Andhra HC (Pre-Telangana)
Balaji Agencies vs Commissioner Of Commercial Taxes, ... on 13 September, 1995
Equivalent citations: [1996]102STC555(AP)
Author: V. Rajagopala Reddy
Bench: V. Rajagopala Reddy
JUDGMENT S. Parvatha Rao, J.
1. This special appeal is directed against the order of the Commissioner of Commercial Taxes dated October 31, 1988, passed in exercise of his powers under sub-section (1) of section 20 of the Andhra Pradesh General Sales Tax Act, 1957 ("the Act", for short), holding that "Honeyrex" should be treated as general goods taxable as such under the provisions of the Act and not as falling under entry 44-A of the First Schedule to the Act as held by the Appellate Deputy Commissioner in his order dated November 25, 1985, while allowing the appeal before him of the appellant herein and reversing the assessment order dated July 9, 1985, of the Commercial Tax Officer bringing to tax the turnover for the assessment year 1984-85 relating to the sales of "Honeyrex" treating it as general goods. It is not in dispute that the sales of "Honeyrex" by the appellant herein during the assessment year 1984-85 were second sales and if "Honeyrex" is to be treated as general goods, the turnover relating to the said sales would be attracted to tax. The said turnover will not be attracted to tax, if "Honeyrex" falls under entry 44-A of the First Schedule to the Act because, then, only first sales of "Honeyrex" in the State would be attracted to tax. The short but troublesome question in the present special appeal is whether "Honeyrex" falls under entry 44-A of the First Schedule of the Act. It is not the contention of the appellant that it could fall under any other entry in the Schedules to the Act as in force at the relevant time.
2. The present entries 44 and 44-A in the First Schedule were introduced by Act 49 of 1976 with effect from September 1, 1976, in the place of the earlier entry 44 which was as follows :
"44. Milk foods and powder and baby milk food excluding fresh milk."
3. In view of this and in view of the working of entry 44-A, it is necessary to read the two entries, as they exist now, together. They are as follows :
"44. Milk foods and powders such as Horlicks, Viva and the like condensed milk, baby milk and baby foods.
44-A. All other foodstuffs or products, whether used as such or after mixing them with any other foodstuff or beverage when sold in sealed or tinned containers such as Bournvita, Ovaltine, Ragimalt, Boost and the like."
4. The Appellate Deputy Commissioner held that "all other foodstuffs" mentioned in the entry means foodstuffs other than milk foods and powders such as Horlicks etc., mentioned in entry 44 and that the examples "Bournvita, Ovaltine, Ragimalt, Boost and the like" fitted in the description of foodstuffs or products used after mixing with other foodstuffs and that no example was given in entry 44-A for foodstuffs or products used as such. He observed that earlier in another appeal relating to another assessee, the Appellate Deputy Commissioner held that "Honeyrex" was a food product falling under entry 44-A and that the Commercial Tax Officer being an inferior authority was bound to follow the said decision and in that view of the matter, allowed the appeal preferred by the appellant herein against the order of the Commercial Tax Officer dated July 9, 1985. Before the Commissioner, the appellant herein, in his reply to the show cause notice issued to him under section 20 of the Act, relied on the clarification dated February 11, 1982, issued by the Government of India to the manufacturers of "Honeyrex", i.e., M/s. Bell & Company, and on the decision of this Court dated February 13, 1976, in Criminal Appeal No. 663 of 1974 relating to the prosecution proceedings against a dealer of "Honeyrex" for violating the provisions of the Prevention of Food Adulteration Act, 1954 and on the decision of the Madras High Court dated July 29, 1978, in Criminal Appeal No. 848 of 1977 preferred by Bell & Company and on the decision of the Andhra Pradesh Sales Tax Appellate Tribunal ("the Tribunal", for short) dated May 1, 1986, in T.A. No. 546 of 1986 (1985 ?). Government of India in its clarification issued to Bell & Company stated that the description of "Honeyrex" given by the manufacturer that it was a "combined food product" containing honey, glucose and sucrose was in order in terms of the provisions of Prevention of Food Adulteration Act. The