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2016 (5) TMI 522 - BOMBAY HIGH COURT

2016 (5) TMI 522 - BOMBAY HIGH COURT - TMI - Classification and applicable rate of tax - period involved is 15-01-2011 to 31-03-2013 - Whether the non-alcoholic beverage concentrate in powder form are to be classified under Schedule Entry C-107 (11)(g), which is exigible to tax @ 5% OR whether the under Residuary Schedule Entry E-1, which is exigible to tax @ 12.5%.

Held that:- there is no dispute that the said products of the Respondent-Dealers are `powders' from which ‘nonalcoholic’ .....

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Oxford English Dictionary is “drink other than water”. The question is, while construing the Entry as it stands, would the drinks made from the said powders be any less of “beverages” because they are “health drinks”? We think not! Merely because a drink has more nutritive value in the form of proteins and meant for a certain class of consumers, it would not cease to be a “beverage”.

even if the potable drink made from the said powders are perceived as health drink, it does not fall .....

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m `beverages', even assuming that the principle of common parlance were to apply. Therefore, the Tribunal has rightly concluded that the `powders' of the Respondent is covered under Schedule Entry C-107 11(g) and no interference is warranted with the impugned order of the Tribunal. - Decided against the revenue - Maharashtra Value Added Tax Appeal No. 2, 3 of 2016, Value Added Tax Appeal No. 931, 932 of 2014 - Dated:- 6-5-2016 - S. C. Dharmadhikari And A. A. Sayed, JJ. For the Petitioner : Mr. V .....

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dgment and order of the Tribunal reads as under: In view of all above, the matter is disposed of are as under:- ORDER The VAT appeal bearing No.931/2014 is hereby allowed and the D.D.Q. order dated 18-07-2014 of the Commissioner of Sales Tax, Maharashtra State, Mumbai is set aside. The products of the appellant are classified under schedule entry C-107 (11)(g) during the relevant period i.e. from 15.01.2011 to 13.03.2013 liable for 5% of VAT Tax. The VAT appeal bearing No.932 of 2014 is hereby a .....

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products and the rate of tax applicable for the relevant period i.e. 15-01- 2011 to 31-03-2013. It had sought the rates of tax for the following products: (1) 100% Whey Gold (French Vanilla 2 Lbs and Mocha Capuccino 1 Lbs) (2) Platinum Hydrowhey (Turbo Chocolate 3.5 Lbs) (3) Serious Mass (Straw 12 Lbs) (4) PRO Complex GAINER (Choc 10.16 Lbs and Straw 10.16 Lbs) (5) True Mass (Chocolate 5 Lbs) (6) Syntha 6 (Chocolate 5 Lbs) M/s. Neulife Nutrition System Pvt.Ltd., the Respondent-Dealer in Appeal N .....

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the Respondent-Dealers are hereinafter referred to as the said products'. 4 It was the case of the Respondent-Dealers before the Commissioner of Sales Tax that they were dealers in non-alcoholic beverage concentrate in powder form and the said products are general purpose protein powders from which non-alcoholic beverages are prepared. These powders are manufactured in USA and the proteins are obtained from whey products which are remnants of cheese making process and are sold in flavours a .....

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entry which can be held applicable to the said products, and classified the said products in Residuary Schedule Entry E-1 which is exigible to tax @ 12.5%. 6. Being aggrieved by the order dated 18 July 2014 of the Commissioner of the Sales Tax, the Respondent-Dealers preferred two Appeals before the Tribunal. After hearing the parties, the Tribunal set aside the order dated 18 July 2014 and allowed the two Appeals and held that the said products of the Respondent-Dealers are classifiable under .....

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ned products will fall within the purview of Schedule Entry C-107(11)(g) during the relevant period from 15.01.2011 to 31.03.2013 and hence taxable @ 5% of VAT and not covered by the Schedule Entry E-1 of MVAT Act, 2002 and therefore taxable @ 12.5%. (b) Whether on application of the common parlance theory and taking into consideration the true intent of legislature, can it be said that the Schedule Entry C-107 (11)(g) envisaged within itself the inclusion of the impugned products Health Drinks .....

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ducts are targeted to be consumed by certain class of population who are into heavy work-out and/or intense physical activity and people who seek to be muscular or gain weight or become lean. He submitted that the said products carry a warning that they are not to be consumed by persons under 18 years of age and pregnant & feeding women. The said products are food supplements and/or health drinks and cannot be termed as beverages'. Learned Counsel for the Appellant submitted that the Com .....

