TMI Blog2017 (6) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... nd baby milk stand exempted by the State Government from payment of tax under the Act with the exception of certain forms of milk, milk products and products sold in sealed containers. Section 4 of the Act exempts milk from tax. It does not refer to raw milk. The 'milk' as exempt would therefore include within its fold all forms of milk unless otherwise excluded. Thus, hot or boiled milk, cold milk, flavoured milk, bottled milk except the forms of milk which have been excluded specifically from the exemption stand ousted from tax net under the Act. Generally, milk is either sold raw or after some processing such as boiling or cooling to make it usable for a longer time but such processing even that of pasturising does not alter the nature of the milk or its characteristic. Even if milk is condensed, skimmed or toned it remains a milk though its form may change - as flavoured milk is basically a milk that stands exempted under Section 4 of the Act read with notification dated 31.01.1985 whether sold in open form or in sealed containers. The "flavoured milk" in controversy is a form of milk which is exempt from tax under Section 4 of the Act as no notification prescribes for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner Trade Tax under Section 35 of the Act. The Commissioner opined that it is taxable. The opinion of the Commissioner was taken up for consideration by the Full Bench of the Trade Tax Tribunal. It vide order dated 14.03.1989 held the milk loses its characteristic as soon as any other material is added to it such as flavouring material including Elaichi etc. Accordingly, the opinion of the Commissioner was upheld. The decision of the Tribunal was challenged by the petitioner by means of Writ Petition No.1269 (Tax) of 1989 and it was dismissed on 26.10.1991 inter alia holding that 'milk' or 'milk products' if sold in sealed containers are not exempt from tax in view of the notification dated 31st January, 1985. The same controversy arose with the petitioner in respect of assessment year 1987-88. The petitioner was assessed to tax @ 12% on flavoured milk . The appeal preferred by the petitioner was dismissed. The further appeal filed by it before the Trade Tax Tribunal was partly allowed and in view of the notification dated 07.09.1981 the rate of tax was reduced from 12% to 6% on the sale of the flavoured milk . The department felt dissatisfied by the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2007-08, apart from technicalities the moot question which arises for consideration is whether flavoured milk in the name of Amul Elaichi Shake and Amul Coco Shake sold in tetra brick packaging by the petitioner is 'milk' and is exempt from tax under Section 4 of the Act read with notification dated 31.01.1985 issued under Section 4 of the Act or is taxable? The question as formulated above is purely legal in nature shorn of all factual disputes. Therefore, there appears to be no difficulty for this court in exercise of its extraordinary jurisdiction to deal with it and to answer the same. It is rather more appropriate and expedient in the interest of justice to decide such a legal issue by some authoritative pronouncement instead of allowing the confusion to prevail or leaving it for decision by any subordinate authority or a tribunal. Thus, irrespective of the fact that the assessment orders 2006-07 and 2007-08 dated 16.02.2008 and 18.02.2010 respectively were open to appeal, we consider it expedient to decide the issue involved in exercise of our power of judicial review, more particularly when the matter had remained pending over a decade and the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act imposes liability of tax upon every dealer on his turnover of sales or purchases or both, as may be prescribed at the rates provided by or under Section 3-A of the Act. Section 3-A of the Act only provides the rates of tax on different goods and the rates as may be provided by notifications from time to time. Section 3-D of the Act provides for the levy of tax on the turnover of sale and purchase of certain specified goods or goods notified by the State Government. Section 4 of the Act provides for the exemptions from tax. It also authorises the State Government to exempt certain goods from payment of tax as may be notified. It reads as under:- Section 4. Exception from tax. No tax under this Act shall be payable on- (a) the sale or purchase of water, milk, salt, newspapers, or any other goods which the State Government may, by notification, exempt;' or (b) the sale or purchase of any goods by the All India Spinners' Association or Gandhi Ashram, Meerut and their branches; or (c) the sale or purchase of such goods by such other person or class of persons as the State Government may, by notification in the Gazette, exempt: Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious notifications issued under the proviso to sub-section (2-A) of Section 3-A of the said Act as it stood before its amendment by the UP Sales Tax (Amendment and Validation) Ordinance, 1981 (UP Ordinance No 12 of 1981), the Governor is pleased to order that, with effect from September 7, 1981, the turnover in respect of the goods specified in column 2 of the list below shall be liable to tax at the point specified in column 3 at the reduced rate