Exemption schedule interpretation: savoury snacks and manufactured sweets lose tax relief when they no longer retain their ordinary identity.

Nimkis and singaras were held not to fall within "bread" in the exemption schedule, because that term must be given its ordinary meaning and does not extend to fried or stuffed savoury preparations. The exemption was therefore unavailable. Sweets made from milk, flour and sugar were also held not exempt, because exemption attached to the raw ingredients did not continue after they were mixed with non-exempt substances and materially transformed into a new manufactured product. The governing principle is that a scheduled exemption applies only where the article retains its ordinary identity and essential character; commercial transformation breaks that identity and defeats the exemption.

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Issues: (i) Whether nimkis and singaras are forms of bread and are exempt from sales tax under Schedule III of the Assam Sales Tax Act, 1947. (ii) Whether sweets prepared from milk, flour and sugar retain exemption because the ingredients themselves are exempt.

Issue (i): Whether nimkis and singaras are forms of bread and are exempt from sales tax under Schedule III of the Assam Sales Tax Act, 1947.

Analysis: The term "bread" in the exemption schedule was construed according to its ordinary and accepted meaning, and not in an extended sense covering all fried or stuffed cereal preparations. Nimkis and singaras were treated as distinct savoury snacks, not articles commonly understood as bread or roti, and they also contained ingredients and underwent preparation beyond mere conditioning of flour.

Conclusion: Nimkis and singaras are not forms of bread and are not exempt from sales tax.

Issue (ii): Whether sweets prepared from milk, flour and sugar retain exemption because the ingredients themselves are exempt.

Analysis: The exemption attached to the raw ingredients did not extend to the finished sweetmeats, because the ingredients were mixed with other non-exempt substances and were materially transformed in the process of manufacture. The final product could not be identified as milk, flour or sugar in its original exempt form.

Conclusion: Sweets prepared from milk, flour and sugar are not exempt from sales tax.

Final Conclusion: The reference was answered against the assessee, and the taxing authorities' view was upheld.

Ratio Decidendi: Articles listed in an exemption schedule must retain their ordinary identity and essential character to qualify for exemption; a commercially transformed product is not exempt merely because some of its ingredients were exempt.

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