Bombay High Court
Commissioner Of Sales Tax vs Food Specialities Ltd. on 11 January, 1995
Author: D.K. Trivedi
Bench: D.K. Trivedi
JUDGMENT Dr. B.P. Saraf, J.
1. By this reference made under section 61(1) of the Bombay Sales Tax Act, 1959, the Maharashtra Sales Tax Tribunal has referred the following questions of law to this Court for opinion at the instance of the Revenue :
(1) Whether on a true and proper interpretation of entry 33(2) of Schedule "C" of the Bombay Sales Tax Act, 1959 (as it stood prior to July 1, 1981) the Tribunal was correct in holding that the product "Paloma lime tea mix" (packed in a scaled container of 100 gms. net weight) sold by the present opponent under invoice No. Bom-1174 dated January 14, 1980, for Rs. 31.10 is not covered by the scope of entry C-33(2) but is covered by the residuary entry E-22 ?
(2) Whether the article would be covered under entry E-6 ?
2. On January 14, 1980, the assessee, M/s. Food Specialities Limited, filed an application before the Commissioner of Sales Tax, Maharashtra State, Bombay under section 52 of the Bombay Sales Tax Act, 1959 ("the Act") seeking determination of the correct rate of tax payable under the Act on the sales of its product "Paloma lime tea mix" (packed in sealed container of 100 gms. net weight). It was stated by the assessee in the above application that it was a powdered soft drink which dissolves instantly in cold water and gives a very delicious and refreshing lime tea drink. The contention of the assessee was that it was not a beverage within the meaning of entry 33(2) of Schedule C to the Act and hence it would fall under the residuary entry being entry 22 of Schedule E to the Act. The Commissioner interpreted entry 33(2) of Schedule C and held that the expression "non-alcoholic beverages" appearing therein was wide enough to include products which can be used as beverage by admixing water. According to him, the word "beverages" was not restricted to mean only prepared drinks. He, therefore, held that the product in question namely, "Paloma lime tea mix" would fall under entry 33(2) of Schedule C to the Act and the sales thereof would be subject to tax at the rate applicable on the sales of goods covered by the said entry, which at the material time was 12 paise in a rupee. Aggrieved by the determination of the Commissioner, the assessee appealed to the Maharashtra Sales Tax Tribunal ("the Tribunal"). The Tribunal accepted the contention of the assessee and allowed the appeal and held that the product "Paloma lime tea mix" sold by the assessee was not covered either by entry 33(2) of Schedule C or entry 6 of Schedule E to the Act and that it would fall under the residuary entry, entry 22 of Schedule E to the Act. Hence this reference at the instance of the Revenue.
3. As the determination of the controversy would depend on the true and proper interpretation of entry 33 of Schedule "C", it would be expedient to set out the same. Entry 33, as it stood at the material time, reads :
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Sr. Description of goods Rate of Rate of Period of
No. sales tax purchase tax operation.
in paise in in paise in
the rupee. the rupee.
1 2 3 4 5
-----------------------------------------------------------------------
33 (1) Soda water Ten paise in Ten paise in 15-1974
the rupee. the rupee. to
30-6-1981
(2) Aerated waters Twelve paise Twelve paise 15-4-1974
(other than soda water) in the rupees in the rupees to
and non-alcoholic 30-6-1981
beverages (including
fruit juices, squashes,
syrups and cordials)
when sold in sealed,
capsuled or corked bottles,
jars, tins, drums or
other containers
Other relevant entries are entries 6 and 22 of Schedule E. These entries, at the material time, were in the following terms :
Entry 6 of Schedule "E" :
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Sr. Description of goods Rate of Rate of Rate of Period of
No. sales tax general purchase operation.
sales tax tax
1 2 3 4 5 6
-----------------------------------------------------------------------
6. Foodstuffs and food Five Three Five 1-1-1966 to provisions of all kinds paise in paise in paise in to (including dried the the rupee the 30-6-1981.
fruits and dried vegetables; rupee. rupee. raw, semi-cooked, semi-processed or ready to serve foods; pickles, sauces, jams, marmalades, jellies, preserved fruits and honey) when sold in sealed containers of weight not exceeding five kilograms in each container, but excepting (cereals as specified in entry 4 in Part I of Schedule B, pulses as specified in entry 5 in Part I of Schedule B) whole, separated or reconstituted milk, milk products as specified in entry 6 in Schedule D, edible oil and salt.
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Entry 22 of Schedule "E" :
------------------------------------------------------------------------ 1 2 3 4 5 6
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22. All goods, other than Five Three Five 15-4-1974 those specified paise in paise in paise in to from the the the 30-6-1981.
time to time in rupee. rupee. rupee.
