TaxTMI 
TaxTMI 
2023 (3) TMI 6
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....on with Assessments framed under Section 12(4) by the Taxing Authority, Bhubaneswar-I Circle, Bhubaneswar vide Orders dated 30.11.2002, 17.10.2003, 13.12.2004 and 20.01.2006 for the Assessment Years 2001-2002, 2002-03, 2003- 04 and 2004-05 respectively by way of sales tax revision petitions under Section 24 of the Odisha Sales Tax Act, 1947. 1.1. Since common questions of law are involved in the present cases, they are taken up for analogous hearing and disposed of by this common Judgment. 1.2. In the afore-noted revision cases, the aggrieved, State of Odisha represented by the Commissioner of Sales Tax, Odisha, has posed following questions of law for adjudication by this Court: A. Whether on the facts and in the circumstances of the case, "KINLEY WATER" sold by the opposite party-company falls within the scope of Entry No.4 of Taxable List? B. Whether on the facts and in the circumstances of the case, the Odisha Sales Tax Tribunal was not justified in ignoring to take into account the material placed before it by the Revenue to show that the opposite party-dealer sold "KINLEY WATER", i.e. "aerated water" which does not fall within the ambit of Entry 39 of ....
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....he OST Act?" 1.6. However, subsequently both the parties abandoned such question for adjudication, rather both the parties sought for a decision on the following issue which is stated vide Order dated 10.01.2023: "2. The Court has been shown by Mr. Monish Panda, learned counsel for the Opposite Party copies of the relevant provisions of the Bureau of Indian Standards specifications regarding Packaged Drinking Water (Other than Packaged Natural Mineral Water) as well as a copy of the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 which contain a specific definition of 'Mineral Water'. It is submitted by Mr. Panda, that the Opposite Party's product is only packaged drinking water and not natural mineral water in terms of the above definitions and specifications. 3. Copies of the above documents have been handed over to learned counsel for the Department who needs some time to examine them and make submissions." 1.7. On the basis of arguments advanced by the counsel for rival parties with reference to the written notes of submission filed by respective parties, this Court frames the following question of law for renderi....
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....rity under Section 23(2) of the OST Act. With regard to aforesaid claim, the Appellate Authority has stated thus: "*** On examination of the accounts produced the Assessing Officer did not accept the claim of the appellant towards tax-free sale of packaged drinking water in the brand name of KINLEY for Rs.67,49,490.23, claim of Rs.14,83,74,260/- towards wear and tear charges and claim of sale of exempted goods for Rs.48,82,97,648.82 under IPR, 1996 (New Unit). As to the first aspect it is seen that the ingredients for manufacture of packaged drinking water are treated water, minerals (sodium chloride, magnesium sulphate). The wrapper used on the bottles also disclosed the same ingredients as treated water, minerals (sodium chloride, magnesium sulphate). As the definition of mineral water it reads as water naturally or artificially impregnated with dissolved salts. So the water sold by the appellant in bottles are mixed with the dissolved common salt and magnesium salt and hence it is nothing but mineral water. Hence the contention of the appellant that their products are packaged drinking water but not mineral water is not acceptable and the Assessing Officer has rightly h....
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....erated or mineral water sold in bottles or in sealed containers'. It speaks that only the specially treated water either by addition of a specific gas or a specific mineral when sold in bottles or sealed containers comes under this entry and taxable @12% under the Orissa Sales Tax Act. It is clear from the contention of the dealer-company is that Para 3.2. of Indian Standard on packaged drinking water (other than Packaged Natural Mineral Water) specification and Para A-32 and A-33 of the prevention of Food Adulteration Rules, can be appreciated with regard to submission of the dealer and it will be suffice to say that on the basis of standard prescribed by the Bureau of Indian Standard and Prevention of Food Adulteration Act and Rules, KINLEY water in the packaged drinking water coming under exempted List under Orissa Sales Tax Act. The learned counsel for the dealer company referred to the decision of Rajasthan High Court in the matter of Assistant Commercial Tax Officer Vrs. Nalavya Agencies. In view of this, KINLEY water is not aerated water because it is neither carbonated adding carbon dioxide nor treated with any aerating gases creating effervesce a....
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....erived from any source of potable water which is subjected to various treatments as decantation, filtration, demineralization, re-mineralisation, reverse osmosis, etc.". 3.1. In terms of standards prescribed in the Bureau of Indian Standards of 1992 as revised in the year 1998, "packaged natural mineral water" is obtained directly from natural and drilled sources from underground water bearing strata for which all possible precautions is required to be taken within the protected perimeters to avoid any pollution of, or external influence on, the chemical and physical qualities. It is characterized by its content of certain mineral salts and their relative proportions and the presence of trace elements or other constituents. It is sourced from natural sources of water and is characterized by content of certain mineral salts in them. Further, such water is collected under condition which guarantees the original microbiological purity and chemical composition of essential components. It is not subjected to treatment other than those permitted by this standard. 3.2. Stating the process thus, it is argued by Sri Monish Panda, learned counsel for the company that the item sold in t....