Commissioner held that that description would not be sufficient to bring it within the description of the goods falling under entry 44-A. He also observed that in the decision of this Court and the Madras High Court in the Criminal Appeals, the main issue which came up for consideration was whether "Honeyrex" was misbranded honey and whether on account of sale of such a product there was any violation of the provisions of the Prevention of Food Adulteration Act and that the said decisions would not be helpful to resolve the question at issue before him. He disagreed with the decision of the Tribunal in T.A. No. 546 of 1986 (1985 ?) dated May 1, 1986 that "Honeyrex" would fall under entry 44-A and in his view the said decision would not bind him in view of the fact that the appeal against his order under section 20 of the Act would lie to the High Court and he was not subject to the jurisdiction of the Tribunal and, therefore, not subordinate to the Tribunal. The reasons given by him for holding that "Honeyrex" is not attracted by entry 44-A of the First Schedule to the Act are as follows :
"However, the question here is whether it can still be considered as a 'foodstuff' similar to Bournvita. Ovaltine, etc. A mere assertion that it is a combined food product is not sufficient to bring it within the range of commodities described in entry 44-A. The foodstuffs described in entry 44-A are such that they are similar in all respects to Bournvita, Ovaltine, Ragimalt, Boost, etc. It is to be observed that all these examples clearly point towards items akin to beverages with which Honeyrex cannot be equated in terms of its usage. The word 'foodstuff' is defined in the dictionary as 'substance used as food'. This definition read further with the examples cited in the entry show that the items intended to be covered under the entry are beverages which have food value and which are sold in sealed containers. On the other hand, honey or Honeyrex which is nothing but enriched honey is consumed in limited doses for specific purposes. It cannot therefore be equated in all respects with foodstuffs akin to Bournvita and Ovaltine."
5. The decision of the Tribunal referred to and dissented from by the Commissioner is in Sri Lakshmi Traders, Kakinada v. State of Andhra Pradesh (1987) 5 APSTJ 91. The Tribunal observed that the Madras High Court and this Court in the criminal appeals in respect of the prosecution launched under the Prevention of Food Adulteration Act, 1954, found that "Honeyrex" was "a balanced food product containing glucose and sucrose enriched with vitamin 'A'" and that "when once the High Court held that sucrose ('Honeyrex' ?) is a food product there is no difficulty in treating the same as falling under entry 44-A of the First Schedule" and without discussion concluded as follows after extracting entry 44-A :
"When the product in question is food product the further enquiry whether it is a beverage or not is totally unnecessary. The Deputy Commissioner (in that case) has misdirected himself when he went into the question as to whether or not Honeyrex is a beverage."
and in that view of the matter, held that "Honeyrex" was a food product falling under entry 44-A of the First Schedule.
6. Mr. Srinivasa Reddy, learned counsel for the appellant, canvasses the view taken by the Tribunal in Lakshmi Traders' case (1987) 5 APSTJ 91. He submits that the word "all" in "all other foodstuffs or products" cannot be ignored and that full import has to be given to it and that the expression "foodstuff" has a wide connotation and includes anything and everything that is edible and that there is no good reason to interpret the said expression narrowly or restrictively. He further submits that even if there is any ambiguity, that ambiguity has to be resolved in favour of the assessee. He submits that reference made to products like Bournvita, Ovaltine, Ragimalt, Boost and the like in entry 44-A is only to illustrate and exemplify the express "beverage" and not "foodstuffs or products". He points out that undisputedly Honeyrex is made of honey, glucose and sucrose and that it is a combined food product and that it can be taken straight or mixed with any other food product or beverage and that though it is not a beverage by itself like Bournvita, Ovaltine, Ragimalt, Boost and the like, it is certainly a food product and therefore is attracted by entry 44-A and that argument to the contra has no merit.
