Mint Orange 2022 Classified as Industrial Input; Gujarat HC Rejects Residuary Tax Entry

The State of Gujarat challenged an order of the Gujarat VAT Tribunal which had allowed the assessee’s appeal and classified the product “Mint Orange 2022” as an industrial input under Entry 226 of Entry 42A, Schedule II of the Gujarat Value Added Tax Act, 2003.

The dispute arose from an advance ruling dated 24.08.2011, where the Commissioner of Commercial Tax (Legal) treated the product as a residuary good taxable under Entry 87 of Schedule II.

Before the Tribunal, the assessee produced laboratory reports and certificates demonstrating the product’s industrial nature, which the Revenue did not dispute. The Tribunal held that the product squarely fell within the specific entry for aromatic chemicals and compounds and could not be pushed into the residuary category.

Issue Before HC: Whether “Mint Orange 2022” was liable to tax as a residuary good under Entry 87 or was classifiable as an industrial input under Entry 226 of Entry 42A, Schedule II of the GVAT Act, 2003.

HC Ruled: The High Court dismissed the Revenue’s appeal, holding that no substantial question of law arose. The Court noted that the Tribunal’s findings were firmly based on documentary evidence, including laboratory reports and certificates, which were never questioned by the Revenue.

Relying on the Supreme Court’s decision in Mayuri Yeast India Pvt. Ltd., the Court reiterated that where a product can reasonably be classified under a specific entry, recourse to a residuary entry is impermissible. Given the composition and industrial use of “Mint Orange 2022” as a mixture of odoriferous substances of aromatic chemicals, the Court agreed that it was rightly covered under Entry 226 of Entry 42A. Thus, the advance ruling treating it as a residuary good was found unsustainable, and the Tribunal’s order was upheld.

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