TMI Blog1990 (10) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... , the relevant entries were as follows: "24. Milk foods (excluding milk but At the point of first 4 per cent. including milk powder). sale in the State. 103. (i) Biscuits (ii) toffees, (iii) chocodo. 10 per cent." lates, (iv) confectionery, (v) butter, (vi) ghee, (vii) cheese, and (viii) foods including preparations of vegetables, fruits, milk, cereals, flour, starch, birds' eggs, meat and meat offals, animal blood, fish crustaceans and molluses. In his order, dated 31st March, 1984, according to the assessing officer, entry 24 was specifically introduced to cover pure milk food and baby food only. As some dealers in malted milk food were taking shelter under entry 24, the very entry was deleted effective from 1st July, 1983. As "Spert" is not a baby food and it contains vitamins and minerals, it was considered as food drink falling under entry 103. Accordingly, the turnover was assessed to 10 per cent tax. The Appellate Assistant Commissioner agreed with the finding of the assessing officer in and by his order dated 27th August, 1984. The Tribunal in its order dated 21st July, 1986, relied on a letter of the Commissioner of Commercial Taxes dated 19th May, 1983 to come to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entitled to the lesser rate of tax as per G.O. P. No. 253 dated 17th March, 1986, issued under section 17 of the Act. Inasmuch as the assessment is termed as a provisional assessment, the petitioners have no right of appeal. Hence the writ petition had been filed. A counter-affidavit has been filed by the respondent stating that rule 18(4) enables the assessing officer to make a provisional assessment. Only the period from April, 1989 to February, 1990, had been brought under assessment and therefore, it cannot be said that the year is over. The petitioners do have a right of appeal or revision under the Act. It is also contended that the licence is only for "malted milk food" which means, it is not a milk food so as to bring it within sub-entry (viii) of entry 103 of the First Schedule. The claim that milk had been predominantly used in the manufacture of Horlicks is disputed. It is asserted that the G.O. P. No. 253 dated 17th March, 1986 will not apply to the product "Horlicks" manufactured by the petitioner. 4.. Writ Petitions Nos. 9079, 11204 and 13828 of 1990 have been filed by M/s. F.D.C. Limited, who claimed to be manufacturers of pharmaceuticals and food products. In pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-entry (x) of entry 103 of the First Schedule to the Tamil Nadu General Sales Tax Act. For the same reason, G.O. P. No. 253 dated 17th March, 1986, reducing the rate of tax from 10 per cent to 4 per cent will not apply to the products manufactured by the petitioners. It is also stated that the contention that the products are baby milk food or they are life-saving drugs is mutually contradictory and cannot be accepted. It is also contended that inasmuch as final assessment orders were passed on 5th July, 1990, Writ Petitions Nos. 9079 and 11204 of 1990 have become infructuous. Against the final order of the assessment dated 5th July, 1990, the petitioners have right of a regular appeal. 5.. We will first take up the group of writ petitions regarding the products, "Soyal" and "Prosoyal spray dried powder". As rightly contended by the learned Additional Government Pleader, Writ Petitions Nos. 9079 and 11204 of 1990 have become infructuous after the passing of the final order of assessment on 5th July, 1990 in TNGST No. 6433/ 1987-88. Accordingly, those two petitions are dismissed as infructuous. Taking Writ Petition No. 13828 of 1990, we are unable to understand how the product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... techniques invented for making fabric out of yarn that it would be most unwise to confine the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed, woven fabric would be 'textiles'. What is necessary is no more than weaving of yam and weaving would mean binding or putting together by some process so as to form a fabric." The contention of learned counsel for the petitioners is that even though natural milk is not used in the manufacture of products, the milk produced from soya bean should also be treated as milk and the benefit of the notification should be made available to the petitioners. We are unable to accept the contention of the petitioner because the notification as well as entry 103 only talk of natural milk as understood in common parlance like cow's milk or buffalo's milk. Milk is defined in "Dairy India 1987" as follows: "A white or yellowish fluid secreted by the mammary gland of mammals. It consists of emulsion of fat in water with casein and other proteins, milk, sugar and inorganic salts." We are, therefore, constrained to reject the arguments of Sri C. Venkataraman and on the materials placed before us, we are unable to hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collection of milk is earmarked. The company is obliged to increase milk production in conjunction with the Animal Husbandry Department of Andhra Pradesh. For the purpose of serial No. 27(2) of the First Schedule to the Industries (Development and Regulation) Act, Horlicks is treated as malted milk food. In fact, the application dated 26th November, 1968, for the grant of licence under the Act itself is for the manufacture of malted milk food under rule 7 of the Registration and Licensing of Industrial Undertakings Rules, 1952. Therefore, it is argued that basically what is manufactured is only malted milk food and the same can be brought only under sub-entry (viii) of entry 103. (ii) Constituents of Horlicks and how it is made: The raw materials for manufacturing Horlicks are said to be milk, malted barley, wheat flour and salts. Malted milk is made by combining whole milk with a mash ground barley malt, wheat flour with or without the addition of salt and bicarbonate of soda. It is not necessary to go into the other details of manufacture. What it matters is that in making 450 grammes of Horlicks, 921 grammes of milk are said to be used. In a bottle of Horlicks of 450 grammes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market