TMI Blog1973 (7) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. During the assessment years in question, the dealer sold condensed milk In soldered tins and other cans in the course of inter-State trade. The Sales Tax Officer brought the turnover in respect of such sales to tax under the Central Sales Tax Act. The dealer then filed appeals against the assessment orders and contended that when during the course of inter-State trade it sold condensed milk in soldered tins and other cans, it did not sell the same In sealed containers. Sale of condensed milk, in such circumstances, was totally exempt from payment of sales tax as per notifications issued by the U.P. Government. In the circumstances it was not liable to pay Central sales tax also on such turnover, as provided in section 8(2A) of the Central Sales Tax Act. The Assistant Commissioner (judicial), who heard the two appeals, did not go into the question whether in this case the dealer sold milk in sealed containers or not. He held that the turnover of sale of condensed milk was generally not exempt under the various notifications issued by the U.P. Government and as such the same was liable to be taxed under the Central Sales Tax Act. The dealer then filed two revision applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om payment of tax. Item No. 10 of this list mentioned milk and milk products such as chhena, dahi, khoa, butter and cream but excluding (1) products sold in sealed containers, and (2) sweetmeats, as items exempt from payment of sales tax. In the result, turnover of a dealer in respect of milk, milk products other than those sold in sealed containers or sweetmeats is exempt from payment of sales tax under the U.P. Sales Tax Act. Subsequently, by Notification No. S.T. 3506/X dated 10th May, 1956, the State Government amended the notification dated 31st March, 1956, and further excluded ghee, one of the milk products from item No. 10 of that notification as an item, turnover of which is exempt from payment of sales tax. The State Government issued yet another Notification No. S.T. 776/C-900(16)-64, exercising its power under section 3-A(1) of the Sales Tax Act, providing for single point taxation in cases of sale of butter and cream. The position that emerges as a result of these notifications and the provisions contained in section 4 of the U.P. Sales Tax Act is that the sale of milk is completely exempt from payment of sales tax in all circumstances. The turnover in respect of milk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its sale is generally not exempt from tax under the U.P. Sales Tax Act. Since elaborate arguments have been addressed to us on both aspects of the question, I propose to deal with each of them. The expression "milk" as used in section 4 of the U.P. Sales Tax Act has not been defined in the Act. This word, therefore, has to be given a meaning which is given to it in common parlance and has to be understood in the same sense in which it is understood by those who deal in this commodity. In common parlance a fluid secreted by the mammary glands of a mamilla which is used by human beings as food is known as milk. In India milk derived from mammary glands of cow and buffalo is widely used as food for human consumption and is understood to be milk. Main question that arises for consideration in this case, therefore, is whether when cow's and buffalo's milk is condensed, it still continues to be milk or get converted into a milk product within the meaning of Notification No. S.T. 911/X dated 31st March, 1956. It cannot be disputed that in this country the secretion obtained from the mammary glands of cows and buffaloes in its natural form is considered to be milk. It is also clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts are all obtained by subjecting natural milk to a process but then in quality, constitution and nature of their use they are basically different from milk. In one sense, whenever a commodity is subjected to a process and some change is brought about in its constitution, it can be said that the resultant commodity is the product of the original commodity. For example, when groundnut oil is refined it may be said that refined groundnut oil is the product of the raw oil subjected to the process of refining. But, in such a case, even though groundnut oil has been subjected to process, its essential qualities and use continue to be the same and it still continues to be groundnut oil in refined form. In my opinion, the expression "milk product" as used in Notification No. 911/X dated 31st March, 1956, has not been used in this sense. If the commodity obtained as a result of processing of milk continues to retain the essential quality of milk as commonly understood, its sale will be exempt from payment of sales tax under section 4(a) of the U.P. Sales Tax Act and it cannot be made taxable under a notification issued for purposes of exempting the turnover of certain sales from tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccept this submission. It is true that the State Legislature exempted the turnover of milk, etc., from the levy of sales tax as they are articles of common use, but it cannot be said that the Legislature did not want to grant that exemption in respect of the same article if it was to be used by persons belonging to higher stratum of society or if it was so adapted by changing its form that it may be preserved for a longer period and its marketing facilitated. If, therefore, the fluid milk, after it is concentrated and converted into condensed milk, remains milk, it will be no argument to say that the Legislature did not intend exemption in respect of such sophisticated articles. Learned standing counsel then contended that generally condensed milk is considered to be a milk product, different from milk from which it is obtained. Turnover of its sale, therefore, is not exempt under section 4(a) of the U.P. Sales Tax Act. In support of this argument he relied upon the following passage appearing in Encyclopaedia Britannica: "Cows' milk and its products have become important articles of commerce. Most of the research on chemistry, bacteriology and technology of milk is being carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the