TMI Blog2024 (1) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... terial has been taxed under Entry No. 52 of the Third Schedule, however, the limited exemption has been given to the material which falls under Entry No. 5 of the First Schedule. The same has to be given a restricted interpretation. In the case of INDUSTRIAL AND COMMERCIAL SERVICE, ALLAHABAD VERSUS COMMISSIONER OF SALES TAX, UP., LUCKNOW [ 1962 (12) TMI 44 - ALLAHABAD HIGH COURT] , the Division Bench of the Hon ble Allahabad High Court had answered the issue whether books used in Section 4 of the UP Sales Tax Act would include the diaries sold by the appellant therein. In terms of Section 4 of the UP Sales Tax Act, the sale of books was exempted from taxation. The appellant therein was selling the diaries, which were claimed to be books as they were bound like a book. There were few pages in the diary containing general information on various matters and the Shlokas from Bhagavad Gita were referred. The Hon ble High Court noted that book has got several meanings and in a wider sense, means a writing in the collection of sheets of paper, blank, written or printed, strung or bound together and the diary would come within this meaning. However, it held that the diary would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion / statute, a consideration in favour of the Revenue has to be given and in case of ambiguity, the same has to be interpreted against the assessee. The question of law as to whether the periodical Amagram is to be classified as catalogue liable for tax under Entry 52 of Third Schedule of the DVAT Act, is answered in favour of the Revenue. Coconut Oil - HELD THAT:- In view of the admitted fact that the coconut oil is sold by the appellant in small packs; is displayed in the category of hair care; the manner in which it is to applied on hair; and the purpose for which it is purchased by the consumer leaves no manner of doubt that the coconut oil sold by the appellant is wrongly sought to be classified under Entry 25 of the Third Schedule of the DVAT Act - the question of law as to whether the coconut oil is wrongly classified under Entry No. 25 of the Third Schedule of the DVAT Act is answered in favour of the Revenue as well. Appeal disposed off. - HON BLE MR JUSTICE VIBHU BAKHRU AND HON BLE MR JUSTICE AMIT MAHAJAN Advocates who appeared in this case: For the Appellant : Mr. Ashok K. Bhardwaj Mr. Manish Hirani, Advs. For the Respondents : Mr. Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Persona Coconut Oil 100% pure edible oil . The appellant also prints and circulates a bi-monthly publication Amagram. 8. Respondent No.1 by order dated 29.01.2013 directed the appellant to get a special audit of their business affairs under Section 58A of the DVAT Act for the period 2011-12, through the designated auditor M/s Matta Associates. 9. The appellant received the Audit Report on 15.04.2013, and submitted the same to the Revenue on 25.04.2013. The Assessing Authority issued a Show Cause Notice dated 01.05.2013 to the appellant for submission of replies on the observations made by the auditor to the effect that the appellant had not discharged the correct tax liability under the DVAT Act and the Central Sales Tax Act, 1956. 10. The learned VAT Officer issued twelve notices of default assessment of tax and interest for the monthly tax periods from April, 2011 to March, 2012 under Section 32 of the DVAT Act, raising a tax demand of Rs. 5,09,52,590/- (tax of Rs. 4,10,47,163/- plus interest of Rs. 99,05,427/-). The learned VATO also imposed penalties of Rs. 4,92,93,491/- on the appellant under Section 86(10) read with Section 33 of the DVAT Act. The said demand was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions under the Cambridge University Press and Collins Dictionary, and also Circular No.2 of 2005-06, to find that Amagram is a catalogue. In respect to Coconut Oil, the learned DVAT Tribunal found merit in the observations of the learned Additional Commissioner and found that the appellant had failed to discharge the burden as to why Coconut Oil was advertised under the category of Persona . 13. Aggrieved by the said impugned judgment, the appellant has preferred the present appeal. 14. The following questions of law are formulated for consideration of this Court: (i) Whether the periodical Amagram is rightly classified as catalogue liable for tax under Entry No. 52 of Third Schedule of the DVAT Act even though the periodicals are specifically referred in Entry No. 5 of the First Schedule of the DVAT Act. (ii) Whether the coconut oil, despite being an edible oil, was wrongly classified under Entry No. 25 of the Third Schedule of the DVAT Act. SUBMISSIONS Classification of Amagram 15. The learned counsel for the appellant submitted that the Amagram is a bi-monthly publication meant primarily for the use by its direct sellers / retailers. It impa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified on a representation being received from different trade associations by a Circular No. 2 dated 26.04.2005. It has been specifically clarified that the catalogues will be considered as a printed material under Entry No. 52 of the Third Schedule. 