Gujarat HC classifies 'Nestle Nestum' as non-food for babies under tax law

The Gujarat High Court upheld the Tribunal's decision, classifying 'Nestle Nestum' and 'Nestle Nestum Baby Cereal' under the residuary entry 13 of Schedule III of the Gujarat Sales Tax Act, 1969. The Court ruled in favor of the assessee, determining that the products did not qualify as normal food for babies and thus did not fall under the definition of food-stuff under entry 6 of Schedule III. The judgment favored the assessee over the Revenue, with no costs awarded in the case.

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Issues:
Interpretation of the Gujarat Sales Tax Act, 1969 - Classification of 'Nestle Nestum' and 'Nestle Nestum Baby Cereal' - Applicability of residuary entry 13 of Schedule III.

Detailed Analysis:
The Gujarat High Court was tasked with interpreting the Gujarat Sales Tax Act, 1969, specifically regarding the classification of 'Nestle Nestum' and 'Nestle Nestum Baby Cereal' under the Act. The core issue revolved around whether these products fell under the residuary entry 13 of Schedule III of the Act. The reference was made by the Revenue challenging the Tribunal's decision that classified the products under the said entry.

The Deputy Commissioner had initially categorized 'Nestle Cerelac' differently, but 'Nestle Nestum Baby Cereal' and 'Nestle Nestum' were considered as food-stuff and food provisions under entry 6 of Schedule III by the Tribunal. The composition of the products was detailed, highlighting their nutritional content. The Tribunal's decision was influenced by a previous judgment and the test laid down by the Supreme Court regarding the definition of food or food-stuff.

The Court emphasized the importance of mental satisfaction derived from an article of food in determining its classification. It noted that mere nourishment and sustenance were not sufficient to categorize an article as foodstuff. The Court applied the test laid down by the Supreme Court and previous Division Bench decisions to conclude that the infant products in question did not qualify as normal food for babies and, therefore, did not fall under the definition of food-stuff under entry 6 of Schedule III.

The Court also drew parallels with a previous case involving a weight-reducing product to reinforce its decision. Ultimately, the Court agreed with the Tribunal's classification, stating that the products in question were covered by the residuary entry 13 of Schedule III. The judgment favored the assessee and ruled against the Revenue. The decision was made without considering the tax implications, and no costs were awarded in the case.

In conclusion, the Gujarat High Court upheld the Tribunal's decision, affirming that 'Nestle Nestum' and 'Nestle Nestum Baby Cereal' were appropriately classified under the residuary entry 13 of Schedule III of the Gujarat Sales Tax Act, 1969.

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