Kerala High Court
/Appellant/Assessee vs /Respondent/State on 28 September, 2018
Author: Ashok Menon
Bench: K.Vinod Chandran, Ashok Menon
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN
&
THE HONOURABLE MR. JUSTICE ASHOK MENON
FRIDAY ,THE 28TH DAY OF SEPTEMBER 2018 / 6TH ASWINA, 1940
ST.Rev..No. 238 of 2009
AGAINST THE ORDER/JUDGMENT IN TA 392/2004 of KERALA
S.T.A.T.ADDL.BENCH,ERNAKULAM DATED 27-06-2009
PETITIONER/S:/APPELLANT/ASSESSEE
M/S.RASNA PRIVATE LTD.
MARKET ROAD, ALUVA, KERALA STATE.
REP.BY ITS POWER OF ATTORNEY HOLDER,
A.V.SURESH KUMAR, S/O.A.RAMAKRISHNA RAO,
AGED 45 YEARS, RESIDING AT PLOT NO.241,
RAGALA ENCLAVE, MANSOORABAD, L.B. NAGAR, HYDERABAD.
BY ADVS.
SRI.A.KUMAR
SMT.G.MINI(1748)
SRI.P.J.ANILKUMAR
SRI.P.S.SREE PRASAD
RESPONDENT/S:/RESPONDENT/STATE
THE STATE OF KERALA,
REP. BY ITS SECRETARY, TAX DEPARTMENT,
THIRUVANANTHAPURAM.
BY SRI.MOHAMMED RAFIQ, SR.GOVT.PLEADER
THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 28.09.2018,
ALONG WITH ST.Rev.237/2009 & CONNECTIONS, THE COURT ON THE SAME
DAY PASSED THE FOLLOWING:
S.T.Rev.237-244/09
-2-
S.T.Rev.Nos.237, 238, 239, 240, 241,
242, 243 and 244 of 2009
-------------------------------------------
O R D E R
Ashok Menon, J.
The Revision Petitions are filed by the assessees, i.e. M/s.Pioma Industries and M/s.Rasna Enterprises and M/s.Rasna Pvt. Ltd. against the common order of the Kerala Sales Tax Appellate Tribunal for the assessment years 1997-98 to 2001-
02. The questions of law framed and to be decided in these revisions are as follows:
"(1) Whether on the facts and in the circumstances of the case, is the Tribunal justified in classifying 'Rasna' as an item coming under Entry 87 and later under 97 of the first schedule to Kerala General Sales Tax Act?
(2) Whether on the facts and in the circumstances of the case, has the Tribunal failed to factually re-decide or analyse whether 'Rasna' can be called a beverage or a non-alcoholic drink as directed by the Hon'ble Supreme Court of India?
(3) Has not the Tribunal failed to appreciate the legislative intent behind introducing the new entries 124-A and 141 separating those items which were earlier grouped under Entry 87 as "non-
alcoholic drinks" and Entry 87 becoming exclusively for non-alcoholic drinks" supporting the contention of the petitioner that 'Rasna' is only a beverage and inclusion of it again under Entry 97 as a non- alcoholic drink is fallacious?
(4) Has not the Tribunal erred in its application of the principle of estoppel, omitting to realize that there is no estoppel against statute?"
2. The main dispute is whether the product 'Rasna' is a beverage or a non-alcoholic drink. The product admittedly is a powder, which when mixed with water brings forth a fizzy S.T.Rev.237-244/09 -3- drink with different fruit flavours. It is also an additive in various culinary preparations, which enhances the taste of those preparations. The relevant Entries for the assessment years 1997-98 and 1999-2000 were 56 and 87 respectively, which were amended, and for the assessment year 1999-2000, the relevant Entries were 124A, 141 and 97. The Assessing Officer (AO), the first Appellate Authority and the Tribunal held that 'Rasna' is to be treated and taxed as 'non- alcoholic drink'. The Honourable Supreme Court in Civil Appeal No.4639/2008, by judgment dated 25.7.2008, directed the Tribunal to consider the matter afresh for the assessment years 1997-98 and 1999-2000, after examining the following:
"(1) Whether 'Rasna' can be treated as beverage for the assessment year 1997-98? (2) To examine the effect of the Entries 124A and 141 vis-a-vis Entry 97 for the assessment year 1999-2000."
3. While disposing of the appeals for those assessment years as directed by the Honourable Supreme Court, the Tribunal also disposed of the appeals for the assessment years 1997-98 to 2001-02 pertaining to Pioma Industries and Rasna (P) Ltd.
4. For the year 1997-98, the Tribunal held that 'Rasna' is a non-alcoholic drink liable to be classified under Entry 87 till 31.12.1999.