26. He submitted that periodicals and journals are to be interpreted to include those newspapers, which are periodically printed for the purpose of disseminating information or providing recreation to the public. The publication Amagram , even though claimed to be published at regular intervals, cannot be categorized as periodicals. 27. He submitted that the Karnataka High Court in the case of Manipal University v. State of Karnataka : 2014 SCC OnLine Kar 2559, had refused to classify the prospectus of the University as periodical or journal. It was held that the prospectus cannot be treated as a book or a book meant for reading. 28. He also relied upon the decision of the Allahabad High Cout in the case of the petitioner itself in M/s Amway India Enterprises v. Commissioner of Commercial Tax : Sales/Trade Tax Revision No. 280-283/2022. He submitted that the issue, as in the present case, is squarely covered by the said d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned Appellate Tribunal and contended that the snapshot of the product Persona from the website of the appellant clearly shows that the intention of the appellant is very clear to treat the oil for the purpose of Persona / cosmetic and not for cooking. 36. He submitted that applying dominant intention test the dominant purpose / objective from the perspective of not only the buyers but also from the seller / dealer, has to be considered, which is clearly for cosmetics. The appellant sells the oil in small packed container, which is used for the purpose of cosmetics since the edible oil is generally sold in big container. 37. He, therefore, submitted that when the appellant itself is selling product as a hair oil / cosmetic and not as an edible oil for the purpose of consumption, the classification of it in the residual entry cannot be objected to. 38. He further submitted that the appellant, in its list of products, has been selling the cooking oil in a separate category. He relied upon the judgment passed by the Hon ble Allahabad High Cout in Bombay Oil Industries (P) Ltd. v. Commissioner of Trade Tax : 2008 SCC OnLine All 918, wherein Parachute coconut oil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be taken away. 46. As mentioned above, the dictionary meaning of a periodical is a magazine or newspaper especially serious or academic ones that are published at regular intervals. Even though the definition of book, in a wider sense, includes a collection of sheets of paper whether blank or written or printed that are bound together, however, while construing the said term for the purpose of exemption, is to be construed in a restricted sense. 47. Strictly speaking, even a diary is a book and the book is also a printed material. The printed material has been taxed under Entry No. 52 of the Third Schedule, however, the limited exemption has been given to the material which falls under Entry No. 5 of the First Schedule. The same has to be given a restricted interpretation. 48. In the case of Industrial and Commercial Service v. Commissioner of Sales Tax : 1962 SCC OnLine All 351, the Division Bench of the Hon ble Allahabad High Court had answered the issue whether books used in Section 4 of the UP Sales Tax Act would include the diaries sold by the appellant therein. In terms of Section 4 of the UP Sales Tax Act, the sale of books was exempted from taxation. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar sense. Popularly a book is what one can read for education, knowledge, enlightenment or recreation, what one would find in a literary or in a book-seller's shop. In this sense the word would not cover diaries. The context in which it has been used suggests that it means an article of such universal use and necessity as water, food, milk, salt and electricity. The Legislature evidently intended to exempt articles of universal necessity and daily use, like milk, water, food, salt, etc., and when it included books among them it must have meant books of such universal necessity and daily use as books required for education, knowledge, enlightenment or recreation and not other books, like diaries, exercise books, account books, etc. There was no reason for placing exercise books, account books and diaries in the same class as water, food, milk, salt and electricity. 