Bombay High Court
M/S Vadilal Daiy International Ltd vs The State Of Maharashtra on 1 September, 2015
Author: G.S. Kulkarni
Bench: S.C. Dharmadhikari, G.S.Kulkarni
Nalawade A.S. 1/26 STR-56-08
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SALES TAX REFERENCE NO.56 OF 2008
IN
REFERENCE APPLICATION NO.78 OF 2001
M/S. Vadilal Dairy International Ltd. ....Applicant.
Versus
The State of Maharashtra. ....Respondent.
Mr. P. C. Joshi for the Applicant.
Mr. V. A. Sonpal, Special Counsel for Respondent State.
CORAM : S.C. DHARMADHIKARI AND
G.S.KULKARNI, JJ.
Reserved on : 4th August, 2015
Pronounced on : 1st September, 2015.
JUDGMENT :(PER G.S. KULKARNI, J.) The Tribunal, by its order dated 30th September, 2005, has referred the following question of law for answer and opinion of this court.
::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 :::Nalawade A.S. 2/26 STR-56-08 "Whether on true and correct interpretation of Schedule entry C-II-35(1) appended to the Bombay Sales Tax Act, 1959, a Notification entry 374 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") and manufacturer of 'Ice cream' which is covered of Schedule Entry "C-II-
35(1)". The Government of Maharashtra had issued a Notification under Section-41 of the Act with effect from 1 st April, 1994 and introduced Entry 374 under which the effective rate of tax was reduced to 4% in respect of "Sweet and Sweetmeats" covered by Schedule Entry "C-II-
35(1)".::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 :::
Nalawade A.S. 3/26 STR-56-08
3. In view of the notification providing for a reduced rate of tax, on 31st December, 1994, the applicant filed an application under Section 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 cream' being distinct and separate from the term "Sweet and Sweetmeats" was exigible to tax at the rate of 8%.
4. The applicant being aggrieved by the determination order dated 29th March, 1995 passed by the Commissioner preferred an appeal before the Tribunal. The Tribunal by its decision dated 23rd March, 2001 upheld the decision of the Commissioner and confirmed that the sale of 'Ice cream' as made by the applicant was not exigible to a tax concession under Notification Entry No.374 and 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 ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 4/26 STR-56-08 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 applicant being aggrieved by the orders dated 23 rd March, 2001 passed by the Tribunal filed Reference Application No.78 of 2001 under Section 61 of the Act before the Tribunal. The Tribunal by an order dated 30th September 2005 passed on the reference application has referred the above question for opinion of this Court.
6. Before we deal with the contentions raised on behalf of the parties, it would be appropriate that we extract the taxing entries which call for interpretation in this reference. The 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:-::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 :::
Nalawade A.S. 5/26 STR-56-08
Sr. Description of goods Rate of Rate of
No. sales tax purchase
tax
1 2 3 4
35 (1) Sweets and sweetmeats, including Eight paise Eight paise
Shrikhand, Basundi and Doodhpak; in the in the
Cakes, pastries, biscuits and other rupee. rupee.
confectioneries, ice cream and kulfi and
non-alcoholic drinks containing ice-
cream or kulfi.
(2) Sweet drops, toffees and chocolates
ig Do Do
7. By a Government Notification dated 8th April, 1994 Entry No.374 was issued under Section 41 of the Act whereby a concessional rate of tax came to be introduced in respect of 'sweet and sweetmeats' as covered under Schedule Entry "C-II-35(1)". It is this notification entry of which the applicant has sought a benefit in respect of sale of 'Ice-cream' as the tax was 4% in place of 8% as prescribed under regular entry No. "C-II-35(1)". Notification Entry 374 reads as under:-::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 :::
Nalawade A.S. 6/26 STR-56-08
374 Sales or Purchases of Sweets To the extent to Nil. Government
and sweetmeats covered by which the amount Notification
sub entry (1) of entry 35 in of sales tax or as F.D.No.STA-
Part II of Schedule-C the case may be 1094/12/Taxation-
purchase tax 2 dated 8.4.94.
exceeds four paise
in the rupee
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 contentions as raised on behalf of the applicant. The contention is that from the year 1960 till 30 th June, 1981 'Ice cream' was admittedly treated as "Sweet and Sweetmeats"
under the Act. On 1st July 1981 when the amendment was brought about to Entry No. "C-II-35(1)" 'Ice-cream' was not placed as a separate entry in the Schedule but was clubbed in the same schedule entry and thus was generally considered to be "Sweet and Sweetmeats". The contention is that a clear impression was created that '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 8 th 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 ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 7/26 STR-56-08 reason the applicant acted upon the concessional notification and assessed itself for a levy of tax at 4% instead of 8% on the sales as made by the applicant.
