‘Robinson Barley’ cannot be taxed as a cereal: Orissa High Court

CUTTACK: The dispute pertaining to the subjection of ‘Robinson Barley’ to sales tax has attained finality with the Orissa High Court ruling that it is a distinct commercial product that cannot be classified as ‘cereal’. Hence, ‘Robinson Barley’ should be taxed at the rate of 12 per cent (pc) and not 4 pc.

Initially, Robinson Barley was taxed at the rate of 4 pc in the State. But then a sales tax officer held that Robinson Barley is neither a medicine nor a cereal. So, it is eligible to be taxed at the last point of sale at the rate of 12 pc.

Again, when an appeal was filed by a sales tax payer it was accepted that Robinson Barley was barley which was a ‘cereal’ taxed at the first point of sale at the rate of 4 pc. However, the Sales Tax Tribunal allowed the appeal of the State to hold that Robinson Barley was not the same as barley in the form of cereal and cannot be taxed at the first point of sale at 4 pc.

The dispute reached the High Court when Reckitt Benckiser (India) Ltd, the manufacturer of Robinson Barley and Purity Barley filed petitions challenging the judgment of the Tribunal. With it, the High Court was left to decide whether Robinson Barley and Purity Barley manufactured by Reckitt Benckiser (India) Ltd should be subject to sales tax under the entry meant for cereals at 4 pc or under the residual entry at 12 pc?

The High Court dismissed the petitions on August 12. The division bench of Chief Justice S Muralidhar and Justice RK Pattanaik said, “In the present case, there can be no doubt that in trade parlance ‘Robinson Barley and Purity Barley’ would not be simply understood as ‘barley’. In other words, they are identifiable, distinct, commercial products different from ordinary barley”.

If a customer went to a shop and asked for barley, the such customer would not be supplied Robinson Barley or Purity Barley. Conversely, if the customer was to ask for Robinson Barley or Purity Barley, then he/she would not be supplied with plain barley.

“The distinct commercial product ‘Robinson Barley’ cannot be classified as ‘cereal’ which is taxable at the rate of 4 pc and has to be brought under the residual entry taxable at the rate of 12 pc”, the bench ruled.

The High Court acknowledged the contention that Barley and Robinson Barley are not items of the same nature though the basic ingredients of Robinson Barley may be barley when barley is transformed into Robinson Barley, it goes through various technical processes and various other ingredients like iron and calcium are added. Robinson Barley is regarded as a new commodity in the market and the same is different from the original commodity, namely barley, the bench ruled.

CUTTACK: The dispute pertaining to the subjection of ‘Robinson Barley’ to sales tax has attained finality with the Orissa High Court ruling that it is a distinct commercial product that cannot be classified as ‘cereal’. Hence, ‘Robinson Barley’ should be taxed at the rate of 12 per cent (pc) and not 4 pc. Initially, Robinson Barley was taxed at the rate of 4 pc in the State. But then a sales tax officer held that Robinson Barley is neither a medicine nor a cereal. So, it is eligible to be taxed at the last point of sale at the rate of 12 pc. Again, when an appeal was filed by a sales tax payer it was accepted that Robinson Barley was barley which was a ‘cereal’ taxed at the first point of sale at the rate of 4 pc. However, the Sales Tax Tribunal allowed the appeal of the State to hold that Robinson Barley was not the same as barley in the form of cereal and cannot be taxed at the first point of sale at 4 pc. The dispute reached the High Court when Reckitt Benckiser (India) Ltd, the manufacturer of Robinson Barley and Purity Barley filed petitions challenging the judgment of the Tribunal. With it, the High Court was left to decide whether Robinson Barley and Purity Barley manufactured by Reckitt Benckiser (India) Ltd should be subject to sales tax under the entry meant for cereals at 4 pc or under the residual entry at 12 pc? The High Court dismissed the petitions on August 12. The division bench of Chief Justice S Muralidhar and Justice RK Pattanaik said, “In the present case, there can be no doubt that in trade parlance ‘Robinson Barley and Purity Barley’ would not be simply understood as ‘barley’. In other words, they are identifiable, distinct, commercial products different from ordinary barley”. If a customer went to a shop and asked for barley, the such customer would not be supplied Robinson Barley or Purity Barley. Conversely, if the customer was to ask for Robinson Barley or Purity Barley, then he/she would not be supplied with plain barley. “The distinct commercial product ‘Robinson Barley’ cannot be classified as ‘cereal’ which is taxable at the rate of 4 pc and has to be brought under the residual entry taxable at the rate of 12 pc”, the bench ruled. The High Court acknowledged the contention that Barley and Robinson Barley are not items of the same nature though the basic ingredients of Robinson Barley may be barley when barley is transformed into Robinson Barley, it goes through various technical processes and various other ingredients like iron and calcium are added. Robinson Barley is regarded as a new commodity in the market and the same is different from the original commodity, namely barley, the bench ruled.