TaxTMI 
TaxTMI 
2018 (7) TMI 668
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....he impugned order classifying the product "Rooh Afza" under the residuary entry (Entry 1 of Schedule V) and not under the Entry 103 of Part A of Schedule II of the U.P. VAT Act? B. Whether the Tribunal was legally justified to give the finding based on common parlance test that the product "Rooh Afza" is known as 'sharbat'? C. Whether the Tribunal was legally justified in classifying the impugned product under the residuary list without considering the 'essential character' test which is a cardinal principle in classification of goods under taxation law?" 3. These bunch of revisions were heard at length on 19.4.2018, 23.4.2018 and 2.5.2018. 4. Sri Laksmi Narsimhan, learned counsel for the revisionist submits as under: (i) In the case of revisionist's itself i.e. M/S Hamdard (Wakf) Laboratories vs. Collector of Central Excise, Meerut, 1999 (113) ELT 20 (SC) (Paras 3 to 8), Hon'ble Supreme Court held that product "Rooh Afza" is classifiable under Heading 2201.90 of the Central Excise Tariff Act, 1985 being a non-alcoholic beverage containing fruit juice. Thus Hon'ble Supreme Court held that "Rooh Afza" is a beverage contain....
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....ich is technically a fruit drink. (ix) Referring to licence issued by the Food Safety and Standards Authority of India, Office of A.D.G. (PFA) and the determination of the product in question, i.e. "Rooh Afza" by the Food Safety and Standards Authority of India, vide letter dated 31st July, 2009, as "non-fruit syrup", he submits that it would mean that "Rooh Afza" is a fruit drink since it is non-fruit syrup. (x) Alternatively, even if it is assumed that "Rooh Afza" is not a fruit drink, it will still be a "processed fruit" since Entry-103 covers processed fruit and preserved fruit. Therefore, the product "Rooh Afza" is liable to tax at the rate of 4% classifiable under the aforesaid Entry-103. (xi) In reply to a question put by the court as to whether the point No.(x) above was argued before the Tribunal or the other statutory authorities, learned counsel for the revisionist submits that in Ground-2 of Sales/ Trade Tax Revision No.527 of 2015, the ground was taken before the Tribunal and therefore, it is presumed that it was argued before the Tribunal. (xii) Even if the alternative submissions as made above, was not raised before the Tribunal, y....
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....stion of taxability of the product in question was not the issue in the aforesaid case. Therefore, the said judgment is not relevant for the purposes of present case. (iv) For interpretation of commodities the well recognised principle is the common parlance test i.e. how the goods are understood by those who trade in it and also by consumers who purchase it for consumption. (v) The other judgments relied by learned counsel for the revisionist are wholly distinguishable on facts. The judgment in the case of M/s Parle Agrao (P.) Ltd. Vs. Commissioner of Commercial Taxes, Trivandrum, (2017) SCC Online SC 659 has been passed without considering the larger bench judgment of Hon'ble Supreme Court in the case of M/s. Indo Internatinal Industries Vs. Commissioner of Sales Tax 1981 UPTC 481 (SC) (Para 4) and Ram Avtar Budhai Prasad V/s Assistant Sales Tax Offier Akola AIR 1961 SC 1325 (para 2) and Commissioner of Central Excise Nagpur Vs. Shree Baidyanath Ayurved Bhawan Ltd. 2010 NTN (Vol 42) 63 (Paras 29, 35, 36, 38, 40, 41 and 43). Hon'ble Supreme Court settled the law that a commodity can not be interpreted in a technical sense. If the words are not defined, th....
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....y entry liable to tax @12.5 % as provided in Schedule-V of the Act as under: "All goods except goods mentioned or described in Schedule-I, Schedule-II, Schedule-III and Schedule-IV of this Act." 10. Before I proceed to examine the rival contentions of the parties, it would be appropriate to narrate briefly the facts of the present cases. 11. The revisionist is manufacturer of the commodity "Sharbat Rooh Afza". During the assessment years 2007-08 and 2008-09 the revisionist manufactured and sold "Sharbat Rooh Afza" and deposited VAT @ 4% on the sales thereof alongwith monthly returns. The Assessing Authority made provisional assessment for several months holding that the product "Sharbat Rooh Afza" is an unclassified item liable to tax @12.5% falling under residuary entry of Schedule - V. The revisionist preferred First Appeals before the Appellate Authority which were dismissed. The revisionist preferred Second Appeals which were dismissed by the impugned orders passed by the Member Commercial Tax Tribunal, Bench-I, Ghaziabad. Aggrieved with the orders of the Tribunal the revisionists have filed the present revisions. Concurrent findings of fact have been recorded by....
