AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 413
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....1/12, 5/12, 7,12, 10/12, 11/12, 12/12, 13/12, 14/12, 15/12, 22/12, 23/12 & 11/11. JUDGMENT (Per A. K. Menon, J.) 1. This order disposes of all the above seventeen Sales Tax References and two Writ Petitions. For the purpose of the present judgment, we refer to the facts and issues raised in Sales Tax Reference No.11 of 2006, Writ Petition No.2055 of 2003 and Sales Tax Reference No.49 of 2006. The issues that arise for consideration pertains to additive flavour compounds only and synthetic essential oils, fragrances, etc. Vide order 31st March, 2006, the following questions were referred to this Court:- (i) Whether on the facts and circumstances of the case, was the Tribunal justified in negating the revenue's interpretation of the words "and their compounds" in schedule entry C-I-19 as covering only the compounds of natural and synthetic essential oils as not quite proper and interpreting the words "and their compounds", therein to mean the compounds of the aromatic chemicals as well. (ii) Whether on the facts an circumstances of the case, was the Tribunal justified in holding that the impugned product i.e. flavouring compound is compound covered by Schedule Entry C-I-19 ....
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....e Maharashtra Sales Tax Tribunal were as follows:- (a) Entry C-I-19 does not cover compounds of aromatic chemicals but the entry covers only the compounds of natural / synthetic essential oils and no other compounds. (b) Entry C-I-19 covers only the compounds which are sold as single entity in form which is almost pure. (c) Entry C-I-19 relates only to compounds treated individually i.e. without requirement of specific formulation. In other words, it does not cover any prepared mixture. On the three questions framed, he submitted that as far as the first question reproduced above, the Tribunal had answered this question in its judgment dated 31st March, 2003 as follows:- "The reading of the entry C-I-19 done by the revenue is not quite proper. The words 'their compounds' therein would obviously mean the compounds of the Aromatic Chemicals and Synthetic and Natural Essential Oils. They would certainly not mean compounds merely of synthetic and natural essential oils, as sought to be interpreted by the revenue. When the synthetic and natural oils themselves were covered by C-I-19 there was obviously no need to specify that even the compounds of such oils would also be cov....
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....o specific reason as to why the terms are used separately. Mr.Sridharan submitted that this Court in the case of Commissioner of Sales Tax V/s. Khosla Kesharwala reported in (2006) 145 STC 57 (Bom.) also indicates that a classification under entry C-II-78 requires the impugned product to predominantly relate to cooking as a colouring and flavouring agent. 8. In effect, Mr.Sridharan submitted that only those products which are in relation to culinary i.e. used in a kitchen which are covered under C-II-78. The impugned product i.e. flavouring essence is not used directly in a kitchen or in cooking or any other similar manner, but used as raw materials in industries such as pharmaceuticals, confectionery products. He submitted that this aspect has been considered by the Tribunal in its judgment on 31st March, 2006 in paragraphs 7 to 9. For all these reasons, it is submitted that the impugned product does not fall within entry C-II-78 but falls under C-I-19. 9. With reference to the third question, Mr.Sridharan submitted that it is relevant only in the matter of S.H. Kelkar, Respondent in Sales Tax Reference No.47 of 2006 and others. In that case, he submitted that the limited questi....
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....rbatti V/s. State of Punjab reported in [1997] 107 STC 56 and G.Radhakrishna Murti & Co. & Ors. V/s. CFTO, Vijaywada reported in [1999] 113 STC 161 (SC). The entry being interpreted in the above mentioned decisions is similar to the entry C-II-86 dealing with perfumes, therefore, what is covered by entry C-II-86 are those goods commonly used directly on the human body. It is an undisputed fact that the impugned products are not used directly on the human body and are used in various industries for the purpose of respective end products. The revenue itself has accepted that the impugned products were sold to various manufacturers of soaps, cosmetics, agarbattis, etc. The impugned products therefore cannot fall within entry C-II-86. 13. Mr.Sridharan submitted that in G.Radhakrishna (supra), the Apex Court had held that the meaning of the word 'perfume' in modern times has undergone a change, observing that the etymological meaning or the original meaning of 'perfume' may come from the word 'fumare' (smoke), but in modern parlance it has undergone a change. The word 'perfume' orginates from the word 'fumare' which means smoke or to emit vapour,....
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....efer to dictionary meanings of certain words which will throw light on various terms with which we are now concerned. 17. The definition of the term in the "Indian Standards Glossary of terms relating to natural and synthetic perfumery published by the Bureau of Indian Standard and referred to the definition of aromatic chemicals at item 2.7, essential oil 2.47, essential oil and synthetic 2.48, perfumery compound 2.87. The aforesaid definitions are reproduced below:- " 2.7 Aromatic Chemicals /Aroma Chemicals - Organic chemicals derived by organic synthesis oras isolate from natural essential oils possessing distinct aroma. Used as a raw material of terms, and it may not necessarily include all the legal meaning of the terms." "2.47 Essential Oil - It is a volatile perfumery material derived from a single source of vegetable or animal origin by a process, such as hydrodistillation, steam distillation, dry distillation or expression." "2.48 - Essential Oil, Synthetic - It is a composition generally consisting of natural essential oils, aromatic chemicals, resinoids, concretes, absolutes, etc., but excluding animal or vegetable non-essential oils and not having volatile residue i....
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....or the period 11-8-1988 to 30-4- 1992 a further modification is shown by way of exclusion from C-I-19, of culinary and flavour essences covered by entry 78 of Part II. For the period 1-5-1992 to 8-9-1992, the perfumes and culinary and flavouring essences whether in a concentrated or diluted form have been excluded. For the period 9-9-1992 to 31-3- 1994, the product described in the entry is identical to that for the period 11-8-1988 to 30-4-1992. For the period 1-4-1994 to 30-9-1995 further change is made in the system which distinguishes perfumes, fragrance and flavour. The natural and synthetic oil and their compounds and fragrance and flavouring chemicals. 20. Thus although in the case of Raw materials it is seen that the expression "and their compounds is applicable only to the natural and synthetic essential oils but not applicable to fragrance and flavour chemicals or industrial flavours and fragrance in concentrated form. A perusal of the definition of Aromatic Chemicals, Essential Oil and Essential Oil, Synthetic referred in 2.7, 2.47 and 2.48 below reveals that they can be combined with each other. For example Essential Oil Synthetic is shown as a composition of natural e....