TMI Blog1974 (3) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, deny that the icecream manufactured by the petitioners was produced purely from milk and cream. According to them, the following articles, inter alia, constitute the base of all varieties of ice-cream: (1) Milk; (2) Cream; (3) Butter; (4) Sugar; (5) G.M.S. (smoother); (6) Straps; (7) Milk powder. In addition essences are used as flavouring agents In some varieties of icecream, and fresh fruits, tinned fruits, and dried fruits are also used in other varieties. For the purpose of deciding whether ice-cream is a milk product within the meaning of entry No. 12 of the Second Schedule to the Act, we shall proceed on the basis that the ice-cream is in conformity with the standards prescribed under the Prevention of Food Adulteration Act, 1954, and the Prevention of Food Adulteration Rules, 1955, because the ice-cream which does not conform to the standards will be considered as adulterated. According to Standard No. A. 11.11: "Ice-cream means the frozen food made with cream, milk or other milk products, sweetened with sugar or honey and with or without (a) egg, (b) fruits, (c) nuts, (d) chocolates, (e) stabiliser not more than 0.5 per cent of the finished product and (f) permissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the statute is dealing would attribute to it. This method of interpretation was reiterated by the Supreme Court in later cases. In Commissioner of Sales Tax v. Jaswant Singh Charan Singh[1967] 19 S.T.C. 469 (S.C.)., while considering whether charcoal was included in the word "coal" specified In entry 1 of Part III of Schedule II to the Madhya Pradesh General Sales Tax Act, 1958, the Supreme Court observed that while construing the word "coal" the test that would be applicable is what is the meaning which persons dealing with coal and consumers purchasing It as fuel would give to that word. The Supreme Court further observed that a sales tax statute, being one levying a tax on goods, must, in the absence of a technical term or a term of science or art, be presumed to have used an ordinary term as "coal" according to the meaning ascribed to it in common parlance. It further observed that while interpreting items in statutes like the Sales Tax Acts, resort should be had not to the scientific or technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense. Again, in State of Gujarat v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers" were exempt from tax. The High Court gave the following reasons: "This notification distinguishes 'milk' from milk products and includes khoa and cream among milk products. If they are milk products there is no reason for saying that condensed milk and milk powder also are not milk products. Milk powder is produced simply by evaporating all water contents of milk; It differs from khoa only in the extent to which the water contents are evaporated. Nothing is added when milk powder is prepared and nothing is added when khoa is prepared. If khoa is treated as milk product, milk powder also must be. Condensed milk is prepared from milk after adding sugar to it; when sugar is added to milk, the product can hardly be said to be still milk and it is undoubtedly a milk product." In J. Shamdas v. State of Andhra Pradesh[1967] 19 S.T.C. 412., zarda was held to be a tobacco product and not exigible to sales tax by virtue of item 7 of Schedule 5 of the Andhra Pradesh General Sales Tax Act, 1957. Under item 7 of Schedule 5 of the said Act, "tobacco and all its products" were exempt from tax. The High Court found that the chemical analysis of the two brands of zarda indicated that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that as in mitha gundi the tobacco contents constituted 10 per cent or less, essentially It was a preparation of tobacco but not a tobacco product. The High Court negatived this contention with the following observations: "With our best endeavour after looking into all dictionaries it is not possible to get a precise definition of 'products'. It is not clear that in order to be a tobacco product It must be wholly produced out of tobacco. In such a case, Its meaning as understood in common parlance should be adopted How is a particular commodity having tobacco contents treated by a particular class of consumers and sellers? If with the consumers a particular commodity is very popular on account of its having tobacco contents, then to that class of consumers it is a tobacco product. In other words, persons who cannot at all take mitha gundi despite low percentage of tobacco, must take it as a tobacco product and will be reluctant to purchase such articles.........judging from this point of view we hold that mitha gundi is a tobacco product on account of Its effectiveness on a particular class of consumers who are accustomed to take it." The High Court further observed that: "A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cultural produce...................shall be excluded from his turnover." The High Court noticed that after the tea-leaves were plucked from the fields, they were subjected to a process of drying, heating and roasting, that, during this process, the colour of leaves was changed from green to yellowish, that the leaves were then subjected to grading with sieves of various sizes, that the fanning machines were also used in completing the grading process, that the produce was then finally roasted with charcoal for obtaining suitable flavour and colours and that it was this final product which was eventually sold In the market. The High Court posed for