specified against each in column 4 thereof: Sl. No. Description of goods Point of tax Rate of Tax 30 Milk powder, condensed milk, baby milk, baby foods and all other food stuffs or products, whether used as such or after mixing them with any other food stuff or beverage, when sold in sealed or tinned containers. M or 1 6.00% The aforesaid notification only prescribes the rate of tax applicable to milk powder, condensed milk etc. as contained in entry 30 of the said notification. It does not provide for levy of tax at any rate on milk or flavoured milk. Again a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1904 (U.P. Act No.1 of 1904) and in supersession of all previous notifications issued under aforesaid clause (a) of section 4, the Governor is pleased to exempt, with effect from February 1, 1985, the goods mentioned in column 2 of Schedule hereunder from payment of tax under the said Act of 1948, subject to the conditions, if any, specified in column 3 thereof: Sl. No. Description of goods Point of tax Rate of Tax 40 Milk (other than condensed milk, milk powder or baby milk) and milk products excluding (1) Products sold in sealed containers, (2) Sweetmeats, (3) Ghee (4) Butter, cream and cheese (5) Ice-cream and ice-candy (6) Kulfi (7) Milk shake and (8) Lassi. A combined reading of Section 4 of the Act and the aforesaid notification would reveal that milk other than condensed milk, milk powder and baby milk stand exempted by the State Government from payment of tax under the Act with the exception of certain forms of milk, milk products and products sold in sealed containers. The said notification in addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpret the above notification in the right perspective. In fact, there was no necessity for including milk in the aforesaid notification of exemption of goods issued under Section 4 of the Act as milk other than condensed milk, milk powder or baby milk already stood exempted from tax under the Act by virtue of Section 4 of the Act itself. So the mention of the 'milk' in the said notification is somewhat superfluous. Section 4 of the Act exempts milk from tax. It does not refer to raw milk. The 'milk' as exempt would therefore include within its fold all forms of milk unless otherwise excluded. Thus, hot or boiled milk, cold milk, flavoured milk, bottled milk except the forms of milk which have been excluded specifically from the exemption stand ousted from tax net under the Act. In common understanding flavoured milk is a form of milk and is not a derivative of a milk or a milk product. It is like hot or cold milk which remains a milk even if sugar is added to it. It does not looses its basic characteristic of the milk by heating or cooling or on addition of sugar or any permitted colour, essence or flavour. The addition of permitted colour or flavour does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1981 again issued under Section 3-A of the Act. A combined reading of Section 4 of the Act with the aforesaid notifications makes it crystal clear that State Government has exempted milk from payment of tax under the Act though some other forms of milk such as condensed milk, milk powder and baby milk and specified milk products have not been exempted. There is no notification which provides to levy tax on flavoured milk or that it stand excluded from the exemption granted vide Section 4 of the Act read with notification dated 31.01.1985 or that it stands ousted from the ambit of 'milk' as contained in Section 4 of the Act. A learned Single Judge of this court in Commissioner of Sales Tax Vs. M/s Neera Drinks, Muzaffarnagar 1999 U.P.T.C. 1130 while dealing with the precise entry No.40 of the Notification dated 31st January, 1985 considered whether Sweeten milk, Badam Milk sold in bottles with caps is exempted from payment of tax under the Act. It was held that milk put in bottles with caps do not change the entry of the product and that the commodity which is sold is basically milk and therefore, exempt from tax. Somewhat similar view was taken by his Lordship a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of above, as flavoured milk is basically a milk that stands exempted under Section 4 of the Act read with notification dated 31.01.1985 whether sold in open form or in sealed containers. The argument that as per the ratio of Dealing Diary Products (Supra) the exemption from tax granted vide notification issued under Section 4 of the Act stands revoked once a good is made taxable under a notification issued under Section 3-A of the Act cuts no ice. It only provides for withdrawing of the exemption granted through a notification issued under Section 4 of the Act with the issuance of notification under Section 3-A of the Act but not the exemptions provided by Section 4 of the statute itself. 'Milk' stands exempted under Section 4 of the Act and this exemption cannot be nullified by any notification, unless a specific notification is issued excluding flavoured milk from the cover of 'milk. To sum up:- (i) 'Milk' not only raw milk, except some of its specified forms is exempt from tax under the Act by virtue of Section 4 of the Act; (ii) 'Milk' has also been exempted vide notification dated 31.01.1985 issued under Section 4 of the Act; (i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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