Title: M/s Devyani International Limited v. The Additional Commissioner
Decided on: 05 May, 2023
S.B. Sales Tax Revision / Reference No. 58/2013
CORAM: HON’BLE JUSTICE SAMEER JAIN
Introduction:
The Rajasthan High Court’s Jaipur Bench has rendered a significant judgment regarding the taxation of ‘pizza’ and ‘sandwich’ sales. It pertains to the eligibility for Value Added Tax (VAT) exemption exceeding 5% when these items are sold as ‘cooked food.’ Justice Sameer Jain presided over this case, emphasizing the evolving nature of eating habits in society and the broad interpretation of ‘cooked food’ in contemporary contexts.
Facts:
The petitioner-assessee operated restaurants below the 3-star category, offering items such as ‘pizza’ and ‘sandwiches.’ These food items, particularly ‘pizza,’ were prepared through baking, which is recognized as one of the cooking processes.
The petitioner argued that ‘pizza’ and ‘sandwiches’ are wholesome foods, providing essential nutrients like carbohydrates, fats, vitamins, proteins, and minerals, making them complete and nourishing meals. ‘Pizza’ is created through baking, while ‘sandwiches’ involve slicing and filling bread with ingredients such as vegetable patties or meat, which are cooked through frying or heating. These preparations also include fresh vegetables and sauces.
The Tax Board, however, categorized ‘pizza’ and ‘sandwiches’ as ‘baked branded products’ rather than ‘food.’ It contended that these items did not fall under the ‘cooked food’ category, as they were not perceived as substitutes for conventional meals that typically consist of vegetables, chapatti or roti, and rice, according to common parlance.
The petitioner asserted that the revenue department had not met its burden of proving that ‘pizza’ and ‘sandwiches’ were not ‘cooked foods.’ The department had not sought expert or technical opinions, nor had it presented any substantial evidence. The department relied on Wikipedia definitions, which were misconstrued.
The petitioner also pointed out that the state government had explicitly classified ‘pizza’ and ‘sandwiches’ as ‘cooked food’ in subsequent notifications dated July 14, 2014, and March 9, 2015. This led to the contention that the state government consistently intended to categorize ‘pizza’ and ‘sandwiches’ as ‘cooked food.’
The department argued that the petitioner’s goods did not fall within the ‘cooked foods’ category but resembled ‘branded baked products.’ It claimed that, in common parlance, especially in Rajasthan, ‘pizza’ and ‘sandwiches’ were not considered ‘cooked food.’
Judgment:
The court highlighted that the concept of ‘cooked food’ extended beyond traditional meal items, acknowledging the changing eating habits of society. It found that the Tax Board’s conclusion lacked solid evidence and therefore could not be upheld.
Furthermore, the court noted that the state government itself had classified ‘pizza’ and ‘sandwiches’ as ‘cooked food’ in a notification dated March 9, 2015.
As a result, the court held that the sale of ‘pizza’ and ‘sandwiches’ qualified as the sale of ‘cooked food’ and, consequently, these sales were eligible for VAT exemption exceeding 5%.
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Written by Yagya Agarwal