5. While considering the effect of the Entries 124A and 141 vis-a-vis Entry 97, the Tribunal held that 'Rasna' is a S.T.Rev.237-244/09 -4- non-alcoholic drink falling under Entry 97 from 1.1.2000 onwards.
6. It is this finding of the Tribunal that is challenged before this Court again by the assessees, M/s.Pioma Industries and M/s.Rasna Enterprises Limited. The argument of the assessees is that 'Rasna' is a natural instant food mix containing processed fruit in powdered form to be dissolved in water, milk etc. used either as a drink or for making food preparations such as milk shakes, ice creams, kulfy, kheer, pudding, instant burfi, balushahi, shahi tukde, gulab jamun etc.
7. The relevant Entries under the Kerala General Sales Tax Act, 1963 ('KGST Act' for short) were Entry 56 and Entry 87 for the year 1997-98. The Tribunal held that 'Rasna' is to be included under Entry 87 and taxed accordingly.
8. The relevant Entries for the relevant assessment years are as follows:-
"In the year 1997-98 Entry Details of goods Point of Rate of No. levy tax 56 Food including At the point of 12.50% vegetative or animal first sale in the preparations sold in State by a dealer airtight containers and who is liable to food colours, essences tax under Section of all kinds and powders 5 or tablets used for making food preparations or beverages.
87 Non-alcoholic drinks, Do 20.00%
squashes, sauces Aerated
waters, mineral water,
beverages Horlicks,
Boost, Bournvita,
S.T.Rev.237-244/09
-5-
Complan, Glucose-D,
Glucovita and similar
items whether bottled or
canned or packed.
Explanation:- Powders,
tablets and concentrates
used for the preparation
of non-alcoholic drinks
shall whether or not
they are bottled or
canned be liable to tax
under this entry.
During 1998-99
56 Food including At the point of 12.50%
vegetative or animal first sale in the
preparations sold in State by a dealer
airtight containers and who is liable to
food colours, essences tax under Section
of all kinds and powders 5
or tablets used for
making food
preparations.
87 Non-alcoholic drinks, -Do- 20.00%
squashes, sauces Aerated
waters, mineral water,
beverages Horlicks,
Boost, Bournvita,
Complan, Glucose-D,
Glucovita and similar
items whether bottled or
canned or packed.
Explanation:- Powders,
tablets and concentrates
used for the preparation
of non-alcoholic drinks
shall whether or not
they are bottled or
canned be liable to tax
under this entry.
During 1999-2000 till 31.12.1999 87 Non-alcoholic drinks -Do- 25.00% whether bottled or canned or packed.
Explanation:- Powders,
tablets, granules and
concentrates used for
the preparation of non-
alcoholic drinks, shall
whether or not they are
bottled or canned be
S.T.Rev.237-244/09
-6-
liable to tax under this
entry.
124A Squashes, sauces, soda, -Do- 20.00%
mineral water, Horlicks,
Boost, Bournvita,
Complan, Glucose-D,
Glucovita and similar
items whether or not
bottled, canned or
packed.
Explanation:- Powders,
tablets, granules and
concentrates used for
the preparation of
beverages shall, whether
or not they are bottled
or canned be liable to
tax under this entry.
From 1.1.2000
97 Non-alcoholic drinks -Do- 25.00%
whether or not bottled
or canned or packed.
Explanation:- Powders,
tablets, granules and
concentrates used for
the preparation of non-
alcoholic drinks, shall
whether or not they are
bottled or canned be
liable to tax under this
entry.
141 Squashes, sauces, fruit -Do- 20.00%
juice, fruit pulp, soda,
mineral water, Horlicks,
Boost, Bournvita,
Complan, Glucose-D,
Glucovita and similar
items whether or not
bottled, canned or
packed.
Explanation:- Powders,
tablets, granules and
concentrates used for
the preparation of
beverages shall, whether
or not they are bottled
or canned be liable to
tax under this entry.
9. The Assessing Officer had, for the year 1997-98, classified the drink 'Rasna' under Entry 87, which is for S.T.Rev.237-244/09 -7- non-alcoholic drinks, squashes etc. taxable @ 20%. The assessees would contend that 'Rasna' is a food preparation in powdered form and cannot be a non-alcoholic drink and is a vegetative food preparation, coming under Entry 56, exigible to tax @ 12.5%. Entry 56 contains the words "powders or tablets used for making food preparation or beverages"; which precisely the product is., argues the learned counsel for the assessees. Entry 87, on the other hand, contains the words beverages like Horlicks, Boost, Bournvita, Complan etc. and 'Rasna', is quite distinct from these. According to the learned counsel appearing for the assessees, powders prepared of vegetative matter used for making beverages would be a food preparation or beverage coming squarely under Entry 56 and not under Entry 87. The argument is that, the items in Entry 87 are all stand alone and the rule of edjusdem generis cannot be imported.