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....ut it is observed from daily production records of M/s Humdard (Wakf) Laboratories, B-1, B-2, Industrial Area, Meerut Road, Ghaziabad, UP, manufacturing Sharbat Rooh Afza and marketing in the same brand name contains 10%. Hence, Sharbat Rooh Afza may be treated as Non Fruit Syrup containing 10% Fruit Juice (Volume by Volume.) This issued in consultation with Director (Fruits and Vegetable Products.) Yours Faithfully. (Dr. Dhir Singh) Assistant Director General (PFA)" 15. As per lable being wrapped on the bottles of "Sharbat Rooh Afza" and filed as Annexure 10 to the revision No.617 of 2012, the product "Rooh Afza" has been represented to customers as "Sharbat Rooh Afza" "a non alcoholic sweetened beverage". 16. After considering the facts and evidences on record the Tribunal, in its impugned order in Revision No.617 of 2012, dated 27.3.2012 passed in Second Appeal No.355/10 (April 2008) and other 8 connected Second Appeals, concluded as under: "प्रश्नगत मामले में निहित विवादित....
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....;-2 वस्तुऐं है तथा कमिश्नर, बिक्रीकर बनाम सर्व श्रीमेलरोज बिस्किट कम्पनी, अलीगढ़-2004 यू०पी०टी०सी०-1001 में मा० उच्च न्यायालय द्वारा प्रतिपादित व्यवस्था के प्रकाश में भी अपीलकर्ता को कोई लाभ देय नहीं है। यह भी उल....
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....60;्थिति के आधार पर भी कोई अनुतोष देय नहीं रह जाता है। यह भी उल्लेखनीय है कि सर्व श्री हमदर्द (वक्फ) लेबोरेटीज बनाम कलक्टर सेन्ट्रल एक्साईज, मेरठ (1999) 6 एस०सी०सी०-617 का संदर्भित निर्णय सेन्ट्रल एक्साईज एक्ट से सम्बê....
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....66;रा जिन न्याय निर्णयों के आधार पर अनुतोष की अपेक्षा की गई है, उनके तथ्य व विधिक स्थिति प्रश्नगत मामले से सर्वथा भिन्न होनें के कारण भी अपीलकर्ता को कोई लाभ देय नहीं है। हमारे द्वारा सर्व श्री आशुतोष ट्रेडि....
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....51; में उपलब्ध नहीं है। इस प्रकार वाद के समस्त तथ्यों एवं उपरोक्त संदर्भित मामले में प्रतिपादित विधि व्यवस्था के प्रकाश में विवादित वस्तु शरबत रूहआफजा के अधिनियम की किसी भी अनुसूची में वर्गीकृत न होनें क....
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....309;धिनियम की किसी भी सूची में वर्गीकृत न होनें के कारण अवर्गीकृत वस्तु की श्रेणी में मानते हुऐ प्रथम अपीलीय अधिकारी द्वारा जो आदेश पारित किये गये है, वह हमारे विचार से पूर्णतः उचित है और उसमें किसी हस्तक्षेप &....
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....sugar syrup and its sale is liable to be assessed at advalorem rate of tax. Following the judgment of the full bench, a division bench of commercial tax tribunal at Ghaziabad has also held, vide its judgment dated 27.03.2012 passed in appeal no.335 of 2010 to 361 of 2010 that 'Rooh-Afza' is only sugar syrup and its sale is liable to be assessed at advalorem rate of tax. The judgment of full bench and of the division bench of commercial tax tribunal at Ghaziabad is binding on this bench. 12. On the basis of discussion made here-in-above the contention of the appellant that its product 'Rooh-Afza' is a fruit drink and is covered in entry no. 103 of Schedule-II appended to the U.P. Value Added Tax Act, 2008 is here-by rejected. 18. In Hamdard Dawakhana (Wakf) Delhi Vs. UOI AIR 1965 SC 1167, relied by learned counsel for the revisionist; the question involved was the validity of certain provisions of the Fruit Control Order 1955, which was enacted for the purpose of controlling the production, supply and distribution, and Trade and Commerce in, certain commodities in the interest of general public. In Hamdard (Wakf) Laboratories Vs. Collector of Central Exci....
