Functional chewing gums
Since it is not an edible item, it cannot be bracketed as sweets and sweetmeats to enjoy the lower tax slab of 4%, and will instead attract VAT at 12.5%.
The bench of Justice Bhargav Karia and Justice Pranav Trivedi said the tribunal’s finding ran contrary to the apex court’s ruling, which categorically held that chewing gum is not an eatable product. 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. 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.”
Ahmedabad: Chewing gum may leave a sweet taste in the mouth, but it cannot sweeten the tax deal for manufacturers. With this observation, Gujarat High Court has allowed the state govt’s appeal against a Value Added Tax tribunal’s order. The state argued that chewing gum is not expressly mentioned in Entry 74A and belongs under the residuary entry. It relied on Supreme Court precedent requiring a common parlance test.