Is it bread or biscuit, bread-sans-moisture or simply rusk? The Himachal Pradesh High Court took 12 years to conclude that rusk is actually bread-sans-moisture and as such, exempt from Value Added Tax (VAT). But the matter is not yet settled. In Meghalaya, the High Court had earlier decided that rusk was different from bread. Hence, there would be no exemption from VAT.

The distinctions are significant because VAT has been subsumed in Goods & Services Tax (GST) and continues to be relevant in the present taxation regime. Also considering contrary rulings by different High Courts, the issue is expected to be finally settled by the Supreme Court.

Meghalaya High Court, in a ruling in March this year, was emphatic that rusk was not bread and as a value-added-product would not get exemption from VAT. “The answer is obvious: bread is bread and rusk is rusk and never may the twain (two) be equated,” the bench said, upholding the appellate judgment about no exemption. Applying the common parlance test, the court questioned whether a person desirous of buying bread would ask for rusk at a shop.

Himachal HC, however, has a different view.

Dictionary meaning

“As per the dictionary meaning of rusk, it would be established that it is nothing but virtually a slice of bread dried and cooked again in the oven,” a division bench of the court said recently while disposing of a case filed by SS Food Kather in 2010. The petitioner had moved court after being levied VAT at the rate of 13.5 per cent for rusk.

“The majority of the ingredients in rusk and bread are the same and the difference of ingredients in the two products is minuscule and it is only the duration of the baking which makes the difference between the two,” the HP High Court said in its ruling.

The bench took note of observations made by Allahabad High Court in a similar matter where it was said that the word rusk had been defined in the Concise Oxford English Dictionary to mean a dry biscuit or a piece of twice-baked bread especially as prepared for use as baby food. Similarly, Collins Cobuild Advanced Learner’s English Dictionary defines rusk as hard, dry biscuits that are given to babies and young children.

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