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....oner of Sales Tax, U.P., Lucknow 2005 NTN (Vol. 27) 35 (Allahabad High Court), this Court considered the question as to whether "Sharbat Rooh Afza" is liable to tax as Syrup @ 12% under Notification No.7421, dated 26.10.1981, issued under the U.P. Trade Tax Act, which specifically provided Tax @ 12% on the point of sale turn over of "Soda Water, Lamonada and other soft beverages and Syrups, Squashes, Jams and Jellies". Considering the entries, this Court held, as under: "It is not disputed that Rooh Afza is a concentrate of invert Sugar base mixed with various items namely Juices, Vegetable, flavours etc. It is said to be a Summer drink and useful also in treating disorders associated with heat. It can be used in ice cream, puddings and then like but its main use is as a table drink for which water is mixed. Sharbat Rooh Afza being concentrate of Sugar is a "Syrup" and falls under the Notification No.7421 dated 26.10.81 and has been rightly taxed @12%." 20. Before I proceed to record my conclusions on the facts and relevant entries under the U.P. VAT Act as discussed above, it would be appropriate to refer to certain judgments of Hon'ble Supreme Court with ....
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....al cotton is made sterile and fit for surgical use and it is not put to the same use to which the unmanufactured cotton is put and vice versa. Therefore, when unmanufactured cotton undergoes a manufacturing process, a new product saleable into the market which is having a distinct identity, comes into existence which is known in the commercial market by a different name and use. Surgical cotton possesses higher utility than the cotton in its unmanufactured state." (Emphasis supplied by me) 22. In the case of Commissioner of Central Excise, New Delhi Vs. Connaught Plaza Restaurant Private Limited, New Delhi, (2012) 13 SCC 639 (Paragraph Nos. 20 to 33), Hon'ble Supreme Court held, as under: "20. Time and again, the principle of common parlance as the standard for interpreting terms in the taxing statutes, albeit subject to certain exceptions, where the statutory context runs to the contrary, has been reiterated. The application of the common parlance test is an extension of the general principle of interpretation of statutes for deciphering the mind of the law maker; "[i] it is an attempt to discover the intention of the legislature from the language used by ....
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....ile interpreting items in statutes like the Sales Tax Acts, resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense" (Emphasis supplied by me) 6. The result emerging from these decisions is that while construing the word 'coal' in Entry I of Part III of Schedule II, the test that would be applied is what would be the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that word. A sales tax statute is being one levying a tax on goods must in the absence of a technical term or a term of science or art, be presumed to have used an ordinary term as coal according to the meaning ascribed to it in common parlance. Viewed from that angle both a merchant dealing in coal and a consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include 'charcoal' in the term 'coal'. It is only when the question of the kind or variety of coal would arise that a distinction would be made between coal ....
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....ould be construed in the sense in which they are understood in the trade, by the dealer and the consumer. The reason is that it is they who are concerned with it and, it is the sense in which they understand it which constitutes the definitive index of the legislative intention". 27.In CCE v. Kanpur Vs. Krishna Carbon Paper Co., this Court has opined thus: "12. It is a well settled principle of construction, as mentioned before, that where the word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature. But there is a word of caution that has to be borne in mind in this connection, the words must be understood in popular sense, that is to say, these must be confined to the words used in a particular statute and then if in respect of that particular items, as artificial definition is given in the sense that a special meaning is attached to particular words in the statute then the ordinary sense or dictionary meaning would not be applicable but the meaning of that type of goo....
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.... how the product is understood in popular parlance. 31. "In Naturalle Health Products (P) Ltd.v.CCE, two appeals were under consideration. One was with respect to Vicks Vapo Rub and Vicks Cough Drops while the other was with respect to Sloan's Balm and Sloan's Rub. It was observed that when there is no definition of any kind in the relevant taxing statute, the articles enumerated in the tariff schedules must be construed as far as possible in their ordinary or popular sense, that is, how the common man and persons dealing with it understand it. The Court held that in both the cases the customers, the practitioners in Ayurvedic medicine, the dealers and the licensing officials treated the products in question as Ayurvedic medicines and not as Allopathic medicines, which gave an indication that they were exclusively Ayurvedic medicines or that they were used in the Ayurvedic system of medicine, though they were patented medicines. Consequently, it was held that the said products had to be classified under the Chapter dealing with medicaments. (Emphasis supplied by me) 32. B.P.L. Pharmaceuticals Ltd. v. CCE, was a case in which product "Selsun Shampo....