7. On the other hand, the learned Assistant Government Pleader for Commercial Taxes, Mr. Bhaskara Reddy, urges that the stand taken by the Commissioner has to be upheld on a harmonious and reasonable interpretation of entry 44-A as juxtaposed to entry 44 in Schedule I. He emphasises the words "all other" preceding the words "foodstuffs or products" and contends that they indicate and signify the entry 44-A cannot be read in isolation but has to be read along with entry 44 and that in that context the words "foodstuffs or products" have to be given a restricted meaning, their width and content being governed by the illustrative foodstuffs or products Bournvita, Ovaltine, Ragimalt and Boost, and that therefore Honeyrex which is not anything like Bournvita, Ovaltine, Ragimalt and Boost does not fall within the expressions "all other foodstuffs or products", so interpreted and as illustrated. He draws support for this contention from the disjunctive "or" in "foodstuffs or products" and the comma following those words.
8. We are inclined to agree with the learned Government Pleader though on the first flush the submissions of the counsel for the appellant appeared to be plausible. We are of the view that the words "all other foodstuffs or products" take their colour from the context in which they occur and have to be interpreted in the light of the company they keep. Therefore, though the expressions "foodstuffs and food products" have a very wide connotation taken by themselves, and in their full width and amplitude they may take in "Honeyrex", in the background and context they occur they have to be narrowed down and circumscribed by the doctrine of noscitur a sociis.
9. For this view we are supported by authorities. There is first the case of State of Bombay v. Virkumar Gulabchand Shah . The question in that case was whether turmeric was a "foodstuff" as that expression was used in Essential Supplies (Temporary Powers) Ordinance of 1946 and Essential Supplies (Temporary Powers) Act, 1946, which replaced that Ordinance.
10. Vivan Bose, J., in his intimitable style observed as follows :
"Much learned judicial thought has been expended upon this problem - what is and what is not food and what is and what is not a foodstuff; and the only conclusion I can draw from a careful consideration of all the available material is that the term 'foodstuff is ambiguous. In one sense it has a narrow meaning and is limited to articles which are eaten as food for purposes of nutrition and nourishment and so would exclude condiments and spices such as yeast, salt, pepper, baking power and turmeric. In a wider sense, it includes everything that goes into the preparation of food proper (as understood in the narrow sense) to make it more palatable and digestible. In my opinion, the problem posed cannot be answered in the abstract and must be viewed in relation to its background and context." (Emphasis [Here italicised.] supplied).
11. After referring to the dictionary meanings of the expressions "foodstuff" and "food", the learned Judge observed :
"So far as 'food' is concerned, it can be used in wide as well as a narrow sense and, in my opinion, much must depend upon the context and background"
and after considering various decisions, he concluded as follows :
"Now the comparison of one Act with another is dangerous, especially when the Act used for comparison is an English Act and a wartime measure, and I have no intention of falling into that error. I am concerned here with the Act before me and must interpret its provisions uninfluenced by expressions, however similar, used in other Acts. I have referred to the cases discussed above, not for purposes of comparison but to show that the terms 'food' and 'foodstuffs' can be used in both a wide and a narrow sense and that the circumstances and background can alone determine which is proper in any given case." (Emphasis [Here italicised.] supplied).
12. The full width and amplitude of the expression "foodstuff" is reached in Sat Pal Gupta v. State of Haryana decided by the Supreme Court under the Essential Commodities Act, 1955. Chief Justice Y. V. Chandrachud held in that case as follows :
"The word 'foodstuffs' which occurs in clause (v) of section 2(a) is not defined in the Act and therefore it must receive its ordinary and natural meaning, that is to say, a meaning which takes account of and accords with the day-to-day affairs of life. Cattle and poultry are living components of the natural environment and there is no reason to exclude that which they eat or feed upon, from the meaning of the word 'foodstuffs'. If, what the human beings eat is food, so is what the other living being eat. 'Cattle fodder' is expressly brought within the compass of essential commodities by clause (i) of section 2(a). It would be illogical if, in that context, rice bran is excluded from the purview of essential commodities on the ground that it is eaten by the poultry and not by Homo Sapiens."