expression has been used in section 4(a) of the U.P. Sales Tax Act. So far as the Government Notification No. 922/X-900(21)-69 dated 31st March, 1970, relied upon by the learned standing counsel is concerned, it cannot have the effect of changing the scope of the expression "milk" as used in section 4(a) of the U.P. Sales Tax Act. That is a notification issued by the State Government. It cannot be used for determining the scope of the expression "milk" as used by the Legislature in section 4(a) of the U.P. Sales Tax Act. All that this notification shows is that after the decision of this court in the case of Nestle's Products India Ltd. v. Commissioner of Sales Tax[1963] 14 S.T.C. 606., the Government thought that condensed milk was a milk product different from milk and as such, it made provision for its sale being taxed at a single point. The opinion of the Government cannot be equated with the opinion of the State Legislature. In this connection, the decision of the Supreme Court in the case of Tungabhadra Industries Ltd., Kurnool v. Commercial Tax Officer, Kurnool[1960] 11 S.T.C. 827 (S.C.). , may be cited with advantage. In that case, the Supreme Court had to interpret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he processing consists in the water contents of the milk being reduced resulting in milk in concentrated form. The learned Judges of the Supreme Court not only held that refined groundnut oil was groundnut oil, but they went further and held that hydrogenated oil also was groundnut oil and as such deduction with regard to it claimed under rule 18(2) was admissible, notwithstanding the fact that while processing refined oil and converting it into hydrogenated oil the form and quality of the oil changed and it underwent a chemical change. The end product (hydrogenated oil) continues to be groundnut oil. In this connection, the learned Judge observed as follows: "To be groundnut oil, two conditions have to be satisfied. The oil in question must be from groundnut and secondly the commodity must be 'oil'. That the hydrogenated oil sold by the appellants was out of groundnut not being in dispute, the only point is whether it continues to be oil even after hydrogenation. Oil is a chemical compound of glycerine with fatty acids, or rather a glyceride of a mixture of fatty acids-principally oleic, linoleic, stearic and palmitic-the proportion of the particular fat varying in the case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 47 of Schedule A to the Bombay Sales Tax Act, 1959, and whether their sales were exempt from payment of sales tax. Their Lordships came to the conclusion that patasa, harda and alchidana were various forms of sugar and that they were exempt from payment of sales tax. It cannot be denied that patasa, harda and alchidana are prepared from sugar. In preparing these articles the form of sugar undergoes a change but not in its essential characteristic and the ultimate product so obtained continues to be sugar. Similarly, in the case before us, by evaporating water from milk its essential characteristic and constituent remains the same and what is obtained is milk in condensed or concentrated form. Learned standing counsel contended that in section 4(a) expression used is milk and not milk in any form. In the circumstances, the observations made by the Supreme Court in Gujarat v. Sakarwala Brothers[1967] 19 S.T.C. 24 (S.C.). cannot support the dealer. I am unable to accept this submission. As stated earlier, there is no justification limiting the meaning of the expression "milk" as used in section 4(a) of the U.P. Sales Tax Act to milk obtained in its natural form only. In my opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of condensed milk is completely exempt under section 4(a) of the U.P. Sales Tax Act from payment of sales tax and as such the dealer is not liable to pay Central sales tax with regard to it as provided under section 8 of the Central Sales Tax Act. I now proceed to consider whether in case it is held that condensed milk is not covered by the expression milk as used in section 4(a) of the U.P. Sales Tax Act and that it is a milk product as contemplated by sales tax Notification No. 911/X dated 31st March, 1956, can it be said that for purposes of section 8(2A) of the Central Sales Tax Act, its sale is exempt from tax generally under the U.P. Sales Tax Act. Relevant portion of Notification No. S.T. 911/X dated 31st March, 1956, reads as follows: "In exercise of the powers conferred by section 4 of the U.P. Sales Tax Act, 1948, as amended from time to time, and in supersession of all previous notifications granting any exemption under the said section relating to any persons or class of persons, or goods, or class of goods, not being goods specified in List I below, the Governor of Uttar Pradesh is pleased to direct that with effect from April 1, 1956, the goods specified in List ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise than in sealed containers to be taxed. The turnover of such sale, therefore, should be considered to be generally exempt from tax within the meaning of section 8(2A) of the Central Sales Tax Act. I am unable to accept this submission. According to section 8(2A) what has to be seen is whether the sale of a particular commodity as such is generally exempt from sales tax. If the argument advanced by the dealer's counsel is accepted it will mean that whenever under the sales tax law of the State, turnover of a commodity has been exempted from tax on certain conditions, it can always be said that the commodity sold in that condition Is generally exempt from sales tax. That is precisely what was being avoided by the explanation added to section 8(2A) of the Act. As stated earlier, under the notification dated 31st March, 1956, milk product is exempt from payment of sales tax only when it is sold otherwise than in sealed containers. The condition that for claiming exemption it should be sold otherwise than in sealed containers is a specific condition, which has been mentioned in the notification issued under the U.P. Sales Tax Act. In support of his contention, learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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