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....definitive index of the legislative intention, when the statute was enacted [see Delhi Cloth and General Mills Co. Ltd. Vs. State of Rajasthan," 34.One of the essential factors for determining whether a product falls within Chapter 30 or not is whether the product is understood as a pharmaceutical product in common parlance [see CCE v. Shree Baidyanath Ayurved, (2009) 12 SCC 413; Commissioner of Central Excise, Delhi v. Ishaan Research Lab (P) Ltd. (2008) 13 SCC 349]. Further, the quantity of medicament used in a particular product will also not be a relevant factor for, normally, the extent of use of medicinal ingredients is very low because a larger use may be harmful for the human body. [Puma Ayurvedic Herbal (P) Ltd. v. CEE, Nagpur (2006) 3 SCC 266; State of Goa v. Colfoax Laboratories (2004) 9 SCC 83 ; B.P.L Pharmaceuticals v. CCE, 1995 Supp (3) SCC1] : 35. However, there cannot be a static parameter for the correct classification of a commodity. This Court in the case of Indian Aluminium Cables Ltd. v. Union of India, (1985) 3 SCC 284, has culled out this principle in the following words: "13. To sum up the true position, the process of manufacture ....
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....e character of the product and the user to which the product is put. However, the miniscule quantity of the prophylactic ingredient is not a relevant factor. In the instant case, it is not in dispute that this is used by the surgeons for the purpose of cleaning or degerming their hands and scrubbing the surface of the skin of the patient before that portion is operated upon. The purpose is to prevent the infection or disease. Therefore, the product in question can be safely classified as a "medicament" which would fall under chapter sub-heading 3003 which is a specific entry and not under chapter sub-heading 3402.90 which is a residuary entry." (Emphasis supplied by me) 24. In the case of Commissioner of Trade Tax, U.P. v. Cartos International and others 2011 (6) SCC 705, Hon'ble Supreme Court held that classification of commodity cannot be made on its scientific and technical meaning. It is only common parlance meaning of the term which should be taken into consideration for the purpose of determining the tax liability. Application of common parlance test for interpretation of a commodity in Taxing Statute has always been recognized by Hon'ble Supreme Court as ....
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....te would attribute to it. Resort to rigid interpretation in terms of artificial and technical meaning should be avoided in such circumstances. However, this rule shall not be applicable when the legislature has expressed a contrary intention, such as by providing a statutory definition of the particular entry, word or item in specific, scientific or technical terms, then interpretation ought to be in accordance with scientific and technical meaning and not according to common parlance understanding. A sales Tax statute being one levying tax on sales of goods must, in absence of technical term or a terms of science or art, shall be presumed to have been used in ordinary sense or common parlance. Technical and scientific tests offer guidance only within limits where a word has a scientific and technical meaning and also an ordinary meaning according to common parlance, it is the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature. If in respect of a particular item an artificial meaning is attached to particular words in the taxing statute then the ordinary sense or dictionary meaning would n....
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....yrup/Sharbat". The product has been represented to buyers as "Sharbat" which is evident from the label being wrapped on the bottles of "Sharbat Rooh Afza". The alternative submission that "Sharbat Rooh Afza" is a "Processed Fruit" is also totally baseless and without substance. Even as per licence to manufacture "Sharbat Rooh Afza" it is "Non Fruit Syrup/Sharabt". Therefore, there does not arise any question for the "Sharbat Rooh Afza" to be a "Processed Fruit". That apart no material has been brought on record by the revisionist either before the fact finding authorities or before this Court to indicate that "Sharbat Rooh Afza" is a "Processed Fruit". 27. As per own licence of the revisionist granted under the Fruit Products Order, 1955,, "the product in question is "non Fruit Syrup/Sharbat". As per letter of the Assistant Director General (P.F.A.), Food Safety and Standards Authority of India, New Delhi, dated 31.7.2009, the product "Fruit Syrup" has been defined in Part - II of Second Schedule of FPO 1955, as the product which contains 65% soluble solids and minimum 25% fruit juice content in the product but from daily production record of the revisionist manufacturing "Sharb....