49. In the case of Garg Book Co. v. State of Rajasthan : 1973 SCC OnLine Raj 147 , the Division Bench was concerned with the classification of the roll registers of the University of Rajasthan . The assessee had claimed the same to be exempted from sales tax, by virtue of Section 4 of the Rajasthan Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that Amagram is a periodical since the same is published periodically and would fall within Entry 5 of the First Schedule. On first blush, the contention might appear to be merited, however, when the Entry is read as a whole, which is accompanied with journals, including maps, charts and globes, the intention of Legislature does not appear to exempt periodicals as circulated by the appellant. 51. As noted above, even the literal definition of the term periodicals implies magazines especially serious or academic ones. Therefore, not every periodical, in a wider sense, is meant to be exempted. It also cannot be disputed that the catalogue also falls within a wider meaning of periodicals being circulated at intervals and periodically. 52. In the case of Minerva Printing Works v. State of Bihar : 1973 SCC OnLine Pat 184 , the Hon ble Patna High Court had considered whether the sale of blank registers, exercise books, letter pads was exempted under the Bihar Sales Tax Act in the category of books and periodicals. It was held that the word book is used along with the word periodical and are meant for reading purposes and derive lessons from and gather information. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act is to be levied and paid on the turn over of sale and purchase which are mentioned in the said section. From the reading of Section 7(b), it is clear that tax is not levied on the sale or purchase of any goods named or described in Column (2) of Schedule I of the Act. 21. Schedule-I is the list of the exempted goods. Entry 7 has been inserted by the legislature granting benefit to these goods from being exempted from tax. While Part-A of Schedule-II is description of goods which are to be taxed @ 4% and Entry 100 is for the printed material including diary and calendar. The entire dispute is whether the brochure printed by the revisionist is entitled to exemption under Entry 7 of Schedule-I or to be taxed @ 4% being item covered under printed material at Entry 100 of Schedule-II Part-A. 22. An effort has been made by the assessee counsel to demonstrate that word book encompasses the brochure printed by revisionist and thus entitled to exemption on the strength of decision of Division Bench of this Court in case of Indo Arts (supra). The decision of Indo Arts (supra) was based upon the notification of taxing authorities issued on 01.05.1956 which had exempted books, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establish that the product squarely falls within the category of exempted goods. It is also settled that while interpreting the exemption notification / statute, a consideration in favour of the Revenue has to be given and in case of ambiguity, the same has to be interpreted against the assessee. 57. The Constitution Bench of the Hon ble Supreme Court, in the case of Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company and Others : (2018) 9 SCC 1 , held as under: 53. After thoroughly examining the various precedents some of which were cited before us and after giving our anxious consideration, we would be more than justified to conclude and also compelled to hold that every taxing statute including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. 58. Therefore, even if it is to be accepted that there is an ambiguity in relation to classifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the product Mediker , which is a shampoo used for anti-lice treatment, is a drug or it is to be categorized as a shampoo. The Hon ble Supreme Court applied the Common Parlance Test and accepted the submission that for the purpose of classification, the Court would treat a particular product on the basis of common parlance. It was held that the product Mediker is used for anti-lice treatment because of its medicinal effect. The cleaning of hair was a subsidiary function. People purchase the product for killing lice in human hair. The purpose and use of the product and the consumer s approach towards the product was considered material and decisive factor in determining the classification of the product. 66. The appellant, in the present case, is admittedly not selling the coconut oil for the purpose of cooking or being used as an edible oil. As mentioned above, the website of the appellant has displayed the product, even though as 100% pure coconut oil, but in the category of hair care. The manner in which it is to be applied has also not been mentioned. 67. It is not disputed by the appellant that the coconut oil sold by it, is purchased by consumers for applying it o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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