TaxTMI 
TaxTMI 
2026 (10) TMI 388
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....urt upheld the classification of 'GRD Powder' and 'GRD Mix', manufactured and marketed by the Respondent, under the residuary entry of Schedule II to the M.P. Commercial Tax Act, 1994 ("1994 Act"), thereby subjecting them to tax at the rate of eight per cent (8%) for the Assessment Year 1997-1998. RELEVANT FACTS 2. The Appellants assert that the indications on the goods 'GRD Powder' and 'GRD Mix', both in terms of graphical representation and the accompanying instructions, require the consumer to dilute the good with milk or water. Consequently, it is urged that the goods are classifiable as 'Non-Alcoholic Drinks and Beverages' falling under Entry 20(ii), Part IV, Schedule II of the 1994 Act, thereby attracting tax at the rate of ten per cent (10%). The Respondents, however, contend that the said goods being sold across the counter in the form of powder and biscuit, are exigible to tax at the rate of eight per cent (8%) under the residuary entry. 3. The relevant entries which fall for consideration in the present appeals are delineated as under:- Schedule II of the M.P. Commercial Tax Act, 1994 Entry Particulars Tax (%) Part IV 20(ii) ....
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....t of a health drink rather than health food. He contended that tea and coffee, though sold in powder form, have consistently been classified as beverages for the purpose of taxation. 7. He further submitted that where two competing entries arise, the Court must apply three well-recognised tests to determine the appropriate classification. The first is the 'common use and functional character test', which requires the Court to ascertain how the good is identified by those who deal with or consume it. Reliance was placed on the judgment of this Court in Atul Glass Industries (Pvt.) Ltd Vs. Collector of Excise, (1986) 3 SCC 480. The second test, he urged, is to determine the 'basic nature of the good', independent of the process of manufacture, since the process is susceptible to change. In support, reliance was placed on Indian Aluminum Cables Ltd. Vs. Union of India & Ors., (1985) 3 SCC 284. The third test, according to him, is the 'popular meaning or common parlance test' which this Court has repeatedly applied, holding that the common parlance meaning of an entry must prevail. 8. On the strength of the Atul Glass (supra) principle, learned counsel contended that the function....
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....o not fall within a specific entry necessarily travel to the residuary entry and cannot be forced into an inapposite specific entry merely to attract a higher rate of tax. He further pointed out that Entry 20(ii) makes no reference to use or adaptation, and therefore, the end use of a good cannot be read into the entry. In support of his submission, he relied upon the judgment in Dunlop India Ltd. vs. Union of India (1976) 2 SCC 241, wherein this Court has held that end use of an article is absolutely irrelevant for classification purposes. 14. Learned counsel for the Respondents further submitted that this Court in Hamdard Wakf Laboratories vs. Collector of Central Excise (1999) 6 SCC 617, has held that beverages, broadly speaking, are liquids for drinking, other than water, which may be consumed neat or after dilution. It was urged that, therefore, for any goods to be classified as a beverage, it is essential that they exist in liquid form at the time of the taxable event. REASONING TAXING STATUTES ARE TO BE STRICTLY CONSTRUED 15. It is settled law that taxing statutes are to be strictly construed. The Court cannot assume any intention beyond what is manifest in the p....
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....to their physical characteristic and form. Accordingly, this Court is of the view that the identity of the goods at the time of taxable event, namely, sale, must be the determinative factor for the purpose of classification under the taxing statute. COMMON PARLANCE TEST, FUNCTIONAL CHARACTER TEST OR BASIC NATURE TEST CANNOT BE APPLIED TO IMPORT END USER CONCEPT IN PRESENT APPEALS 22. This Court is of the opinion that common parlance test, functional test or basic nature test cannot be applied to import end use concept to override or bypass explicit or implicit statutory guidance, particularly, where the language of the entry is clear and unambiguous-like in the present appeals. RULE OF EJUSDEM GENERIS 23. The rule of ejusdem generis requires a general word to be construed in the context of specific words accompanying it. The expression 'beverages' must derive its meaning from the class constituted by these associated words and cannot be interpreted in isolation so as to encompass goods of an altogether different character or physical form. 24. Consequently, this Court is in agreement with the submission of learned senior counsel for the Respondents that the goods whi....
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...., they remain in powder form. Consequently, they do not fall within the expression 'beverage'. 30. Before parting with the present appeals, this Court places on record its appreciation for the assistance rendered by all the learned counsel, who appeared, in particular, Mr. Vivek Sarin, learned senior counsel, Mr. Arkaj Kumar, learned counsel and Mr. Bhargava V. Desai, learned counsel. 31. The appeals are, accordingly, dismissed. 32. Pending application(s), if any, shall stand disposed of. --------------------- Notes: 1. In Mathuram Agrawal v. State of Madhya Pradesh, (1999) 8 SCC 667, the Supreme Court has held, "....The intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambig....