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M/s. Vadilal Dairy International Ltd. Versus The State of Maharashtra

Levy of vat / sales tax on Ice cream - classification - covered by the term “Sweet and Sweetmeats” or not - Bombay Sales Tax Act, 1959 - Held that:- in ordinary parlance as also considering the object of the notification entry 374, we are certain that the contention on behalf of the applicant that 'Ice-cream' can be included within the words “sweet and sweetmeats” as contained in notification entry 374 cannot be accepted. - Decided against the assessee. - Sales Tax Reference No. 56 of 2008, Refe .....

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issued u/s. 41 of the said Act, Tribunal was correct in holding that the product 'Ice cream' manufactured by the applicant was not covered by the term Sweet and Sweetmeats appearing in both the aforesaid entries and thereby impugned item 'Ice cream' was not eligible for the tax concession? 2. The factual backdrop on which the above question has been referred needs to be noted. The applicant assessee is a registered dealer under the Bombay Sales Tax Act,1959 (For short the Act ) .....

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on 52 of the Act before the Commissioner praying that the effective tax rate in respect of sales on Ice cream made by the applicant under Invoice 292 dated 1st May, 1994 be determined. This application came to be decided by the Commissioner by an order dated 29th March, 1995, wherein it was held that ice-cream in common parlance was not considered as Sweet and Sweetmeats and therefore, was not covered by the said term appearing in Scheduled Entry C-II-35(1) . It was thus, held that 'Ice crea .....

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that the sales of the applicant were liable to tax at the rate of 8% under Schedule Entry C-II- 35(1) . The Tribunal however, directed that the decision of the Tribunal would be prospectively effective and shall not adversely affect the past liability of the applicant provided the applicant had not collected tax in excess of 4% in respect of which sales of 'Ice cream' effected during the period 01st April 1994 till the date of communication of the decision of the Tribunal. 5. The applic .....

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basic entry in Schedule-C which is brought into effect from 25th May, 1981 pertaining to the levy of tax which included tax on 'Ice-cream' reads as under:- Sr. No. Description of goods Rate of sales tax Rate of purchase tax 1 2 3 4 35 (1) Sweets and sweetmeats, including Shrikhand, Basundi and Doodhpak; Cakes, pastries, biscuits and other confectioneries, ice cream and kulfi and non-alcoholic drinks containing icecream or kulfi. Eight paise in the rupee Eight paise in the rupee (2) Swee .....

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ation Entry 374 reads as under:- 374 Sales or Purchases of Sweets and sweetmeats covered by sub entry (1) of entry 35 in Part II of Schedule-C To the extent to which the amount of sales tax or as the case may be purchase tax exceeds four paise in the rupee Nil. Government Notification F.D.No.STA- 1094/12/Taxation- 2 dated 8.4.94. 8. On behalf of the applicant, it is contended that the legislative background pertaining to Entry C-II-35(1) would be of relevance in order to appreciate the contentio .....

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'Ice cream' would continue to fall in Schedule Entry No. C-II-35(1) even after 1st July, 1981. Thus after the notification entry 374 was brought into effect from 8th April, 1994 the applicant believed that concessional rate of tax under the notification entry would also apply to ice-cream as ice-cream was always part of the entry pertaining to sweet and sweet meat . It was for this reason the applicant acted upon the concessional notification and assessed itself for a levy of tax at 4% i .....

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e historical background, notification entry 374 which provides for concessional rate of tax for sweets and sweet meat is required to be made applicable also to ice-cream though the word 'ice-cream' has not been specifically included in notification entry No.374. In other words, historically ice-cream has become and was treated as an inseparable part of the basic schedule entry C-II-35(1). (iii) Schedule entry C-II-35(1) cannot be read into different parts so as to conclude that ice-cream .....

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t. The use of semicolon as above would not separate ice-cream from sweet and sweetmeat so as to say that 'Ice-cream' is separated and forms a separate entry. (iv) As understood in common parlance, 'Ice-cream' is consumed as a sweet and that therefore, it is required to be treated as part of sweet and sweetmeats . (v) A plain reading of the schedule entry C-II-35(1) leads only to one conclusion that it is inclusive entry and covers various items which would form part of sweet and .....

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o 'Ice-cream'. (vii) The legislature had consciously clubbed sweet items in one schedule entry namely in schedule entry C-II-35(1) and therefore, necessarily benefit of the notification entry 374 was required to be held applicable also to the item 'Ice-cream'. 10. In support of his submissions, Mr. Joshi has relied on the following decisions. Commissioner of Sales Tax vs Kwality Frozen Foods (2009) 19 VST 355 (Bom), Commissioner of Sales Tax vs Pure Ice cream Company (1975) 36 ST .....

