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Judgment
J.K. Ranka, J.—Instant sales tax revision petition is directed against the order of the Rajasthan Sales Tax Tribunal, Ajmer, in Appeal No. 8/88 dated November 6, 1992. The matter pertains to the assessment years 1982-83 and 1983-84. The present petition was admitted on the following questions of law:
"(i) Whether the ''ice cream'' is an exempted item of goods under exempted entry dated March 6, 1964 or not with amended entry dated March 9, 1966?
(ii) Whether the ''ice cream'' is a milk product or not?
(iii) Whether the Tribunal is competent to decide the matter for the years for which there was no dispute before it?"
The brief facts which can be noticed are that the assessee is carrying on the business of sale of ice cream and the turnover was to the extent of Rs. 1,41,375 and Rs. 3,11,650 for the assessment years 1982-83 and 1983-84, respectively. The controversy, in short, is whether the ice-cream is a milk product or not. The claim of the assessee is that, it being a milk product, is exempt under the Sales Tax Act. However, the assessing officer was of the view that under the notification dated March 6, 1964, ice-cream is not defined and therefore, it is not a milk product and thus is exigible to tax under the Rajasthan Sales Tax Act and accordingly levied tax at eight per cent. However on an appeal filed, the Deputy Commissioner (Appeals) was satisfied with the arguments advanced by the assessee and held that it is a milk product, however, the Deputy Commissioner (Appeals) directed to levy tax at five per cent, as against eight percent, which was assailed before the Rajasthan Sales Tax Appellate Tribunal by the assessee and the Tribunal vide impugned order not only upheld the findings of the assessing officer but also held that the tax would be levied on the same rate as observed by the assessing officer.
Mr. Sarvesh Jain, counsel for the petitioner, contended that ice-cream is basically prepared by using milk and cream and once the main ingredient being milk and cream, which is exempt under the Rajasthan sales tax laws, then on the same analogy the ice-cream should also fall within the category as a milk product. He contended that ice-cream is formed by milk and cream put together and when milk and cream are mixed and placed in deep freezer, it becomes an ice cream and thus enures for exemption. He further contended that when ice cream melts what remains is basically milk and cream. He further contended that when fresh milk, dahi (curd), khoa and cream was exempt from the levy of sales tax then ice-cream also ought to be exempt. He further contended that the lower authorities have held it to be a "cooked food" when it cannot be said to be "cooked food" and there is no basis to categorize it as a "cooked food". He further contended that cheese, paneer, lassi, shrikhand and yogurt where also the main ingredient is milk and these being exempt then on the same analogy, ice-cream being prepared from the milk ought to be liable for exemption and according to him, the specific entry which is relevant for the years in dispute read as under:
"Fresh milk (whether whole or the fat contents of which have been removed or reduced), dahi, khoa and cream."
He relied upon the judgments in the case of Assistant Commercial Taxes Officer v. Murli Brothers [1989] 75 STC 72 (Raj) : [1989] 5 RTJS 285 , Kwality Ice Cream Company and Restaurant Vs. The Sales Tax Officer, New Delhi, , Deputy Commissioner of Sales Tax (Law), Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam Vs. Pio Food Packers, and Commissioner of Central Excise & Customs v. Suresh Synthetics [2007] 216 ELT 662 (SC).
Per-contra learned counsel for the Revenue contended that the ice-cream is entirely a different product though milk may be a major ingredient in preparation of an ice-cream and as such is liable to be taxed and all the three authorities in unison have come to the conclusion that ice-cream does not fall within the category of a milk product. She further contended that it will basically fall in the category of "cooked food" as certain processes are involved in preparation of an ice-cream and after mixing of various products, ice-cream is prepared and once it fall within the category of "cooked food", then certainly it is liable to tax as "cooked food". She further contended that plain, simple meaning is required to be seen while analysing a matter like this and once the Legislature did not include ice-cream as a part of milk product though dahi (curd), khoa and cream and fresh milk were part of the exemption but ice-cream being entirely a different product, is certainly liable for taxation and accordingly has rightly been taxed. She placed reliance on the judgment in the case of Annapurna Biscuit Manufacturing Co., Kanpur Vs. Commissioner of Sales Tax, U.P., Lucknow, , State of Tamil Nadu Vs. Pyare Lal Malhotra and Others, and Commissioner of Sales Tax Vs. Hira Ice Candy, .
I have considered the arguments advanced by the counsel for the parties and perused the material available on record. In my view, ice-cream can certainly be said to be a product of a milk and certainly would be covered within the definition of a milk product, dahi (curd), khoa and cream. It is true that ice-cream as such is not mentioned anywhere but when ice cream is prepared basically by ingredient of milk and cream, I have no hesitation in holding that ice-cream would certainly be exempt under the Rajasthan Sales Tax Act.