13. In Welcome Hotel v. State of Andhra Pradesh the Supreme Court held that the expression 'foodstuffs' includes cooked food also, delineating the meanings of the words "food" and "stuffs" as follows :
"Further the expression 'food' has generally been understood to mean mutritive material absorbed or taken into the body of an organism which serves for purposes of growth, work or repair and for the maintenance of the vital process. What human beings consume is styled as food and what animals consume is described as animal feed. This distinction has to be borne in mind. Expression 'foodstuffs' is made of two expressions, 'food' plus 'stuffs'. In other words, the stuff which is used as food would be foodstuff. Therefore, foodstuff is that which is taken into the system to maintain life and growth and to supply waste of tissue. If the raw foodstuff with a view to making it consumable by human beings undergoes a change of its condition by the process of cooking, the derivative is nonetheless foodstuff. If raw rice is foodstuff, does rice when boiled in water cease to be foodstuff.......... Therefore, the expression 'foodstuff' as used in the 1955 Act comprehends cooked food."
14. That decision was also under the Essential Commodities Act, 1955. Similarly, in Collector of Central Excise, Bombay v. Parle Exports (P.) Ltd. , the Supreme Court answered the question whether non-alcoholic beverage bases - like Gold Spot base, Limca base or Thumps-Up base - are either "food product" or "food preparation" in terms of the exemption notification issued under rule 8 of the Central Excise Rules, 1944, as follows :
".......... In this case, therefore, it is necessary to endeavour to find out the true intent of the expressions 'food products and food preparations', having regard to the object and the purpose for which the exemption is granted bearing in mind the context and also taking note of the literal or common parlance meaning by those who deal with those goods, of course bearing in mind, that in case of doubt only it should be resolved in favour of the assessee or the dealer avoiding, however, an absurd meaning. Bearing the aforesaid principles in mind, in our opinion, the Revenue is right that the non-alcoholic beverage bases in India cannot be treated or understood as new 'nutritive material absorbed or taken into the body of an organism which serves for the purpose of growth, work or repair and for the maintenance of the vital process' and an average Indian will not treat non-alcoholic beverage bases as food products or food preparations in that light." (Emphasis [Here italicised] supplied).
15. Approaching the question from the angle of the intention of the law-maker, the Supreme Court further held as follows :
".......... According to the tradition of our law, primacy is to be given to the next in which the intention of the law-giver has been expressed. Cross refers to Blackstone's observations that the fairest and most rational method to interpret the will of the law-maker is by exploring his intentions at the time when the law was made, by signs the most natural and probable. And these signs are either the words, the context, the subject-matter, the effects and consequences, or the spirit and reason of the law. We have no doubt, in our opinion, that having regard to the language used it would not be in consonance with the spirit and the reason of law to give exemption for non-alcoholic beverage bases under the notification in question. Bearing the aforesaid purpose, in our opinion, it cannot be contended that expensive items like Gold Spot base, Limca base or Thumps-Up base were intended to be given exemption at the cost of public exchequer."
16. While interpreting the expression "cooked food" used in certain notifications issued under the Uttar Pradesh Sales Tax Act, 1948, for the purpose of answering the question whether that expression included biscuits for human consumption, the Supreme Court in Annapurna Biscuit Manufacturing Co. v. Commissioner of Sales Tax, U.P. observed as follows :
"It is a well-settled rule of construction that the words used in a law imposing a tax should be construed in the same way in which they are understood in ordinary parlance in the area in which the law is in force. If an expression is capable of a wider meaning as well as narrower meaning the question whether the wider or the narrower meaning should be given depends on the context and the background of the case."
and held :
"It may be that biscuit is served at tea time and in its wider meaning 'cooked food' may include biscuit. But ordinarily biscuit is not understood as cooked food. If a person goes to a hotel or restaurant and asks for some cooked food or [Words in Hindi are not printed here.] pakaya hua bhojan certainly he will not be served with biscuits in Uttar Pradesh. While it is not necessary to state in the present case as to what all items may be called as cooked food, we can definitely say that in the context and background of the notification biscuit cannot be treated as cooked food."