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d strictly as it pertains to a concession in the levy of sales tax. Rules of Strict interpretation as would be applicable to an exemption notification are applicable. Mr. Sonpal submits that on a plain reading of notification entry 374 the concessional rate of tax is applicable only to sweet and sweetmeats which forms the first part of schedule entry C-II-35 (1) and 'Ice-cream' would definitely not fall within the meaning of sweet and sweetmeats . Mr. Sonpal submits that schedule entry C .....

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sed on behalf of the applicant that ice-cream would be included in sweet and sweetmeat is misconceived. Mr. Sonpal submits that as a illustration, sweet and sweet meats can never include biscuits. He further submits that non-alcoholic drinks can never be sweet and sweetmeats and therefore, necessarily biscuits and non-alcoholic drinks which fall in the same entry namely entry C-II-35 (I), cannot be read to be sweet and sweetmeats for the purpose of concessional rate of tax as available under not .....

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se (2) . Mr. Sonpal submits that the contention on behalf of the applicant is too far stretched and in fact would do violence to the plain language and the legislative intent as contained in notification entry 374, which is only to make available concessional rate of tax to sweet and sweetmeats which would include items like shrikand, basundi and doodhpak. It is submitted that the intention of legislature is basically to grant benefit to items like shrikand, basundi and doodhpak which are items .....

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e entry C-II-35 (1) and notification entry 374 issued under section 41 of the Act and as to whether the Tribunal has correctly held that the product Ice-cream as manufactured by the applicant was not covered by terms 'sweet and sweetmeats', as used in schedule entry C-II-35 (1) and as also notification entry 374 and thus not eligible for tax concession. 13. A plain reading of schedule entry C-II-35 (1) (supra) would clearly indicate that it takes within its ambit several items. A perusal .....

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Shrikhand, Basundi and Doodhpak; Cakes, pastries, biscuits and other confectioneries, ice cream and kulfi and non-alcoholic drinks containing ice-cream or kulfi. (2) Sweet drops, toffees and chocolates. 14. From a perusal of the above entry what is apparent is that the first part of the entry namely sweets and sweet meats includes shrikand, basundi and doodhpak to form one category. It is pertinent to note that when the entry says sweet and sweet meats items like shrikand, basundi and doodhpak a .....

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. A plain reading of the items in the second category makes it quite clear that all these are items connected and commonly sold in bakery establishments. The third category contains the item in dispute namely ice cream along with kulfi and non-alcoholic drinks containing ice-creams or kulfi. The third category therefore, is quite distinct and different from the first two categories of this entry. A careful examination of these three categories indicates that the items contained therein are disti .....

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erve that a distinct feature of the first category of the entry is that these are of categories of Indian sweets which are commonly available and items of large scale consumption in Indian households. The intention of the legislature is therefore to include in the words sweet and sweetmeats , those items which would belong to a similar category or go hand in hand with items like shrikhand, basundi or doodhpak. A hypothetical example to be considered as to what could be included in first category .....

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s kept operational. 15. The items in second category namely cakes, pastries, biscuits and other confectioneries are definitely different form items in the first category and cannot be considered to be sweet and sweet meats. Similarly, the third category which include ice-creams and kulfi and nonalcoholic drinks containing ice-cream or kulfi cannot be understood to be items in the first category which is sweet and sweet meat and include shrikand, basundi and doodhpak. Items in second category and .....

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und it appropriate to include certain more items however, in a separate entry. 16. In the light of the above discussion, we now consider notification entry 374. This entry encompasses a concessional rate of tax. The entry recites 374 Sales or purchase of sweet and sweet meats covered by sub-entry 1 of entry 35 in part II of schedule C. The words sweet and sweetmeats in schedule entry C-II 35 (1) as used in notification entry 374, as observed by us, cannot be extended to icecream which falls in t .....

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. Kwality Frozen Foods Ltd. (supra). The issue in this case had arisen from the very same decision of the Tribunal as in the present case whereby in regard to the applicant as also the companion litigants the Tribunal had directed prospective effect to be given to the orders passed by the Commissioner who had declined the benefit of the concessional rate of tax under notification entry 374 on sale of ice-cream. The Revenue had challenged this direction in an appeal before this Court. The Divisio .....