This court in the case of Assistant Commercial Taxes Officer v. Murli Brothers [1989] 75 STC 72 (Raj) : [1989] 5 RTJS 285 while deciding a controversy about "cheese" which too was covered by entry No. 3 after March 6, 1964 held as under (pages 74 and 75 in 75 STC):
"The exemption entry up to March 6, 1964 left no doubt that all milk products were exempt from payment of tax including ghee and butter, as specifically mentioned therein. Thereafter, that entry was substituted with effect from March 6, 1964 by mentioning therein specifically milk, dahi, curd, khoa and cream and the words milk products, does not find a place therein. The question is whether this alone is sufficient to hold that the exemption granted to milk products other than ghee and butter which have been shown specifically as exigible to tax in the notification dated March 8, 1969, ceased to be so exempt from the payment of tax. In my opinion, it is not so. The notification dated March 8, 1969, providing specifically for ghee and butter while living out other milk products was issued much after the substituted exemption entry at S. No. 3 with effect from March 6, 1964. If the substituted entry were to be read as excluding the products of the goods mentioned therein, then it was not necessary to provide expressly for the taxation of ghee and butter which are two of its products in the notification dated March 8, 1969. This being so, the ordinary rule of construction that products of exempted goods would also be exempt unless a contrary intention appears must be applied. No contrary intention to tax the products of milk or curd other than ghee and butter appears from the aforesaid notification dated March 8, 1969. This being so, cheese, which is admittedly the product of milk, or curd, must be held to be exempt from payment of tax by virtue of this entry. Reference may be made to the decision of the Supreme Court in Alladi Venkateswarlu and Others Vs. Govt. of Andhra Pradesh and Another, , wherein it was held that the term ''rice'' is wide enough to include rice in its various forms whether edible or inedible. On this basis it was held that the term ''rice'' as ordinarily understood, would include both parched and puffed rice. The view taken, therefore, finds support from this Supreme Court decision."
It was held that cheese is admittedly a product of milk or curd and must be held to be exempt from payment of tax.
The Delhi High Court in the case of Kwality Ice Cream Company and Restaurant Vs. The Sales Tax Officer, New Delhi, considering a case of ice-cream held as under (pages 406 to 408 in 34 STC):
"It has been finally contended on behalf of the respondents that if all varieties of ice-cream are treated as milk products and, therefore, exempt from assessment, then even ice-cream, which has no milk content or very little milk content in it, will also be eligible for exemption. We have already referred to the standards prescribed by the Prevention of Food Adulteration Rules for ice-cream and we have proceeded on the basis that the ice-cream which comes under the category of milk products within the meaning of entry No. 12 is ice-cream which conforms to the standards prescribed under the said Rules. There is no difficulty in excluding from entry No. 12 the so-called ice-cream, even if any, which has absolutely no milk content, because such an ice-cream cannot be called a milk product. There would, however, be some difficulty in respect of ice-cream which while having some milk content, however, does not conform to the standards prescribed under the Prevention of Food Adulteration Rules. But such a difficulty exists in the cases of other entries in the Second Schedule. For instance, standards are prescribed for fresh milk both of cow or buffalo. Fresh milk which is sold by a vendor may not conform to such standards and might be adulterated by him by the addition of water. None the less, so far as the assessment to sales tax is concerned, even adulterated milk will be exempt from assessment. It is for the Legislature to devise a method which would prevent the sale of adulterated articles of food from escaping assessment.
As a result of the above discussion, we hold that ice-cream is a milk product within the meaning of entry No. 12 in the Second Schedule of the Act and by virtue of section 6 of the Act the sale of ice-cream is exempt from assessment to sales tax. So far as the writ petitions are concerned, the same are accepted and the assessment orders levying sales tax on the sale of the ice-cream by the petitioners are quashed. . . .
. . .
The honourable Khanna, J. added:
. . .