9. Mr. Joshi learned counsel for the applicant in support of the contention that notification entry no. 374 is applicable to ice-cream has made the following submissions:
(i) Ice-cream was held and assessed as sweet and sweet meat for past several years and in his contention since 1960 therefore 'Ice-
cream' was specifically shown in the inclusive part of "sweet and sweetmeat" in schedule entry C-II-35 (1);
(ii) Taking into consideration the 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 is distinct from "sweet and sweetmeat". For the purpose of notification entry 374, schedule ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 8/26 STR-56-08 entry C-II-35 (1) is required to be read as a whole as if the same stands incorporated in the notification entry 374. The semicolon appearing after the words "sweets and sweetmeat including shrikand, basundi, and doodhpak", in schedule entry C-II-35 (1) inserted in the amendment Act of 1981 cannot be relied upon de'hors the interpretation as made by the revenue to include ice-
cream as sweet and sweetmeat. 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 sweet-meats" which includes 'Ice-cream'. Other items being shrikand, basundi and doodhpak, cakes, pasteries, biscuits, kulfi and non-alcoholic drinks containing Ice-creams or kulfi. All these items are sweet and therefore, ''Ice-cream' is required to be treated as a sweet.
(vi) When two meanings are possible then a meaning which is favourable to the assessee is required to be applied and thus notification entry No.374 which prescribes a concessional rate of tax is applicable to 'Ice-cream'.
::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 :::Nalawade A.S. 9/26 STR-56-08
(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 STC 18 (Bom), Commissioner of Sales Tax vs Mangharam & Company (1976) 37 STC 599 (Bom), Commissioner of Sales Tax vs Radha Dyeing & Printers Mills (1981) 48 STC 61 (Bom), Pappu Sweets and Biscuits vs Commissioner of Trade Tax (1998) 111 STC 425 (SC), Godfery Philips India Ltd & anr vs. State of U.P. & ors. (2005) 139 STC 537 (SC).
11. On the other hand, Mr. Sonpal, learned Special counsel appearing for the respondents submits that notification entry 374 is required to be interpreted 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 ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 10/26 STR-56-08 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-II-35 (1) is required to be read in three parts. The first part pertains to "sweet and sweetmeats" including shrikand, basundi and doodhpak. The second part is cakes, pastries biscuits and other confectioneries and third part is 'Ice-cream' and kulfi and non-alcoholic drinks containing 'Ice-cream' or kulfi. He submits that notification entry 374 pertains only to first part namely "sweet and sweetmeats" which would include shrikand, basundi and doodhpak and thus the contention as raised 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 notification entry 374. Mr. Sonpal submits that the use of semicolon and the use of word 'and' as contained in entry C-II-35 (1) clearly reveals the legislative intent to treat "sweet and sweetmeats"
different from cakes, pastries and biscuits as also confectioneries, ice-::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 :::
Nalawade A.S. 11/26 STR-56-08 cream and kulfi and non-alcoholic drinks containing ice-creams or kulfi.
Mr. Sonpal submits that it is in fact for these reasons in entry C-II-35 sweet drops, toffees, and chocolates has been separated by providing sub clause (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 of common and mass consumption than other items like cakes, pastries and ice-creams and non-alcoholic drinks. In support of his submissions, Mr. Sonpal has placed reliance on the decision in Commissioner of Central Excise, New Delhi vs Connaught Plaza Restaurant Private Limited, New Delhi (2012) 13 Supreme Court Cases 639.
12. Having considered the rival submissions as made on behalf of the parties, we now proceed to examine the question of law as to what is the correct interpretation of schedule entry C-II-35 (1) and notification ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 12/26 STR-56-08 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 of each of these items indicates these items are capable of being categorized differently. It is also pertinent that these items are separated by use of a 'semicolon' as also use of the word "and" which would differentiate the category of items from each other. For the sake of appreciation, we extract hereinbelow items contained in schedule entry C-II-35 (1) as they stand without any variations grammatically or otherwise however in a separated form.
"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 ice-cream or kulfi.
(2) Sweet drops, toffees and chocolates. "::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 :::
Nalawade A.S. 13/26 STR-56-08
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 are expressly included and thus the meaning of the words "sweet and sweet meats" is required to be gathered and understood in that context. In other words, "sweet and sweet-meats"
would include items which belong to are akin to the category of shrikand, basundi and doodhpak. The use of semicolon after the words "doodhpak" is significant. It separates first category from the other category which includes items like cakes, pastries, biscuits and other confectioneries. These items form the second category. 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 distinct from each other.