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ich falls for our consideration is as to whether the words sweet and sweetmeats as contained in the notification entry 374 would include 'Ice-cream'. This judgment does not determine this question, except for recognizing that historically 'Ice- cream' came to be treated as part of schedule entry C-II-35(1). This position is not disputed by the Revenue. 18. The next decision as relied on behalf of the applicant is in the case of Commissioner of Sales Tax vs. Pure Ice-cream Company .....

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per person. The Sales Tax Officer had disallowed the claim of the assessee and held that 'Ice-cream' manufactured and sold by the assessee was not 'cooked food' but was a sweet and therefore, taxable under entry 31 of schedule C of the Act. The assessee had filed appeals before the Assistant Commissioner against the assessment orders. The appeals were dismissed. The respondent therefore, approached the Tribunal in a second appeal. The Tribunal allowed the appeals and held that & .....

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edule A and as such exempt from tax? Entry No. 14 under which exemption was sought read as follows :- Cooked food and non alcoholic drink is served at one time at a price of not more than one rupee per person, for consumption at or outside any eating house, restaurant, hotel, refreshment room or boarding establishment which is not a shop or establishment conducted primarily for the sale of sweetmeats, confectionery, cakes, biscuits or pastries. . On this background, the Division Bench held that .....

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see could be consumed by the customers of the assessee in the assessee's depots. The question as referred was thus answered in the affirmative. We do not see how the judgment would assist the applicant in the present context. The entry which fell for consideration of this Court in the said decision is in no manner comparable to the entry in the present case. There the Court was concerned on the issue whether 'Ice-cream' is a food and whether it is cooked food for the purposes of inte .....

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of schedule A and as such, exempted from tax. The claim of the assessee was that the 'Ice-cream' sold by it at its place of business at Apollo Bunder was exempted from tax as per entry 14 of schedule A of the Act. This is the same entry which was subject matter of the decision of the Division Bench in Pure Ice-cream Company (supra). The Assessing Officer had accepted this claim for exemption however, the Assistant Commissioner issued a notice to the assessee as to why the assessment ord .....

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by the assessee was exempted from tax under entry 14 of schedule A of the Act. Entry No.14 pertained to cooked food and non alcoholic drinks etc. as we have noted above while discussing the decision of the Division Bench of this Court in Pure Ice-cream Company. The revenue contended that assessee was not entitled to obtain exemption under entry 14 because the place of business was conducted primarily for the sale of Sweet and sweetmeats and that 'Ice-cream' sold by the assessee was Sweet .....

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ial distinction between the two. It was observed that the shorter Oxford English Dictionary defines Sweetmeat as preserved or candied fruits, sugared nuts, etc.; also, globules, lozenges, drops , or sticks made of sugar with fruit or other flavoring or filling . It was observed that sweet which is not a sweetmeat and a sweetmeat both normally taste sweet, but all that tastes sweet is not and cannot be sweetmeat, and both on dictionary meaning and according to the commonly understood notions of w .....

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ets and Biscutis vs. Commissioner of Trade Tax, U.P. Lucknow (supra). In our opinion, this decision is also no avail to the applicant. The issue which fell for consideration of the Supreme Court was as to whether the assessee was entitled for exemption from payment of sales tax under the exemption notification in respect of toffees. The issue was whether toffee is a sweetmeat or commodity of a like nature and whether the assessee's industrial unit making toffees would not be entitled for exe .....

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ired to be considered is the object of the notification and the context in which that word is used in the notification. 11. The High Court has also not correctly applied the popular parlance test. As can be seen from the observations made by it that 'there is no doubt that a toffee is a sweetmeat, as understood by the people where toffee originated and that toffee and other things of that nature are of foreign origin and are sweets or sweetmeat according to those people and their nature cann .....

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words used in the provision, imposing taxes or granting exemption should be understood in the same way for which they are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them . In that case, the question that had arisen for consideration was whether non- alcoholic beverage bases are food products or food preparations in terms of the Central Excise Notification No.55/75 dated March 1, 1975. This Court observed that non alcoholic b .....

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led by the appellant in C.A.N.1692 of 1997 indicating that toffee is not considered as sweetmeat, that they are not sold in shops selling sweetmeats but are sold in shops selling confectioneries or other types of goods, and that the consumers do not buy toffees as sweetmeat or treat them as such. It was, however, contended by the learned counsel for the State that sometime before this exemption notification was issued by the State, the Allahabad High Court had in two cases held that toffee is a .....

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