In the present case, the words ''fresh milk, whole or separated'' provide a complete description of what was intended to be exempted. There is no vagueness left about it. Apart from that, ''milk products'' were also considered to deserve the exemption. That is why the entry was made to read as ''fresh milk, whole or separated and milk products''. The attempt to regard the expression ''milk products'' as general and then to cut into its meaning to understand by it only the residue which may be left when the whole milk is separated, as was contended by the respondent''s learned counsel, is wholly uncalled for and futile. There is no scope for invoking the rule of ejusdem generis when interpreting the expression ''milk products'' which is an unambiguous and clear expression well-known and easily understood by the common man. The attempt of the Revenue to call to its aid a technical rule of interpretation, in order to understand a well-understood expression, and thereby to divert one''s attention from its natural meanings and in this process to deny ice-cream, which is well-understood to be a milk product, the exemption it enjoys under the relevant entry in the schedule, is without any justification. The entry has to be interpreted in the manner in which it is understood in common parlance. Ice-cream, as everyone knows, is a milk product and there was hardly any need to indulge in uncalled for hair-splitting and making an appeal to the technical rules of interpretation. I am entirely in agreement with my learned brother that ice-cream being a milk product within the meaning of entry No. 12 in the Second Schedule of the Act is exempt from assessment under the Act; and that writ petitions have to be allowed and the questions posed in the references have to be answered in the manner in which they have been answered by him, without any order as to costs."
The honourable apex court in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam Vs. Pio Food Packers, held:
"It is well-settled that in determining the meaning or connotations of words and expressions describing an item or commodity, the turnover of which is taxed in a sales tax enactment, if there is one principle, it is this that the words or expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. It is they who are concerned with it, and it is the sense in which they are understood in that constitutes definitive index of legislative intentions when the statute was enacted."
The honourable apex court, time and again, has held that while interpreting the entry for the purposes of taxation, recourse should not be made to the scientific meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. That is what is known as "common parlance test" ( Gopalanand Rasayan Vs. The State of Maharashtra and Others, ).
The honourable apex court, in the case of Union of India and others Vs. Garware Nylons Ltd. etc., , again observed that the burden of proof is on the taxing authorities to show that the particular case or item in question is taxable in the manner claimed by them. Mere assertion in that regard is of no avail. It further observed that there should be material to enter appropriate finding in that regard and the material may be either oral or documentary. It is for the taxing authority to lay evidence in that behalf even before the first adjudicating authority.
In so far as the classification of goods is concerned, the honourable apex court in the case of H.P.L. Chemicals Limited Vs. Commissioner of Central Excise, Chandigarh, has held that classification of goods is a matter relating to chargeability and the burden of proof is squarely upon the Revenue. If the Department intends to classify the goods under a particular heading or sub-heading different from that claimed by the assessee, the Department has to adduce proper evidence and discharge the burden of proof.
It may also be relevant to note that under the Prevention of Food Adulteration Rules, 1955, "ice cream, kulfi and chocolate ice-cream would mean the frozen product obtained from cow or buffalo milk or a combination thereof or from cream, and/or other milk products, with or without the addition of cane sugar, (dextrose, liquid glucose and dried liquid glucose). Maltodextrin, eggs, fruits, fruit juice, preserved fruits, nuts, chocolate, edible flavours and permitted food colours. It may contain permitted stabilizer and emulsifiers not exceeding 0.5 per cent, by weight. The mixture shall be suitably heated before freezing. The product shall contain not less then 10 per cent, milk fat, 3.5 percent, protein and 36.0 per cent, total solids". Even these rules provide that the main ingredient being milk and when frozen after mixing becomes ice-cream.
The judgments relied upon by the counsel for the Revenue are distinguishable on facts inasmuch as in the case of Commissioner of Sales Tax Vs. Hira Ice Candy, , the case related to ice-candy which was neither found as a cooked food or confectionery and thus found as unclassified item, liable to be taxed.
16.1 The case of Annapurna Biscuit Manufacturing Co., Kanpur Vs. Commissioner of Sales Tax, U.P., Lucknow, , related to biscuits as to whether it is a cooked food or otherwise. The facts in the case of State of Tamil Nadu Vs. Pyare Lal Malhotra and Others, , was relating to iron and steel scrap and therefore even not remotely connected with the facts of the instant case.
Before concluding, I may observe that the present matter is being decided for the assessment years under challenge and the judgment is based on the material available on record. In my view, the Tribunal exceeded its jurisdiction by holding that the rate of tax would be levied for succeeding assessment years as well which in my view, is contrary to the law laid down under the taxing statutes. Each year is different and the Tribunal cannot come to a conclusion that the same rate would apply for all times to come.
Therefore, in the light of the above facts and circumstances, when cheese, paneer, lassi, shrikhand and yogurt can be said to be items which are being produced with the main ingredient being milk so also on the same analogy, ice-cream in my humble opinion, would also fall within the same category and would thus, be exempt and therefore, finding reached by the Tax Board, is required to be reversed. Even as per common parlance in every house hold or even otherwise one immediately understands as to how ice-cream is being prepared and even a child would know that the ice-cream would be prepared by mixing milk, cream, sugar, etc. In view of what I have observed hereinabove the revision petition deserves to be allowed and is accordingly allowed. Question of law is answered in favour of the assessee and against the Revenue with no order as to costs.