10. It is pertinent to note that the Explanation to Entry 87 states that powders, tablets and concentrates used for preparation of non-alcoholic drinks would also come under Entry 87. The Entry also includes non-alcoholic drinks and squashes; taking in fruit juices or fruit pulp in a mashed, liquefied form, which is undoubtedly a non-alcoholic drink as well. The Explanation clarifies that even if it be in the form of powder, tablet or concentrate, capable of being converted to a non-alcoholic drink, it shall be taxed under Entry 87. We cannot agree with the argument of the learned S.T.Rev.237-244/09 -8- counsel for the assessees that beverages included under Entry 87 have been specified by the names like Horlicks, Boost, Bournvita, Complan etc; and that the items are all stand alone. That would be totally ignoring the Explanation. 'Rasna' being fruit pulp in powdered form would squarely come under Entry 87, which also includes squashes. Our view is also fortified by the test report of the Public Health Laboratory at Annexures-III, which states that after diluting the product as per label instruction, it appears similar to squash. On consideration of both these Entries, we are of the opinion that 'Rasna' is a fruit concentrate in powdered form, which would be a squash and also a non-alcoholic drink bringing it squarely under Entry 87 exigible to 20% tax for the assessment year 1997-98.
11. Considering the changes made during 1998-99 as extracted above, Entry 56 has excluded 'beverages' and now it contains only 'food preparations' and therefore, 'Rasna' which is not perse a food preparation, would definitely not come under Entry 56 for the year 1998-99. The use in making food preparations is not as an essential ingredient and is only an additive to improve it. The essential use is to mix it with water and have in a liquid form. The classification under Entry 87 remains unchanged and hence, for the year 1998-99, 'Rasna' continues to be a product coming under the classification of Entry 87 being a non-alcoholic drink or a squash in powdered form.
S.T.Rev.237-244/09 -9-
12. Next, we have to consider which Entry would apply to 'Rasna' for the assessment year 1999-2000 till 31.12.1999. The two Entries extracted above would indicate that the Entries have been totally changed for that year because now Entry 87 contains 'non-alcoholic drinks' and the Explanation says that it could be in the form of powders, tablets, granules and concentrates used for the preparation of non- alcoholic drinks. Whereas, Entry 124A includes squashes, sauces, soda, mineral water and other beverages like Horlicks, Boost, Bournvita etc.; and the Explanation also says that it could be powders, tablets or granules and concentrates. Since non-alcoholic drinks and squashes have been separated for the year 1999-2000 till 31.12.1999, 'Rasna' would come under the classification of squashes and would be excluded from the Entry pertaining to non-alcoholic drinks because it is definitely closer to squashes.
13. From 1.1.2000 onwards, there is no change in Entry 87, which is now incorporated under Entry 97 and Entry 124A has been modified as Entry 141, but with some changes that Entry 141 also includes fruit juice and fruit pulp. The Explanation continues to be the same, and therefore, 'Rasna' would continue to remain under Entry 141 for the period starting from 1.1.2000 onwards.
Hence, for the reasons mentioned by us, the revisions are allowed in part and the orders of the AO, Appellate Authority and the Tribunal will stand modified to the extent S.T.Rev.237-244/09 -10- that for the year 1999-2000 till 31.12.1999, 'Rasna' would come under Entry 124A and from 1.1.2000 onwards the product would come under Entry 141. Regarding the classification pertaining to the year 1997-98 and 1998-99, there would be no change. No costs.
Sd/-
K.VINOD CHANDRAN JUDGE Sd/-
ASHOK MENON JUDGE APPENDIX IN S.T.REV.238/09 PETITIONER'S/S EXHIBITS:
ANNEXURE-I TRUE COPY OF THE JUDGMENT DATED JULY 25, 2008 OF THE HON'BLE SUPREME COURT OF INDIA IN CIVIL APPEAL NO. 4639 OF 2008.
ANNEXURE-II TRUE COPY OF THE COMMON ORDER DATED JUNE 27, 2009 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDL.BENCH, ERNAKULAM IN T.A. NOS. 392/2004 AND 154/2004 PASSED AS PER THE DIRECTIONS OF THE HON'BLE SUPREME COURT IN C.A. NO.4639 OF 2008.
ANNEXURE-III COPY OF LABORATORY TEST REPORT OF PUBLIC HEALTH LABORATORY, AHMEDABAD MUNICIPAL CORPORATION, FINDING RASNA AS SUGAR AND FRUIT IN POWDER FORM.
jg //TRUE COPY//