::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 :::Nalawade A.S. 14/26 STR-56-08 We would interpret the entry by giving to its contents a plain and natural meaning and as to how the items would be commonly understood.
When the entry uses the word "sweet and sweet meats" to include shrikand, basundi and doodhpak, we would have no hesitation to come to a conclusion that the words "sweet and sweet meat" would include only such other items which would be of a category akin to the items contained in the entry namely shrikand, basundi and doodhpak. We may also observe 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 of "sweet and sweetmeat" which can be clubbed with items like shrikand, basundi and doodhpak, would be items like pedha or barfi. We have enumerated these items purely as an illustration and taking note of the fact that notification entry 374 has outlived its existence and is no more relevant after 30 th September, 2005 inasmuch as period of dispute in this reference from is from 1st April, 1994 to 30 th ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 15/26 STR-56-08 September, 2005 during which period the concessional rate of tax vide notification entry 374 was 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 non-
alcoholic 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 third category by no interpretation can be stretched so as to be included in the first category to mean that they are sweet and sweetmeat. In our opinion the applicants are thus not correct in contending that the words "sweet and sweetmeats" would include ice-cream. The submission militates against a plain reading of entry C-II-35 (1). Moreover, inclusion of clause (2) under entry C-II-35(1), namely toffees, chocolates would fortify and adds credence to our observation that the legislature has found it appropriate to include certain more items however, in a separate entry.
::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 :::Nalawade A.S. 16/26 STR-56-08
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 ice-
cream which falls in third category of entry C-II 35 (1) nor can it be included in the second category namely cakes, pasteries, biscuits etc. and thus the applicant would not be correct in contenting that the benefit of notification entry 374 would be available to the applicant in sale of 'ice-
cream' undertaken by it.
17. Mr. Joshi, learned counsel for the petitioner in support of his submissions has placed reliance on the decision of the Division Bench of this Court in the case of Commissioner of Sales Tax vs. 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 ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 17/26 STR-56-08 tax under notification entry 374 on sale of ice-cream. The Revenue had challenged this direction in an appeal before this Court. The Division Bench upheld the decision of the Tribunal accepting the contention on the part of the assessee that historically 'Ice-cream' was treated to be a part of entry C-II(35)(1) and therefore, bonafide the assessee had presumed that notification entry 374 will be applicable and thus, had taken benefit of Notification Entry 374 by collecting tax at the concessional rate. In our opinion, this judgment would not support the case of the applicant, inasmuch as the issue in the present reference which 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 (supra) . The issue in this decision was regarding sale of 'Ice cream' by the assessee at certain places which are described as "depots". The dispute was pertaining to the assessment years 1st January, 1960 to ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 18/26 STR-56-08 31st March, 1960 and 1 st April, 1960 to 31st March, 1961. For this period the assessee claimed an exemption for entire production under entry 14 of schedule A under the Act in respect of the sales of 'Ice-
cream' made by them in their depots at a price not exceeding one rupee 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 'Ice-cream' even though a sweet was "cooked food" and the "depots"
where it was sold for consumption were eating houses and therefore, assessee was entitled for exemption. Reference was thereafter made to this Court on the question :- "Whether, on a true and proper interpretation of entry No.14 of Schedule A to the Bombay Sales Tax Act, 1959, the Tribunal was justified in holding that the sales of ice-cream effected by the respondents at their depots were covered by the said entry No.14 of Schedule A and as such exempt from tax?" Entry No. 14 under which exemption was sought read as follows :- "Cooked food ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 19/26 STR-56-08 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 entry 14 exempted cooked food subject to conditions contained therein and held that it would be wholly wrong to cut down the ambit of the exemption granted by the said entry to what can be eaten only at fixed hours of the day or in the course of a regular breakfast, lunch or dinner. What was observed was that the entry does not mention of a "Meal". It uses the word "food" to distinguish it from 'drink' namely what one can eat. It was thus, observed that 'Ice-cream' sold by the assessee 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 interpreting the entry no.14. We are ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 20/26 STR-56-08 therefore, of the clear opinion that this decision in any manner would not assist the applicant.
