1998 (9) TMI 634 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 27 of Schedule C, Part II of the Bombay Sales Tax Act, 1959 regarding the classification of "gulkand" as either medicine or foodstuff.

Analysis:
The controversy in this case revolves around the classification of "gulkand" under the Bombay Sales Tax Act, 1959. The assessee claimed that "gulkand" should be considered as medicine under entry 24(1) of Schedule C, Part II, while the Sales Tax Officer assessed it under the residuary entry 102 at a rate of 10 per cent. The Assistant Commissioner and the Tribunal upheld this assessment. The Tribunal referred the matter to a larger Bench to determine if "gulkand" qualifies as medicine under the Act.

The larger Bench concluded that "gulkand" does not meet the criteria to be classified as medicine under entry 24(1) of Schedule C, Part II. Subsequently, the Tribunal re-evaluated the classification, with the assessee arguing that "gulkand" should be considered foodstuff under entry 27 of Schedule C, Part II. The Tribunal agreed with the assessee's contention, leading to the Revenue appealing this decision to the High Court.

Upon review, the High Court focused on interpreting entry 27 of Schedule C, Part II, which pertains to foodstuffs and food provisions. The Court emphasized that the terms "foodstuff" and "food provision" should be understood in their popular sense, as they are not defined in the Act. The Court highlighted that "gulkand" is commonly used as a mouth freshener or for taste enhancement, which does not align with the definition of foodstuff or food provision.

The Court referred to various dictionary definitions to support its conclusion that "gulkand" does not qualify as foodstuff under entry 27. Consequently, the Court ruled in favor of the Revenue, determining that "gulkand" falls under the residuary entry 102 of Schedule C, Part II, subject to a 10 per cent tax rate. The reference was answered in the negative, favoring the Revenue and dismissing the assessee's classification of "gulkand" as foodstuff.

In conclusion, the High Court's judgment clarifies the classification of "gulkand" under the Bombay Sales Tax Act, emphasizing its ineligibility as foodstuff under entry 27 of Schedule C, Part II, and affirming its categorization under the residuary entry 102.