itself the question whether this process changed the nature of the commodity. It answered this question in the following words: "In our opinion, the process of grading and roasting is not materially different from the process through which tea-leaves have already undergone. It is not a manufacturing process. The loose tea even after grading and roasting still remains tea. It is true that the process of grading and roasting is a more sophisticated process undertaken to fetch a better price and easy market for the tea. The intention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t although milk, flour and sugar were exempt from sales tax, sweets prepared from milk, flour and sugar were not exempt from sales tax. It has to be noticed that what were exempt under the Assam Sales Tax Act were milk, flour and sugar and not the products of milk, flour and sugar. In State of Punjab and Others v. Chandu Lal Kishori Lal[1970] 25 S.T.C. 52 (S.C.)., the Supreme Court held that cotton seeds did not come within the scope of section 5(2)(a)(vi) of the Punjab General Sales Tax Act, 1948. The Supreme Court observed that though cotton in its unginned state contained cotton seeds, the cotton and the seeds were separated by the manufacturing process of ginning and the seeds so separated could not be said to be cotton itself or part of the cotton. It has to be noticed that what was included in section 5(2)(a)(vi) of the said Act was cotton simpliciter and not cotton products. In Goel Industries (Pvt.) Ltd. v. Commissioner of Sales Tax[1971] 28 S.T.C. 729., the Allahabad High Court held that ice was not water and was not exempt under section 4(1)(a) of the U.P. Sales Tax Act, 1948, under which sale of water was exempt from tax. Here again, it had to be noticed that what was ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndian Standards Institution IS 2802-1964, which has been entitled as "Indian Standards Specification for Ice-cream", icecream has been described in Standard No. O. 2 as under: "Ice-cream is a widely consumed food and is a recognized medium to help increasing the milk intake." The Prevention of Food Adulteration Act and the Rules framed thereunder govern the manufacture and sale of various articles of food. Such articles of food include items of common use and the description of such articles of food in the said Act and the Rules is such as has to be understood by persons who manufacture or sell such articles and those who buy them. Similar is the position with the article described in the Gazette of India and the notice issued by the Delhi Milk Scheme which have been referred to above. Ice-cream has been considered in the abovesaid Rules, Gazette and notice as a milk product. Therefore, if the test laid down in the judgments of the Supreme Court and the several High Courts cited supra is to be applied, namely, that entries in the taxation statutes, like the Sales Tax Act, have to be interpreted in the manner they are understood in common parlance or in commercial circles, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat articles which come under the category of milk products need not be the direct products of fresh milk but may be the product of milk only. Thirdly, even if the rule of ejusdem generis is applied, we do not find any difficulty in bringing ice-cream within the category of milk products because Ice-cream is in fact produced from fresh milk although the fresh milk undergoes a change during the process. It has been finally contended on behalf of the respondents that if all varieties of ice-cream are treated as milk products and, therefore, exempt from assessment, then even ice-cream, which has no milk content or very little milk content in it, will also be eligible for exemption. We have already referred to the standards prescribed by the Prevention of Food Adulteration Rules for ice-cream and we have proceeded on the basis that the ice-cream which comes under the category of milk products within the meaning of entry No. 12 is ice-cream which conforms to the standards prescribed under the said Rules. There is no difficulty in excluding from entry No. 12 the so-called ice-cream, even if any, which has absolutely no milk content, because such an ice-cream cannot be called a milk pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, the amounts of commission paid to the hawkers were cash discount and could be deducted from the sale price as provided under section 2(h) of the Act?" The first question in all these references is answered in the affirmative, i.e., in favour of the assessee and against the revenue. So far as the second question is concerned, no arguments were addressed before us challenging the finding of the learned Additional District judge on this point. Therefore, this question is answered in the negative, i.e., in favour of the revenue and against the assessee. There shall be no order as to costs either in the writ petitions or the sales tax references. KHANNA, J.-I entirely agree with the observations and conclusions of my learned brother, Ansari, J. I may, however, add that when the words in a statutory provision are clear and involve no ambiguity, as in the present case, they have to be given their full and natural meaning. They do not call for any elaborate Interpretation. The reliance by the revenue on the rule of ejusdem generis for interpreting the words "milk products" is wholly misplaced. This rule has to be applied with great care and caution. Gener ..... X X X X Extracts X X X X X X X X Extracts X X X X
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