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....mineral water and would be within the ken of Entry 4 of List of Goods subject to Levy of Sales Tax (in short, "Taxable List") attracting levy of tax @ 12%. 4.1. Amplifying by way of written note of submission, it is stated by the learned Additional Standing Counsel that though the description of KINLEY WATER in the web-portal informs that "the process involves disinfection, sand filtration, activated carbon filtration, 10-micro polishing filtration, reverse osmosis, 5-micro polishing filtration, mineral dosing and ozone filtration" coupled with removal of "trace compounds like carbonates, bicarbonates, chlorides, sulphates, phosphates, nitrates, calcium, magnesium, sodium, potassium, iron and manganese from the water", it is evident from nutritional information as already mentioned that KINLEY water is mineral water sold in bottles or sealed containers. 4.2. In the written note the Revenue has clarified as follows: "In this context, it is pertinent to place before this Hon'ble Court the nutrition the label of KINLEY WATER in the following manner: Energy : 0k Cal Carbohydrate : 0g Sugar : 0g Protein : 0g Fat : 0g S....
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.... "packaged drinking water" is nothing but water which is added with salts like sodium and magnesium. Such addition is requirement as per the specifications of the Bureau of Indian Standards and the company is to undertake the process in conformity with statutory requirement envisaged under the Prevention of Food Adulteration Act. Nevertheless, this mere addition of salt(s) would not take away the understanding of the product as "packaged drinking water" in common sense and trade parlance. The various processes employed by the company is to bring the commodity more acceptable to a section of people for drinking purposes. 5.4. On consideration of documents furnished by either side, it has come to fore that Drinks and Carbonated Beverages Sectional Committee, Food and Agricultural Division Council has specified as follows: "In the preparation of this standard due consideration has been given to the provisions of the Prevention of Food Adulteration Act, 1954 and the Rules framed thereunder. The standard, however, subject to the restrictions imposed under this Act and Rules, wherever applicable. In the preparation of this standard assistance has been derived from th....
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....ural mineral water which, after possible treatment in accordance with 4.1 and after packaging, has less carbon dioxide content than that at emergence and does not visibly and spontaneously give off carbon dioxide under normal conditions of temperature and pressure. 3.1.4 Natural Mineral Water Fortified with Carbon Dioxide from the Source- Natural mineral water which, after possible treatment in accordance with 4.1 and after packaging, has more carbon dioxide content than that at emergence. 3.1.5 Carbonated Natural Mineral Water- Natural mineral water which, after possible treatment in accordance with 4.1 and after packaging, has been made effervescent by the addition of carbon dioxide from another origin. NOTE- Mineral water means natural milneral water as defined in 3.1. 3.2 Packaged Natural Mineral Water- Natural mineral water filled into hermetically sealed containers of various compositions, forms and capacities that is, suitable for direct consumption without further treatment. 4. Treatment and Handling 4.1 Treatment permitted include separation from unstable constituents, such as compounds contai....
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....f commodity as is given by the opposite party-company shows that the water is the potable water which is subject to treatment such as decantation, filtration, demineralization, re-mineralisation, reverse osmosis. These processes are as per the requirements of specification of the Bureau of Indian Standards as also the Prevention of Food Adulteration Act. 5.9. Various processes employed by the opposite party-company described above amount to purification of water by removal of waste and sterilization of water by ultra violet radiation. In other words, the water is made fit for human consumption without any risk or hazard. The processes required for the treatment of water for making it fit for human consumption are relative and depend upon the nature and source of the original commodity. If the opposite party is able to source water from a clean source, many of the processes are unnecessary because water in its natural form from many sources is clean and potable, which otherwise the company brings about by treatment. 5.10. In Rule 5 of the Prevention of Food Adulteration Rules, 1955 it has been spelt out that "standards of quality of the various articles of food specified in Ap....
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....tural mineral is a natural mineral water which, after possible treatment as given hereunder and after packaging, has less carbon dioxide content than that at emergence and does not visibly and spontaneously given off carbon dioxide under normal conditions of temperature and pressure. (v) Natural Mineral Water Fortified with Carbon Dioxide from the Source- A natural mineral water fortified with carbon dioxide from the source is a natural mineral water which, after possible treatment as given hereunder and after packaging, has more carbon dioxide content than that at emergence. (vi) Carbonated Natural Mineral Water- A carbonated natural mineral water is a natural mineral water which, after possible treatment as given hereunder and after packaging, has been made effervescent by the addition of carbon dioxide from another origin." 5.11. In said Rule 5 under Appendix-B, "Packaged Drinking Water (Other Than Mineral Water)" has been defined as follows: "A.33- Packaged Drinking Water (Other Than Mineral Water)- "PACKAGED DRINKING WATER" means water derived from any source of potable water or sea water or underground water or surface ....
