The Supreme Court of India has issued notice to Pepsico India, advancing the revenue’s appeal against the Rajasthan High Court’s decision regarding the classification of Potato Chips under the Rajasthan VAT Act, 2003.
In the present case, Manish Singhvi and Milind Kumar represented the revenue.
At the High Court, the revenue had raised a matter of classification concerning the taxation of “Potato Chips” under the Rajasthan VAT Act, 2003. The question at hand was whether the Tax Board was justified in categorizing potato chips as “processed vegetables” under entry 107 of Schedule IV, subjecting them to a 4% tax rate, instead of the 12.5% rate specified in the residual entry of Schedule V.
The counsel for the revenue argued that the issue of classification had already been addressed in a previous judgment (STR No. 199/2009) on March 31, 2017. In that case, the court ruled in favor of the assessee, holding that “Potato Chips” fell under entry 107, attracting a 4% tax rate. The court also emphasized that once a reasonable and justified tax rate was established, the imposition of interest and penalty was not warranted.
The revenue’s counsel mentioned that they had filed a Special Leave Petition (SLP) against the previous judgment, titled Deputy Commissioner Vs. Pepsico India Holdings Pvt. Ltd., which had been admitted for hearing without interim protection or stay.
However, the Rajasthan High Court, taking into account the settled nature of the issue by a Coordinate Bench, declined to entertain the revision petitions on the same question of law. In line with principles of judicial discipline, the court dismissed all revision petitions and corresponding pending applications.
In the present case before the Apex Court bench of Justice B V Nagarathna and Justice Ujjal Bhuyan, notice was issued to respondents, and the matter was tagged with SLP (C) No.18731 of 2023.
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