07 February, 2015

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Popcorn is not ‘Namkeen’ but ‘Puffed Grain’–Haryana State VAT Clarification in case M/s PVR Limited, Gurgaon

In its recent order of Clarification dated 30.01.2015 u/s 56(3) of HVAT Act, the state vat authorities in case of M/s PVR Limited has clarified that the Popcorn prepared and sold in cinema premise is liable to VAT @ 5% under schedule C entry No. 59 of Act.


M/s. PVR Limited, Gurgaon (TIN- 06941823135) (hereinafter referred to as the applicant) has sought a clarification under section 56(3) of the Haryana Value Added Tax Act, 2003 (hereinafter referred to as the Act) on the following:-

"What is the rate of tax on sale of popcorn under the Haryana Value Added Tax Act,  2003?"

2 According to the statement of facts the applicant runs multiplex cinemas in the name of PVR cinemas in the State and sells popcorn to the visitors in addition to the other food items. The popcorn is prepared in the machines installed at the cinema premises. Oil/butter and salt are added in the corn while preparing the popcorn. The applicant also provides pouches containing various flavours including cheese and orange etc.

Further, caramel flavor is also provided by the applicant. The customers spread these f l avours in the popcorn bucket, just mix and consume. It is claimed by the applicant company that the popcorn falls in Entry 59 and 100 B of Schedule C appended to the Act and are liable to tax @ 5% being Schedule C goods. The applicant has also taken support of number of judgments.


3. The issue has been examined. The entries taken support of by the applicant contained in Schedule C are reproduced hereunder for ready reference:-

Entry 59 "Parched, roasted or puffed grain, parched gram and roasted groundnut"

Entry 100B "Mithaii and Namkeen except those covered by entry 59 of Schedule B and Khoya"


So far as Entry 100 B pertaining to namkeen is concerned, namkeen in common parlance includes Bhujia mixtures etc prepared in Indian house-holds and by Halwais. So applying the Common Parlance Test as well as understanding of an item by the persons who use it and sell it, {the popcorn cannot be said to fall under the term 'Namkeen'.

Entry 59 reads as parched, roasted or puffed grain. Popcorn is prepared from maize (or also called as corn) which is a grain. Parched Grain is grain that has been cooked by dry roasting. Further, Puffed grains have been made for centuries with the simplest methods like popping popcorn. Modern puffed grains are often created using high temperature, pressure, or extrusion. Thus the popcorn is nothing but a puffed grain. So the popcorn sold by the applicant falls under Entry 59 of Schedule C and is liable to VAT accordingly.

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