Schedules A, B, C
and D and in the
preceding entries.
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So far as entry 6 of Schedule E is concerned, the counsel for the parties are agreed that the item in question does not fall under that entry. The only controversy is whether it would fall under entry 33(2) of Schedule C. If it does not, the agreed position is that it would fall under entry 22 of Schedule E, as it is not covered by any entry of any Schedule including any entry of Schedule E, except entry 22 which is the residuary entry.
4. We have, therefore, concentrated our attention only on item (2) of entry 33 of Schedule C to ascertain whether the product of the assessee "Paloma lime tea mix" would fall thereunder. The contention of the Revenue is that it is a beverage and hence it would fall under item (2) of entry 33. The assessee vehemently opposes the same and submits that it is not a beverage but a powder from which beverage can be prepared, which is not covered by entry 33(2). Item (1) of entry 33 is soda water. Item (2) thereof deals with aerated water and non-alcoholic beverages (including fruit juices, squashes, syrups and cordials). These products also fall under these items only when they are sold in scaled, capsuled or corked bottles, tins, drums, jars or other containers.
5. We have carefully considered the rival submissions. "Beverage", as commonly understood, means "any liquid for drinking other than water". It is a name applied to drinks. In Webster's 3rd International Dictionary, "beverage" has been described as "liquid for drinking especially such liquid other than water (as tea, milk, fruit juice, beer) usually prepared (as by flavoring, heating, admixing) before being consumed". The Random House Dictionary of the English language (College Edition) describes "beverages" as "any liquid for drinking especially such liquid other than water". There is no dispute about the fact that the products sold by the assessee are not in liquid form. It is in a powder form - when dissolved in water it may take the form of beverage. The ingredients used in its manufacture are :
(1) Sugar, (2) Niligiri's instant tea, (3) Maltodextrine, (4) Citric acid, (5) Tartaric acid, (6) High quality orange flavour made from natural oils, and (7) Vitamin C. The "directions for use" are also indicated on the packet, which says that the contents of the packet are to be emptied in a jug of cold water (1 litre/5 tumblers) and then stirred and served by adding ice cubes. It is evident from the above description that it is not a beverage but a powder from which non-alcoholic beverage can be prepared. In that view of the matter, it is difficult to hold that the product "Paloma lime tea mix" sold in powder form by the assessee in packs of 100 gms. net weight falls under entry 33(2) of Schedule "C" to the Act.
6. The above conclusion of ours also gets support from the fact that on and from May 1, 1982, the Legislature itself has specifically included in item 47 of Schedule C, Part II to the Act [which replaced item 33(2) of the old Schedule] to include "soft drink powders, tablets and crystals from which non-alcoholic beverages are prepared by adding any potable liquid". This entry at the material time read as under :
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Entry Description of goods Rate of Rate of Period of
No. sales tax purchase tax operation.
1 2 3 4 5
---------------------------------------------------------------------
47. (i) Aerated waters and non- 12% 12% 1-5-1982 to alcoholic beverages 30-4-1992 (including fruit juices, squashes, syrups and cordials) when sold in sealed, capsuled, or corked bottles, jars, tins, drums or other containers.
(ii) Soft drink powders, 12% 12% 1-5-1982 to
tablets and crystals 31-3-1989
from which non-alcoholic
beverages are prepared
by adding any potable
liquid.
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We are, therefore, of the clear opinion that "Paloma lime tea mix" sold by the petitioner is not a beverage. It is a soft drink powder from which non-alcoholic beverages may be prepared by adding any potable liquid. Hence, it would not fall under entry 33(2) of the Schedule C to the Act (as it stood at the material time).
7. We are supported in our above conclusion by the decision of the Kerala High Court in Deputy Commissioner of Sales Tax v. Sukumaran [1989] 74 STC 185, wherein it was held that since the product "Rasna" was only a concentrate and not a liquid, it would not come within the ambit of the expression "drinks" or "beverages" and the decision in Brooke Bond India Limited v. State of Kerala [1992] 84 STC 334 (Ker), where it was held that "instant coffee-chicory powder" sold under the brand name of "Bru", being a powder, could not be treated as drink or beverage for the purpose of sales tax.
8. We, therefore, answer the first question in the affirmative and in favour of the assessee. The second question is also answered in favour of the assessee but in the negative. This reference is answered accordingly.
9. Under the facts and circumstances of the case, there shall be no order as to costs.
10. Reference answered accordingly.