17. In the light of the above discussion we have to examine the context and setting in which the words "foodstuff or product" are used keeping in view that the object and intendment of the Act is to tax sale or purchase of the goods and that at the relevant time general goods were subject to multiple point tax - at present no goods are subject to multiple point tax after the introduction of the Seventh Schedule to the Act by Act No. 22 of 1995, with effect from April 1, 1995. Firstly, we have to notice that the words "all other" indicate and signify that entry 44-A cannot be read in isolation but has to be read along with entry 44; more so when, as pointed out by us earlier, they were both substituted together by amending Act 49 of 1976 in the place of the pre-existing entry 44. In the context they occur it is obvious that the said words take in only foodstuffs or products consumed by human beings. Secondly, we notice that reading entry 44-A as a whole the words "all other foodstuffs or products" do not stand by themselves, but are qualified in three ways, -
(i) whether used as such or after mixing them with any other foodstuff or beverage;
(ii) when sold in sealed or tinned container; and
(iii) such as Bournvita, Ovaltine, Ragimalt, Boost and the like.
18. In our view, these three descriptions or requirements qualify "all other foodstuffs or products" intended to be brought in under entry 44-A. That is to say, foodstuffs or products which do not satisfy those descriptions or requirements do not fall under entry 44-A. Counsel for the appellant urges that they qualify only "products" and not "foodstuffs". We do not think so. We cannot ignore the punctuation mark, i.e., comma, after the words "all other foodstuffs or products" and the disjunctive "or" in between the words "foodstuffs" and "products". We cannot also ignore the word "other" in "whether used as such or after mixing them with any other foodstuff or beverage", which means that those words qualify both foodstuffs and products. If we are right in our view that the words "such as Bournvita, Ovaltine, Ragimalt, Boost and the like" qualify "all other foodstuffs or products", then it follows that only those foodstuffs or products which are akin to Bournvita, Ovaltine, Ragimalt and Boost are intended to be brought in under entry 44-A, when they are sold in sealed or tinned containers. The words "such as" indicate that what are mentioned thereafter are illustrative. Interpreting the words "such as" in "livestock, that is to say, all domestic animals such as, oxen, bulls, cows, buffaloes, goats, sheep, horses, etc.," the Supreme Court held in Royal Hatcheries Pvt. Ltd. v. State of Andhra Pradesh [1994] 92 STC 239 (SC); (1994) Suppl SCC 429 as follows :
"......... But the rule-making authority chose to limit the meaning of 'livestock' in the said clause only to domestic animals mentioned therein. Yet again, the clause does not stop with the words 'all domestic animals'. It proceeds further and goes on to illustrate the meaning of the expression 'all domestic animals' by mentioning some of them, namely, oxen, bulls, cows, buffaloes, goats, sheep and horses and then ends with the word 'etc.' This could not have been without a purpose. It could only be to indicate the type of domestic animals the rule-making authority had in mind. Why did the rule-making authority not mention a single bird, while mentioning so many animals ? It is true, the words 'such as' indicate that what are mentioned thereafter are only illustrative and not exhaustive. The clause also ends with the word, 'etc.', which does mean that some more domestic animals in addition to those specifically mentioned therein are also included within the meaning of the words 'all domestic animals'."