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parlance, has placed reliance upon the judgment of the Supreme Court in the case of Commissioner of Central Excise, New Delhi vs. Connaught Plaze Restaurant Private Limited, New Delhi (2012) 13 SCC 639, and inter alia invited our attention to paragraph 20 of the judgment, which reads as under: 20. Time and again, the principle of common parlance as the standard for interpreting terms in the taxing statutes, albeit subject to certain exceptions, where the statutory context runs to the contrary, h .....

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the other hand supported that impugned order of the Tribunal and submitted that the reasons for classifying its products under Entry C-107 11(g) are that the said powders are meant for one and all and are being sold and bought by people for their flavors as well as their content. The Entry is clear and unequivocal. The onus to prove coverage under particular entry is on the Revenue. In view of the specific entry in the Schedule Entry C-107 11(g) to the taxing statute, it would override the gener .....

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@ 5% OR whether the said products are classifiable under Residuary Schedule Entry E-1, which is exigible to tax @ 12.5%. 12. In our view, the Tribunal has rightly held that the said products are classifiable under Schedule Entry C-107 (11)(g) and has rightly set aside the order of the Commissioner of Sales Tax who had classified the said products under Residuary Schedule Entry E-1, for the reasons which shall presently indicate. 13. The Schedule Entry C-107 (11)(g) for the relevant period reads .....

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pute that the said products of the Respondent-Dealers are powders' from which nonalcoholic drinks are prepared for the purpose of consumption by mixing the said powders with liquids like water, milk, juice, etc. In our view, there is no warrant for restricting the meaning of term beverages in the Schedule Entry C-107 (11)(g) as sought to be contended by the learned Counsel for the Appellant. The Entry in our view is clear and unambiguous. The Entry is couched with the non-technical word beve .....

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ew, even if the potable drink made from the said powders are perceived as health drink, it does not fall out of the purview of the Entry. It has been held by the Supreme Court in State of Maharashtra v/s. Bradma of India Ltd. (2005) 2 SCC 669 that the residuary entry could be resorted to only when by a liberal construction the specific entry cannot cover the goods in question. In the present case, in view of the specific Entry 107-C (11)(g) to the Statute, it would override the general Entry. Ev .....

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t case. As a matter of fact, in the aforesaid case in para 41 of the judgment, the Supreme Court held that the terms of the statutes must be adapted to developments of contemporary times rather than being held entirely inapplicable. 15. The Tribunal has reproduced the legislative history of the Schedule Entry 107-C (11)(g) in the impugned judgment and order in the following terms: C-II-47 Aerated waters and non-alcoholic beverages (including fruit juices, squashes, syrups and cardials) when sold .....

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crystals for which nonalcoholic beverages are prepared by adding any potable liquid 12% 1-4-1989 to 30-4-1992 C-II-47 i) Aerated, mineral, medicinal tonics, distilled or demineralised water and water sold in sealed, capsuled or carked container but excluding water for injection 12% 1-5-1992 to 8-9-1992 ii) Non-alcoholic beverages including vegetable or fruit juices, squashes, syrups and cardials when sold in sealed, capsuled or carked bottle, jar, tins drums 2% 1-5-1992 to 8-9-1992 iii) Powders .....

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minerals, medicinals tonics, distilled or demineralised water and water sold under brand name in sealed, capsuled or carked containers but excluding water for injection 12% 1-4-1994 to 30-9-1995 ii) Non-alcoholic beverages, including vegetable or fruit juices, squashes, syrups and cardials when sold in sealed, capsuled or carked bottle, jars, tins, drums or other container 12% 1-4-1994 to 30-9-1995 iii) Powders, tablets, cubes, crystals and other solid from which nonalcoholic beverages and soup .....

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tion entry A-158) 13% 1-10-1995 (The entry C-II 21 is related to Aerated and carbonated non-alcoholic beverages whether or not containing sugar or other sweetening matter as flavour or any other additives) 20% 1-10-1996 C-107(7) Alcoholic and non-alcoholic beverages 4% 1-5-2005 to 31-3-2010 C-107(II)(g) Powders, tablets, cubes, crystals and other solid or liquids from which non- alcoholic beverages and soups are prepared. 4% 1-2-2008 to 31-3-2013 As C-107 (II)(g) is added w.e.f. 1-2- 2008 hence .....

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