milk is generally considered to refer to bottled fresh milk and its associated products, while concentrated milk refers to plain and sweetened, condensed and evaporated milk. In the National Dairy Development Board Act, 1987, milk product is defined to include malted milk foods with or without cocoa powder. There is no need to multiply the literature on the subject. What we can deduce from the above definitions is that malted milk contains a large amount of wholesome milk. (iv) Interpretation of the entries: Mr. C. Natarajan compares entry 103(viii) with entries like 116 and 120 of the First Schedule to the Tamil Nadu General Sales Tax Act. He stressed the absence of the words, "wholly or exclusively" in entry 103(viii). He argues that the Legislature is deemed to be aware of the normal rule of construction and therefore, the absence of the word, "wholly or exclusively" in entry 103(viii) should be given due weightage. The addition of the mash of ground barley and wheat flour to the milk will not therefore take the product Horlicks away from the entry 103(viii). Reference is made to AIR 1976 SC 599 (Union of India v. Tata Iron and Steel Co. Ltd.) and AIR 1975 SC 2279 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Second Schedule to the Tamil Nadu General Sales Tax Act. That entry started by saying "iron and steel, that is to say," and proceeded to describe the various forms of iron and steel sold in the market. The Supreme Court in that case explained that each sub-item is a fresh starting point and is a separate taxable commodity for the purpose of sales tax and each of them forms a separate species for each series of sales of them, and they may all belong to the same genus (iron and steel). Even this judgment may not be of much help in understanding the entry 103(viii) and 103(x). In Commissioner of Sales Tax v. Agarwal and Company [1983] 52 STC 117 (Bom), it was held that milk would ordinarily include milk in all its forms including evaporated or dehydrated milk or milk powder. It was held that skimmed milk powder would fall under the entry "milk powder". There is, however, one Division Bench judgment of our High Court which is more helpful to decide the case. That is, State of Tamil Nadu v. A.K. Sundaram [1983] 54 STC 82. In that case, the question was whether arrowroot powder sold by the assessee would fall under entry 103(viii) of the First Schedule or not. At the time of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Bearing the aforesaid principles in mind, in our opinion, the Revenue is right that the non-alcoholic beverage bases in India cannot be treated or understood as new 'nutritive material absorbed or taken into the body of an organism which serves for the purpose of growth, work or repair and for the maintenance of the vital process' and an average Indian will not treat nonalcoholic beverage bases as food products or food preparations in that light." The conclusion of the Supreme Court is as follows: "We have no doubt, in our opinion, that having regard to the language used, it would not be in consonance with the spirit and the reason of law to give exemption for non-alcoholic beverage bases under the notification in question. Bearing the aforesaid purpose, in our opinion, it cannot be contended that expensive items like Gold Spot base, Limca base or Thums-Up base were intended to be given exemption at the cost of public exchequer." The Supreme Court was concerned with the "beverage base" and the decision was that it will not be a food product or food preparation. 7.. An analysis of all the judgments and the arguments of the learned counsel for the petitioners as well as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit of reduced rate of tax. We may also refer to a series of letters from the side of the Revenue indicating that products like Horlicks are only milk foods. The Commissioner of Commercial Taxes in his letter dated 29th April, 1986 says as follows: "'Viva' is a milk food taxable at the reduced rate of 4 per cent single point with effect from 17th March, 1986. The copy of the Board's Proceedings Rt. 33/72 dated 6th January, 1972 is not furnished, as it is not readily available." In the Government Memorandum No. 129579-ST/Spl./61-2, dated 9th February, 1962, certain clarifications were issued in respect of the entries as they stood at that time. The said notification refers to specific items and in respect of Horlicks, it is stated as 3 per cent single point tax under entry 24 of the First Schedule. We have also noticed that if Horlicks comes under entry 24, it has necessarily to come under entry 103(viii) as per the amended Schedule. It is now well-settled that the fact that Horlicks has been treated as a milk food for over two decades cannot be ignored altogether. Though such treatment by the Revenue will not estop them from pleading otherwise, the conduct of the Revenue shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er hydrogenation was complete, they could not be said to produce 'refined oil' at any stage." 9.. We therefore hold that the impugned order made in TNGST No. 180826/89-90 dated 28th April, 1990 is vitiated by errors of law apparent on the face of facts and liable to be quashed. We also accept the contention of the learned counsel for the petitioner and the ratio of Mahendrakumar Ishwarlal and Company v. Deputy Commercial Tax Officer [1971] 28 STC 551 (Mad.) that it is not open to the Revenue to pass a provisional order of assessment after the end of the assessment year. Therefore, there is no point in directing the petitioners to seek the statutory remedies available under the Act. Accordingly, the writ petition is allowed and the impugned order is quashed and there will be no order as to costs. 10.. We are left with Tax Case No. 1145 of 1987. We have already set out the facts of the case and the question is whether "Spert" will fall under entry 24 as it stood prior to Tamil Nadu Act 39 of 1983 or whether it will come under entry 103(viii) as it stood prior to Tamil Nadu Act 39 of 1983. We have only to apply the tests which we have formulated while discussing the case of Horlic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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