Nestle challenges VAT on Maggi noodles in Guj HC

Court has directed the state government not to take any coercive action against the company during the pendency of the petition

The FMCG major Nestle India Ltd has challenged in the Gujarat High Court, state government's decision to levy value added tax (VAT) on sale of its noodles in Gujarat. The noodles made by the company are sold under brand name 'Maggi'.

A division bench of Justice Akil Kureshi and Justice Sonia Gokani on Tuesday issued notice to the state government and Deputy Commissioner Commercial Tax (VAT) and asked them to file reply on the multinational's petition by December 20.

The court has also directed the state government not to take any coercive action against the company during the pendency of the petition.

In a special civil application filed in the Gujarat High Court the company has challenged the order of the Deputy Commissioner Commercial Tax (VAT) issued in October this year, seeking recovery of VAT for the assessment year 2008-2009 for the sale of noodles in Gujarat.

The company has contended in its petition that the noodles falls under the category of 'sev' made out of wheat flour which is exempted from VAT as per the order of the September 9, 1986, judgement of the Gujarat Sales Tax Tribunal.

It has further contended that noodles, which falls under classification of 'sev' were exempted from VAT during previous assessment years of 2006-07 and 2008-07 by the same authority which is now seeking VAT on the food product at the rate of 12.5 per cent under the residuary entry of the Gujarat Value Added Tax Act.