Gujarat HC rules chewing gum is not a sweet, upholds 12.5 per cent VAT on it

The Gujarat High Court has made it clear that chewing gum cannot be placed in the category of sweets or sweet edibles. On this ground, the court upheld the levy of 12.5 per cent value added tax (VAT) on it instead of 4 per cent.

In its observation, the court said that the remnant of chewing gum is not swallowed after it is chewed but is thrown away. Many people, from children to adults, like chewing gum, but in the matter of tax this very fact proved decisive.

The case concerns Cad Mac Chew Foods, a Gujarat company that makes peppermints, sugar tablets and chewing gum. A dispute over the company's tax had been going on for several years. In February 2007, commercial tax officials inspected the company and examined its sales and tax records.

The company challenged the decision of the VAT department. The tribunal then ruled in the company's favour and placed chewing gum in the category of sweets and sweet edibles. On that basis, it was decided that a 4 per cent tax would apply. The Gujarat government, however, challenged this ruling in the High Court.

During the hearing, a two-judge bench of the Gujarat High Court said that a thing cannot be considered an edible merely because its taste is sweet. The court noted that the sweetness of chewing gum is felt while it is chewed, but it is not swallowed. It is therefore not right to place it in the tax category of sweets or sweet edibles. The court set aside the earlier ruling of the VAT tribunal and accepted the state government's position.

Will chewing gum become costlier across the country? The High Court's ruling relates to a tax case in Gujarat, so it cannot be concluded that tax on chewing gum will rise nationwide. The ruling will have a direct bearing on the collection of the tax in question in Gujarat.