19. Mr. Joshi then relied on the decision of the Division Bench of this Court in the case of Commissioner of Sales Tax vs. Mangharam and Company (supra). The issue which fell for consideration of the Division Bench was similar to one which was fell for consideration in the case of Pure Ice-cream Company as to whether 'Ice-cream' is a cooked food in entry no.14 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 orders for the period in question should not be revised thereby deleting the exemption in respect of sale of Ice cream. By an order passed by the Assistant Commissioner it was held that sale of 'Ice-cream' effected by the assessee was taxable under entry 31 of schedule C of the Act. The assessee's appeal against the orders of ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 21/26 STR-56-08 the Assistant Commissioner failed. The assessee thereafter, approached the Tribunal in appeal, the Tribunal allowed the same holding that 'Ice cream' sold 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 "Sweetmeats". This contention of the Revenue was repelled by the Division Bench by observing that entry 31 of schedule C makes a distinction between "Sweet and Sweetmeats".
It was observed that the term "Sweet" is a wider generic term, which comprehends within it the species of sweets known as sweetmeats, but from this it does not follow that every sweet is a sweetmeat. It was observed that words "sweet food" are merely descriptive of a "sweet and a sweetmeat"', and do not define or bring out the essential 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 ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 22/26 STR-56-08 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 what an ice-cream is and what sweetmeats are. The Division Bench did not accept the submission on behalf of the Revenue that 'Ice cream' is a sweetmeat. We fail to appreciate as to how this Judgment would support the case of the applicant. In fact, it completely supports the Revenue inasmuch as the Division Bench has categorically held that term sweet and sweetmeat would not include ice-cream.
20. Mr. Joshi then placed reliance on the decision of the Supreme Court in the case of Pappu Sweets 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 exemption. The ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 23/26 STR-56-08 Supreme Court while applying the test of strict interpretation to the exemption notification observed as under :-
"7. It is true that dictionary meaning of the word "sweetmeats"is a very wide and any food which is sweet and rich in sugar can be described as "sweetmeat". Toffee is a confection of sugar and other materials and being rich in sugar would be ":sweetmeat" in its wider sense. But for deciding whether toffee is "sweetmeat" as contemplated by the exemption notification, what is required 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 cannot be changed simply because their origin is different from what is usually conveyed by the word 'mithai' in this part of the country", the High Court preferred to decide the issue by relying upon how toffee is understood by the people of the country where originated rather than by considering how "toffee" is understood in India and more particularly in the State of U.P. As held by this Court in Collector of Central Excise v. Parle Exports (P) Ltd. [1989] 75 STC 105 ; (1989) 1 SCC 345 "the 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-::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 :::
Nalawade A.S. 24/26 STR-56-08 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 beverages are not understood in India as food products or food preparations, though they might have been regarded as such in foreign countries. The High Court, therefore, should have applied the rest of popular parlance by finding out how toffee is understood in the country and more particularly in the State of U.P. No evidence was led by the State to substantiate its case that "toffee" is considered as sweetmeat either by the dealers in toffees or by the consumers. On the other hand, evidence was 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 sweetmeat. But it was so held in a different context and no evidence was led by the State to show that thereafter, the dealers in toffees and consumers started treating them as sweetmeat. In the Hindi version of the notification for the word sweetmeat the word "mithai"
is used. The word "mithai" has a definite connotation and it can be said with reasonable amount of certainty that people in this country do not consider toffee as "mithai". The High Court committed a grave error in holding that as some manufacturers of toffees sell their products by describing them as sweets it can be said that in commercial circles toffee is known as sweetmeat."
(emphasis supplied)
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Nalawade A.S. 25/26 STR-56-08
21. Mr. Sonpal, learned special counsel for the respondent has appropriately relied on the decision of the Supreme Court in the case of Connaught Plaza Restaurant Private Limited. In this decision the Supreme Court has held that interpreting entries and items in taxing statutes must be construed in terms of their commercial or trade understanding or according to their popular meaning .These entries and items are required to be construed in the sense that the people conversant with the subject matter of the statute, would attribute to it.
22. Adverting to the above settled norms of interpretation as laid down by the Supreme Court in the context of the present case, we may observe 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.
23. As a sequel to our above discussion, we do not agree to the contentions as raised on behalf of the applicant and noted by us above. We are in complete agreement with the submissions as made on ::: Uploaded on - 02/09/2015 ::: Downloaded on - 07/09/2015 23:55:20 ::: Nalawade A.S. 26/26 STR-56-08 behalf of the Revenue. We therefore, answer the above reference in favour of the revenue and against the assessee.
24. Reference Application accordingly stands disposed of in above terms. No order as to costs.
(G.S.KULKARNI, J.) ( S.C. DHARMADHIKARI, J.)
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