Tax Officer, Sector IX, Kanpur Vs. Dealing Dairy Products & Anr
 INSC 302 (10 May
Reddy, B.P. (J) Jeevan Reddy, B.P. (J) Anand, A.S. (J)
1994 AIR 2383 1994 SCC Supl. (2) 639 JT 1994 (3) 648 1994 SCALE (2)856
Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.- Heard the counsel
for the parties.
review petition has to be allowed following the ratio of the decision of this
Court in CST v. Agra Belting Work I.
assessment year concerned herein is 1975-76. And the matter arises under the
U.P. Sales Tax Act. The question pertains to taxability of turnover relating to
State of U.P. has been issuing, from time to time, notifications under Section
4 of the Act, exempting milk and milk products from the levy of sales tax. It
has also been issuing from time to time notifications under Section 3-A
notifying the rates of tax on sale/purchase of different goods. In this case,
we are concerned with one notification under Section 4 namely the one dated
21-5-1974 and two notifications under Section 3-A dated 4-11-1974 and 30-5-
1975. The notification under Section 4 dated 21-5-1974 exempted milk and milk products from the levy of tax. Ice-
cream was understood to be a milk product and, therefore, exempt. However, by
notifications issued under Section 3-A (dated 4-11-1974 and 30-5-1975) a rate
of tax was prescribed expressly for ice-cream among other goods.
CST v. Agra Belting Works1 a Bench of this Court comprising R.S. Pathak, C.J., Ranganath
Misra and B.C. Ray, JJ. held, by a majority, that Sections 3, 3-A and 4 of the
U.P. Sales Tax Act are parts of the taxing scheme incorporated in the Act, and
therefore, where a notification is issued under Section 3-A prescribing a rate
of tax for goods, which may have been exempted from tax by an earlier
notification under Section 4, it must be held that the intention was to
withdraw the exemption and make the sale leviable to tax at the rate prescribed
in the notification.
held that it is not necessary in such a case that a specific or separate
notification withdrawing or revoking the exemption is issued. Following the
said decision it must be held that the exemption granted to ice-cream by
notification dated 21-5-1974 was undone by the notification dated 4-11-1974 as
well as by the notification dated 30-5- 1975.
the above reasons the review petition is allowed and the order of the High
Court dated 12-12-1986 (which was the subject-matter of SLP No. 14648 of 1988)
is set aside.
the same reasons, the order dated 9-1-1989 in the aforesaid SLP No. 14648 of
1988 is also set aside and the order of the assessing authority holding the
turnover relating to ice-cream as taxable is restored.
(1987) 3 SCC 140: 1987 SCC (Tax) 233 641 Consequently, the SLP (C) No. 14648 of
1988 shall be deemed to have been granted and the civil appeal registered on
that basis shall be deemed to have been allowed in the above terms.
6. Mr Raju
Ramachandran, learned counsel for the respondent-dealer submitted that setting
aside the order of the High Court at this distance of time would expose the
respondent-dealer to penalties and other penal consequences in addition to tax.
In our opinion the said apprehension is unfounded. No such proceeding for
levying penalty or for visiting other penal consequences has been initiated so
event, the facts of this case particularly the conflict of opinion in the High
Court on this point make it appear that it may not be a case calling for levy of
penalty or for visiting other penal consequences.
There shall be no order as to costs.