High Court rules ghee sales subject to sales tax. Distinction from butter clarified.

The High Court held that the sales of ghee by the assessee are liable to sales tax under section 3-D(2) of the U.P. Sales Tax Act. The Tribunal's decision was overturned, emphasizing the distinction between ghee and butter as separate commercial commodities. The interpretation of the term "including" in the tax notification was crucial, with the court determining it should be read as "and," making both ghee and butter subject to separate tax liabilities. The revision was allowed with costs assessed at Rs. 200.

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Issues Involved:
1. Taxability of ghee sold by the assessee.
2. Interpretation of the word "including" in the relevant tax notification.
3. Distinction between ghee and butter as separate commercial commodities.
4. Applicability of section 3-D(2) of the U.P. Sales Tax Act.
5. Precedent cases and their relevance to the current case.

Detailed Analysis:

1. Taxability of Ghee Sold by the Assessee
The primary issue was whether the ghee sold by the assessee was taxable. The Tribunal initially held that the sales of ghee by the assessee were not taxable under Notification No. ST-II-4944/X-10(2)-74 dated 30th May, 1975. The assessee was only liable to pay tax on his first purchase of butter. However, the High Court overturned this finding, holding that the sales of ghee by the assessee are indeed liable to sales tax under section 3-D(2) of the U.P. Sales Tax Act.

2. Interpretation of the Word "Including" in the Relevant Tax Notification
The court examined the term "including" in the context of the notification, which described taxable items as "Ghee including butter, cheese and cream other than butter, cheese or cream sold in sealed or tinned containers." The department argued that "including" could serve as a word of extension or limitation. The court referred to multiple precedents to interpret "including" and concluded that in this context, it should be read as "and," making the description of the goods: "Ghee and butter, cheese and cream other than butter, cheese or cream sold in sealed or tinned containers."

3. Distinction Between Ghee and Butter as Separate Commercial Commodities
The court emphasized that ghee and butter are distinct commercial commodities, citing the case of Commissioner of Commercial Taxes in Mysore, Bangalore v. Samant Brothers, which held that butter and ghee are different substances and serve different purposes. This distinction was crucial in determining that the sale of ghee by the assessee was not the same as the purchase of butter, thus subjecting both to separate tax liabilities.

4. Applicability of Section 3-D(2) of the U.P. Sales Tax Act
The court held that the assessee's sales of ghee attract sales tax under section 3-D(2) of the U.P. Sales Tax Act. This section imposes a tax on the sale of goods, and given the distinct commercial nature of ghee and butter, the sale of ghee by the assessee falls within its ambit.

5. Precedent Cases and Their Relevance to the Current Case
The court reviewed several precedent cases to support its interpretation:
- Commissioner of Commercial Taxes in Mysore, Bangalore v. Samant Brothers: Confirmed that butter and ghee are different commercial commodities.
- G. Baliah Setty, B. Satyanarayana & Co. v. State of Andhra Pradesh: Rejected the argument that taxing both butter and ghee amounts to double taxation.
- Dilworth v. Commissioner of Stamps: Provided a framework for interpreting "including" as potentially exhaustive.
- South Gujarat Roofing Tiles Manufacturers Association v. State of Gujarat: Interpreted "including" as "mean" in certain contexts.
- Hindustan Aluminium Corporation Ltd. v. State of U.P.: Emphasized considering the scheme of taxation in interpreting notifications.
- Commissioner of Income-tax, Andhra Pradesh v. Taj Mahal Hotel, Secunderabad: Discussed the extended meaning of "includes."
- Minerva Printing Works v. State of Bihar: Interpreted "including" as "means and includes" in a specific context.
- Commissioner of Sales Tax, U.P. v. Chawla Stores, Allahabad: Discussed the classification of items for taxation purposes.

Conclusion
The High Court concluded that the sales of ghee by the assessee are liable to sales tax under section 3-D(2) of the U.P. Sales Tax Act. The Tribunal's order was overturned, and the revision was allowed with costs assessed at Rs. 200. The decision emphasized the distinct commercial nature of ghee and butter and interpreted the term "including" in the notification as "and," thus making both ghee and butter separately taxable.

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