryana : (1974) 3 SCC 620, the Hon’ble Apex Court held that the popular meaning, in the context of sales tax, was the one which was popular in commercial circles. The main criterion for determining the classification was normally the use of the product to which it was put by the customers and the purpose for which it was generally sold. Thus, in view of the admitted fact that the coconut oil was sold by assessee in small packs; was displayed in the category of hair care; the manner in which it was to applied on hair; and the purpose for which it was purchased by the consumer leave no manner of doubt that the coconut oil sold by assessee was wrongly sought to be classified under Entry 25 of the Third Schedule of the DVAT Act. Therefore, the question of law as to whether the coconut oil was wrongly classified under Entry 25 of the Third Schedule of the DVAT Act was answered in favour of Department.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The appellant, Amway India Enterprises Private Limited (hereafter ‘Amway’), has filed the present appeal under Section 81 of the Delhi Value Added Tax Act, 2004 (hereafter ‘DVAT Act’), impugning the judgment dated 18.08.2021, passed by the Appellate Tribunal, Delhi Value Added Tax, Delhi (hereafter ‘Tribunal’).
2. The learned Tribunal, by its common impugned judgment, had decided the appeals bearing 370-394/ATVAT/2017 filed by Amway, challenging the order dated 08.01.2018, passed by the learned Additional Commissioner – Objection Hearing Authority (hereafter ‘OHA’).
3. The present appeal relates to two of the issues decided by the Tribunal against the appellant in relation to classification of the coconut oil sold by the appellant and a bi-monthly publication namely ‘Amagram’.
4. It was the case of the appellant that the coconut oil, being sold by it, was rightly classified under Entry No. 25 of the Third Schedule appended to DVAT Act as ‘Edible Oils and Oil cake’, whereas as per the Revenue, the same is to be classified as a residuary item under Section 4(1)(e) of the DVAT Act.
5. The appellant had also agitated that its bi-monthly publication namely ‘Amagram’ is to be classified as a periodical within the meaning of Entry 5 of the First Schedule appended to DVAT Act.
6. However, the Tribunal has held that the same falls under Entry 52 of the Third Schedule of the DVAT Act. For the ease of reference, the classification sought by the appellant and by the Revenue, is reproduced as under:
