Ruling that chewing gum attracts VAT at 12.5%, the court allowed the state govt’s appeal against an order of the Value Added Tax tribunal. Ahmedabad: Chewing gum may be consumed for its sweet flavour, but since it is not an edible item, it cannot be classified as a sweet or sweetmeat and therefore does not qualify for the lower 4% VAT slab, Gujarat High Court has held.
The bench said, “We are of the opinion that the Tribunal has committed an error in holding that chewing gum is taxable as ‘sweets and sweetmeats’ under Entry 74A of the Schedule II of the Gujarat Value Added Tax Act, 2003 and consequently, deleting the interest and penalty. The state govt took the fight to the high court, arguing chewing gum belongs under the residuary Entry 87 and therefore attracts the higher slab. We, therefore, answer both the questions in favour of the Revenue and against the assessee and hold that ‘chewing gum’ cannot be classified as ‘sweets and sweetmeats’ under Entry 74A of the Schedule II of the Gujarat Value Added Tax Act, 2003.”
The company backed the tribunal’s approach, maintaining that bubble gum is mainly consumed for sweet juice and should be treated as a sweet and confectionery item for taxation. A bench of Justice Bhargav Karia and Justice Pranav Trivedi set aside the tribunal’s view, holding it was contrary to apex court findings that chewing gum is not an eatable product.
Before the HC, the state stressed that chewing gum is not expressly mentioned in Entry 74A and invoked Supreme Court precedent on using a common parlance test for classification.