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.... the product in question contained the ingredients specified for water to fall within the comprehension of "mineral water" as per A.32 of Appendix-B appended to the Prevention of Food Adulteration Rules, the matter would have been different. On the contrary, the opposite party-company having demonstrated that it has produced "packaged drinking water" in conformity with the specification of A.33 of Appendix-B of said Rules, it has discharged its onus. 5.13. The Hon'ble Delhi High Court in Bottled Water Processors Association Vrs. Union of India, 2010 SCC OnLine Del 2038, held that it is mandatory for packaged drinking water to be manufactured, sold or exhibited for sale only with a BIS Certification Mark. Packaged drinking water has to conform to the stipulated Indian Standards Specification as per IS 14543:2004. Rule 37 of the Prevention of Food Adulteration Rules requires the label to state that it is packaged drinking water and the label shall not contain any statement, claim, design, device, fancy name or abbreviation which is false or misleading in relation to the place of origin of the drinking water. Consequently, if packaged drinking water is sold without the usage of ....
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....king water" is considered, the addition of salts would not change the nature and character of water and make it mineral water. While "mineral water" offers the essential minerals that are necessary for human body, "packaged drinking water" goes through the treatment process that destroys all minerals in it. As understood commonly "mineral water" has a flavour that is distinct from that of commercial drinking water. The flavour of packaged drinking water, on the other hand, can vary depending on the quality of its source, treatment process, and natural mineral content. 6.2. As is understood in the common commercial parlance, the commodity, "packaged drinking water" prepared in conformity with the standards prescribed and in terms of statutory requirement and sold in the market at the relevant time in the brand name "KINLEY" is not "mineral water". 6.3. In Krishna Iyer Vrs. State of Kerala, (1962) 13 STC 838 (Ker) it has been observed as follows: "But it is not the dictionary meaning of the term that will invariably prevail in the construction of a statute. The rule of interpretation applicable to such cases is well recognised. It is the rule that particular words used....
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....ce that the identity of an article is associated with its primary function. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between an article and the need it supplies in his life. It is the functional character of the article, which identifies it in his mind. Refer: Madras Rubber Factory Ltd. Vrs. Union of India, 1983 (13) ELT 1566 (SC). 6.7. This Court also recognizes the concept laid down by the Hon'ble Supreme Court of India in the case of MSCO Pvt. Ltd. Vrs. Union of India, AIR 1985 SC 76, that while construing a word which occurs in a statute or a statutory instrument in the absence of any definition in that every document it must be given the same meaning which it receives in ordinary parlance or understood in the sense in which people conversant with the subject-matter of the statute or statutory instrument understand it; it is hazardous to interpret a word in accordance with its definition in another statute or statutory instrument and more so when such statute or statutory instrument is not dealing with any cognate subject. In construing a word in an Act caution is ne....
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.... the Bureau of Indian Standards can be considered to be authoritative meanings of any particular term as popularly understood in the trade and connected circles. Vide Bansal Mechanical Works Limited Vrs. Inspector of Entry Tax, Belur Railway Siding and Others, (2003) 133 STC 497 (WBTT). It may not be out of place to have regard to the decision of the Hon'ble Supreme Court of India in the case Commissioner of Commercial Taxes Vrs. A.R. Thermosets Pvt. Ltd., (2016) 94 VST 258 (SC), wherein inter alia culling out the meaning given to "Bitumen emulsion" as per Indian Standards ICS 293.08.0.20 published by the Bureau of Indian Standards, while holding that the process adopted for bringing into existence "Bitumen emulsion" from "Bitumen" there is no change in the characteristics or identity of bitumen so as to transform bitumen into a new product having an identity, characteristic and use, observed thus: "19. At the very inception, we think it absolutely seemly to state that the nature and composition of the product or the goods and the particular entity in the classification table is important. Matching of the goods with the Entry or Entries in the Schedules is tested on the ba....
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....ds prescribed by the Bureau of Indian Standards and provisions contained in the Prevention of Food Adulteration Act, considered that KINLEY brand water does not fall within the meaning of "aerated water" in view of decision rendered by the Rajasthan High Court in the case of Assistant Commercial Tax Officer Vrs. Nalvaya Agencies, (2000) 119 STC 393 (Raj), wherein it has been held that even in the filtering process adopted in public distribution system or at different places, some gases may be used or interacted with water which does not convert the drinking water as "aerated water". 8. To understand the meaning of mineral water or other specie of water sold in the market, it is necessary to examine in the context whether the commodity sold in the market is drinking water or something more than or other than drinking water. The fallacy lies in the contention of the Revenue that the opposite party-assessee had sold mineral water inasmuch as it failed to appreciate that the processes described by the company is nothing but purification of water to make it more potable through the processes undertaken by the company for making water possible to reach at the people for safe drinking ....