Rajasthan High Court rules ‘Kurkure’ and ‘Cheetos’ as ‘namkeen,’ not ‘snacks’ under VAT Act.
Case Title: Ms Pepsico India Holdings Private Ltd. V. Assistant Commissioner
Decided on: 06 October, 2023
Writ no. S.B. Sales Tax Revision / Reference No. 119/2020
CORAM : HON’BLE MR. JUSTICE SAMEER JAIN
INTRODUCTION
This case concerns a dispute over the classification of ‘Kurkure’ and ‘Cheetos,’ snack products manufactured by PepsiCo India Holdings, for tax purposes under the Rajasthan Value Added Tax Act, 2003 (RVAT Act). The main issue is whether these snacks should be categorized as ‘namkeen’ (subject to a lower tax rate) or ‘snacks’ (subject to a higher tax rate) under the RVAT Act.
PepsiCo argued for ‘namkeen’ classification, while the Revenue authority classified them as ‘snacks.’ The case hinges on statutory interpretation, and the outcome has significant tax implications for these products.
Facts of the case
The case involved various Sales Tax Revision/Reference applications (STRs) and revolved around the interpretation of whether ‘Kurkure’ and ‘Cheetos’ should be classified as ‘namkeen’ or ‘snacks’ under the RVAT Act. Pepsico presented their case based on packaging labels, ingredients, FSSAI licenses, and legal judgments to support their classification as ‘namkeen.’ They argued that specific entries should take precedence over general entries in the tax schedule and that the Revenue authority had not provided sufficient evidence for their classification.
The Respondent’s argument rested on classifying these products as snacks and placing them under the residual entry, citing basic internet searches and ingredient lists.
Courts Analysis and Decision
After a comprehensive examination of the arguments and evidence presented, the court ruled in favour of the petitioner, PepsiCo India Holdings Pvt. Ltd. The court classified ‘Kurkure’ and ‘Cheetos’ as ‘namkeen’ under the Rajasthan Value Added Tax Act, 2003. This decision resulted in a lower tax rate for these products and effectively quashed the Tax Board’s orders that had classified them as snacks.
The court’s decision was based on the interpretation of a previous judgment by the Tax Board and the insufficient evidence presented by the respondent to support their classification of the products as snacks. As a result, PepsiCo’s products were classified as ‘namkeen,’ leading to a lower tax liability for the company.
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Written by- Kusuma R