Commissioner, Trade Tax. U.P. Vs. S/S National Cereal Product  Insc 156 (7 March 2005)
Pal, Arijit Pasayat & C.K. Thakker
Nos. 6222- 6225/1999 CA No. 4313/2001, CA Nos ..of 2005 @ SLP(C )
Nos.7423-25/2004 RUMA PAL, J.
granted in special leave petitions.
dispute in this case is whether germinated barley or malt is a cereal for the
purposes of three notifications. Malted barley is barley which is soaked in
water and upon germination, dried. The first notification is issued under
Section 3D of the U.P. Sales Tax Act, 1948 read with Section 21 of the U.P.
General Clauses Act, 1904 and is dated 30th May, 1975. It provided that with effect from
18th June, 1975 the turnover of first purchases of inter alia foodgrains including
cereals and pulses but excluding Sawan, Kodon, Mandua, Kakun, Manjhri (or Ankri),
Kutu, Ramkana and Paddy would be liable to tax under clause (b) of sub-section
(1) of Section 3D at the rates mentioned against it.
second Notification is dated 11th September, 1976. This notification was issued under sub-section (2A) of Section 3A of
the UP Sales Tax Act, 1948. It provided that with effect from 11th September,
1976 the turnover in respect of foodgrains (including cereals and pulses) other
than cereals and pulses as defined in Section 14 in the Central Sales Tax Act,
1956 shall be liable to tax at the reduced rate of 4% at the point of sale to
third notification is dated 30th of April, 1977 issued under Section 3D (1) of
the U.P. Sales Tax Act, 1948. It provided that with effect from 1st May, 1977,
the turnover of first purchases of inter alia foodgrains including cereals and
pulses other than cereals and pulses as defined in Section 14 of the Central
Sales Tax Act, 1956 would be liable to tax at 4%.
the respondent assessee had claimed that the malted barley sold by it was
covered by the word "cereal" in Section 14 of the Central Sales Tax
Act 1956. The High Court had rejected this claim by its judgment dated 16th
September, 1993 and held that malted barley was not a cereal within the meaning
of Section 14 of the 1956 Act.
respondentassessee then moved five rectification applications before the High
Court alleging that the alternative cases that had been argued by the respondent
had not been noted or dealt with by the High Court in the order dated 16th September, 1993. The alternative case of the
respondentassessee was that even if the malted barley was not a cereal within
the meaning of Section 14 of the Central Sales Tax Act, 1956 nevertheless it
continued to be a foodgrain or cereal for the purposes of the three
notifications. In the further alternative it was urged by the respondentassessee
that in any case it was the duty of the Taxing Authority to tax the assessee under
the proper entry if the contention of the assessee had been negatived by the
authorities. The five rectification applications were disposed of by judgment
and order dated 21st
September, 1994. The
High Court held that the determination of the alternative cases might require
evidence and therefore it was appropriate to send the case back to the Sales
Tax Tribunal. Accordingly, it was ordered that the Sales Tax Tribunal shall
decide the question whether the malt prepared from barley is foodgrain including
cereal within the meaning of the three notifications. It was however, made
clear that the Tribunal would take the finding of the Court that malt and
barley were two different commodities and that malt did not fall within the
definition of word 'cereal' for the purposes of Section 14 of the Central Sales
Tax Act, as final.
remand, the Tribunal re-examined the meaning of the definition "malt"
and "cereal" in several dictionaries and encyclopedias and came to
the conclusion that the word 'malt' was covered by the word "cereal"
in the three notifications.
High Court dismissed the revision application of the Department by
independently considering the definitions given in various dictionaries and
other authoritative works and came to the conclusion that malt is merely
another form of barley and was a foodgrain within the meaning of the three
the decision of the High Court learned counsel for the Department submitted
that the Tribunal and the High Court had erred in holding that the malt was
either a cereal or a foodgrain when the order of remand, which had not been
challenged by the respondentassessee, had already held that the malt was not a
submission is mis-conceived. By the order dated 21st September 1994, the High Court had merely held that the barley malt
was not a cereal for the purposes of Section 14 of the Central Sales Tax Act.
It was clearly envisaged by the order of remand that despite such finding,
barley malt could still be a cereal or a foodgrain for the purposes of the
for the appellant then referred to various other dictionaries to contend that
malt is neither cereal nor a foodgrain. The grain, according to the appellant,
is a seed which is yet to be germinated. We have considered the various
dictionary meanings referred to by the appellant. In none of them has the word
'grain' been limited to an un-germinated seed. On the contrary, malt has been
described as a foodgrain.
by which the rate of tax has been fixed in respect of foodgrains makes it clear
that the definition of foodgrains in the notifications is wider than that in
Section 14 of the Central Sales Tax Act, 1956. It must be remembered that the
notifications are not exception notifications but contain charging provisions.
As such the onus to prove that the malted barley does not fall within foodgrains
or cereals was on the Revenue. They have failed to discharge the onus.
the Tribunal and the High Court have concurrently found that malted barley is a
foodgrain or cereal for the purposes of the three notifications for reasons
that cannot be discarded as perverse. We therefore see no reason to interfere
with their conclusion.
we find that the question of law formulated in the Special Leave Petition was
wholly incorrect. The question of law as framed was whether the Tribunal was
justified in holding that barley malt falls under the category of cereals and
pulses contained in Section 14 of the Central Sales Tax Act. That was not the subject
matter of remand nor decided by the Tribunal nor affirmed by the High Court.
appeals are accordingly dismissed without any order as to costs.