2026-VIL-1097-GUJ
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VAT High Court Cases

Gujarat Value Added Tax Act, 2003 - Classification of chewing gum – Taxability as "sweets and sweetmeats" under Entry 74A of Schedule II of the GVAT Act or under the residuary Entry 87 - The assessee classified sales of chewing gum under Entry 74A attracting tax at 4%. The Assessing Officer held chewing gum liable to tax at 12.5% under the residuary entry - Whether the Tribunal was justified in holding chewing gum taxable under Entry 74A as ‘sweets and sweetmeats’ - HELD - A literal application of the words "sweets and sweetmeats" would not include chewing gum. The relevant test for classification is the common parlance test, namely whether a particular item falls under a specific entry as understood by those who deal with it - The Supreme Court in Associated Distributors Ltd. has held that bubble gum in common parlance cannot be construed as mithai or sweetmeat. Bubble gum and chewing gum are not eatable items. They are kept in the mouth and thrown out after chewing. They are used as a mouth freshener and are not made only of sugar but also contain gum base and waxes. This finding of the Supreme Court is not distinguishable on the ground that the question before it did not directly concern classification of chewing gum, since the Court categorically held that bubble gum cannot be considered sweetmeat after considering the common parlance test - There is no conflict between two specific entries in the present case. The only question is whether chewing gum falls within Entry 74A - Since the Supreme Court has already answered this question, the decision applies squarely to the facts. The Tribunal committed an error in holding that chewing gum is consumed for its sweet juice and therefore qualifies as a sweet. This finding is contrary to the binding decision of the Supreme Court that chewing gum is not an eatable product - The Tribunal also erred in relying on a decision holding that duty cannot be levied under the residuary entry once an item is considered under a specific entry, since there is no other entry in Schedule II to levy duty except the residuary Entry 87 - The classification code assigned by the Commissioner under the entry of sweets and sweetmeats for e-services does not alter this position, since the code is based on the Excise Tariff classification of chewing gum, which itself carries a rate equivalent to the residuary entry - Chewing gum cannot be classified as "sweets and sweetmeats" under Entry 74A and is taxable under the residuary Entry 87 - Both questions of law are answered in favour of the Revenue and against the assessee – The Revenue appeal is allowed
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