Skimmed milk powder treated as taxable milk product; fresh milk exemption could not be extended to reconstituted milk.

Skimmed milk powder was held to fall within the specific taxable category of milk products under the Kerala General Sales Tax Act, because the First Schedule expressly treated milk powder as taxable goods. The exemption for fresh milk under S.R.O. No. 342 of 1963 could not be extended to reconstituted skimmed milk powder merely because it was used to prepare milk or sold in milk form. Use of the goods under C forms for processing did not change their character under the State Act. The Tribunal's interference was set aside and the Deputy Commissioner's restoration of taxable turnover was reinstated.

---

---

Issues: Whether skimmed milk powder used for preparing milk is exempt as "fresh milk", or is taxable as "milk products" under the Kerala General Sales Tax Act, 1963.

Analysis: Entry 122 of the First Schedule specifically treated milk products, including milk powder, as taxable goods. The exemption under S.R.O. No. 342 of 1963 covered only fresh milk. Skimmed milk powder is a product of milk and, even when reconstituted into milk, does not become fresh milk within the meaning of the exemption. The purchase through C forms under section 8(3)(b) of the Central Sales Tax Act, 1956 showed use in processing, but that did not alter the taxable character of the milk powder under the State Act. The prior decisions on fresh milk and pasteurised milk did not assist the assessee because the goods in question remained milk powder falling within the specific taxable entry.

Conclusion: The turnover of skimmed milk powder was liable to tax and was not entitled to exemption as fresh milk; the Revenue's position was upheld.

Final Conclusion: The assessment made by the assessing authority was wrongly disturbed by the Tribunal, and the order of the Deputy Commissioner restoring taxable turnover of skimmed milk powder stood reinstated.

Ratio Decidendi: Where a statute specifically taxes milk powder as a distinct milk product, an exemption granted only to fresh milk cannot be extended to skimmed milk powder merely because it is reconstituted and sold as milk.

---