19. We may usefully to the following observations of a Division Bench of the Orissa High Court in Foremost Dairies Limited v. State of Orissa [1993] 88 STC 535, with which we agree :
"The use of expression 'such as' has to be read in the context in which it is used. Where divergent articles are indicated, the situation may be different from one where only similar articles are indicated. To illustrate, the case of 'food and beverages' may be taken. In rule 93-K 'food and beverages' in sealed containers such as Maltodex, Maltova, Horlicks, Viva, Complan, Bournvita, condensed milk have been indicated. They belong to a class. We have observed in the case of State of Orissa v. Jyoti Trading Company (S.J.C. No. 15 of 1987 decided on July 7, 1992) [1993] 88 STC 530 that jam, jelly, tomato sauce and squash are not covered by item 4 of rule 93-K for levy of tax at the first point of sale as they do not belong to the indicated class. The context in which the expression 'such as' is used is of vital importance. In the context of divergent articles being covered, serial 30-D of the list of goods exempted from sales tax in terms of Notification No. 20206-CTA-14/76 dated April 23, 1976 is relevant. The entry relates to sale of 'feed and fodder' such as husk straw, hay, grass, oil-cake and manufactured mixed balanced feed for cattle, poultry and pig. The entry is very wide and in such a case the articles intended to be covered by the entry belong to a wide range, and can take within its sweep any article which is akin to any of the indicated articles.
It is clear that baby food of all categories and descriptions were not intended to be encompassed. Otherwise the expression 'baby food' would have sufficed. It has to be seen whether the article in question is akin to the illustrated articles. Various trade names have been indicated to signify the intended inclusion. Since merely brand and trade names of products of different manufacturers have been indicated, baby foods of all varieties, trade names and brand names are encompassed. The view of the Tribunal that Angel Baby Milk Food is covered by item (11) of rule 93-I is irreversible."
20. In that case the Orissa High Court was considering whether Angel Baby Milk Food fell under item (11), which read as follows :
"(11) Baby foods, such as Amul, Amul Spray, Vijay Spray, Lever Spray, Bal Amul, Glaxo, Farex, Casilan, Lactodex, Lactogen, Nespray."
21. In the present case, in entry 44-A instead of "etc.", the words "and the like" are used, which convey the same meaning, but with more emphasis on similarity or akinness with foodstuffs or products indicated, i.e., Bournvita, Ovaltine, Ragimalt, Boost. Interpreting the item "food and beverages in sealed containers such as Maltodex, Maltova, Horlicks, Viva, Complan, Bournvita, condensed milk", another Division Bench of the Orissa High Court in Amar Chand Lakhiram v. State of Orissa [1993] 90 STC 340 held as follows :
"The item itself indicates that all food and beverages are not covered thereunder and only such of them which are akin to or of the kind of specific goods mentioned in the latter part are covered by the item. In other words, any other specific goods to be covered by the item must take its colour from the specific goods mentioned in the latter part. It is well-known that the specific goods mentioned in the latter part are for usual consumption by persons who can afford for the same, whereas barley is for occasional human consumption irrespective of capacity of persons to afford for the same. Consequently, Robinson's barley in sealed container cannot be considered to be an item of food/beverage.........."
22. This decision also supports the view we have taken.
23. It is not contended by the learned counsel for the appellant that "Honeyrex" is akin to Bournvita, Ovaltine, Ragimalt or Boost. There can be no doubt that Honeyrex, which is honey with certain additives, is not in any way like Bournvita, Ovaltine, Ragimalt, etc. Therefore, it follows that it cannot be brought under entry 44-A. We therefore uphold the order of the Commissioner of Commercial Taxes dated October 31, 1988, and overrule the decision of the Tribunal in Sri Lakshmi Traders, Kakinada v. State of Andhra Pradesh (1987) 5 APSTJ 91.
24. The learned counsel for the appellant did not press his further contention that the Commissioner of Commercial Taxes is bound by the decisions of the Sales Tax Appellate Tribunal and that he is subordinate to that Tribunal and that therefore he erred in not following the decision of the Tribunal in Sri Lakshmi Traders (1987) 5 APSTJ 91. Therefore it is not necessary for us to deal with that contention.
25. In the result, the special appeal is dismissed. No costs.
26. Appeal dismissed.