Commercial Taxes
Officer Vs M/s. Jalani Enterprises
JUDGMENT
Dr. MUKUNDAKAM
SHARMA, J.
1.
Leave
granted.
2.
Since
the issues involved in these appeals are identical, we propose to dispose of all
these appeals by this common Judgment and Order.
3.
In
appeals arising out of SLP (C) Nos. 11358 of 2008 and 15883 of 2008 the issue
which falls for our consideration is as to whether Jaljira which is a product
manufactured by the respondent herein is only an appetizer and is not a masala
and therefore liable to sales tax at the rate of 10% and not 16%. In appeals
arising out of SLP (C) Nos. 27432 of 2008 and 27433 of 2008 a similar question arises
for consideration that as to whether Jaljira and similar other products are not
Masala and therefore they are liable to be assessed to sales tax at the rate of
10% and not 16%.
4.
In
order to decide the aforesaid issues some factual aspects are required to be mentioned.
The respondent firm is a manufacturer and seller of Jaljira and some other products
but in the present appeals we are concerned only with the product called
Jaljira. The respondent deposited sales tax at the rate of 10% assuming that Jaljira
is not a Masala and hence taxable at the general rate of 10% as residuary entry
199, which reads as under: "199. General rate, that is all goods that are
not covered by S. No. 1 - 198. 10%"
5.
The
counsel appearing for the appellant submitted that the respondent is liable to pay
sales tax at the rate of 16% on the product manufactured by it and the
assessing officer was justified in treating the respondent liable to pay sales
tax at the rate of 16%.
6.
On
examining the entire matter it appears that a Notification being notification dated
26.03.1999 was issued by the State Government, which was to the following
effect:
Sr.
No.
|
Detail
of Goods
|
Tax
Rate
|
119
|
All kinds
of eatables & non alcoholic potable liquids such as fruit syrups, distilled
juices, jams [chatni, murabbas], fruit juice, dry milk power, drink concentrates
of all types and forms, essence, concentrates, corn flaks and wheat flakes,
custard powder, baking powder, ice-cream powder and packed masala.
|
12%
|
Subsequently another notification
being notification dated 29.03.2001 was issued by the State Government to the following
effect:
Sr.
No.
|
Detail
of Goods
|
Tax
Rate
|
82
|
Dry Fruits,
Supari, Kirana items, Masala (different from packed masala) such as Mirch, Dhanai,
Saunf, Methi, Ajwain, Sua, Halsdi, Kathodi, Amchur, Elaichi, Jeera (cumin
seed)
|
4%
|
184
|
All kinds
of eatables & non alcoholic potable liquids such as fruit syrups, distilled
juices, jams [chatni, murabbas], fruit juice, dry milk power, drink concentrate
of all types and forms, essence, concentrates, corn flaks and wheat flakes,
custard powder, baking powder, ice-cream powder and packed masala.
|
16%
|
Subsequent thereto
also a notification was issued by the appellant herein on 22.03.2002 making the
same effective from the date of its issuance, wherein Entry 80 includes the
following:
Sr.
No.
|
Detail
of Goods
|
Tax
Rate
|
80
|
Dry Fruits,
Supari, Kirana items, Masala ([when sold in unmixed form, whether lose or in
polyethylene packs]) like Mirchi, Dhaniya, sonf, methi, ajwain, suwa, haldi, kathodi,
amchoor and asalia, jeera (cumin seed)
|
4%
|
Whereas Entry 186
includes the following:
Sr.
No.
|
Detail
of Goods
|
Tax
Rate
|
186
|
All kinds
of eatables & non-alcoholic potable liquids such as fruit syrups,
distilled juices, jams [chatni, murabbas], fruit juices, drink concentrates of
all types and forms, essences, concentrates, corn flaks and wheat flakes, custard
powder, baking powder, ice-cream powder and [multi-ingredient packed masala].
|
16%
|
A letter dated 12.11.2001
was issued by the Deputy Secretary, Finance Department, Tax Division,
Government of Rajasthan to the Commissioner, Commercial Taxes Deptt, Rajasthan,
Jaipur, which reads as follows: "
........I am to state
that "Packed Masala" used in entry number 184 means, a Masala where
two or 4 ore ingredients are mixed and sold in packed conditions. Spices sold singly
will continue to be taxed as per entry number 82......"
7.
In
the backdrop of the aforesaid facts, an assessment order was passed by the assessing
officer so far as respondent is concerned. In the said assessment order it is sated
that the respondent has shown its product Jaljira, which is manufactured by it,
as liable to sales tax at the general rate of 10%. The officer, however, referred
to the contents of the notification dated 29.03.2001 holding that jaljira is a
masala and the same falls in the category of packed masala and therefore liable
to be taxed at the rate of 16% as mentioned under Entry No. 184 of rate
notification.
8.
On
examining the entire matter the assessing officer held that Jaljira manufactured
by the assessee is spice, which is sold in different types of packing due to which
it would come within the category of packed masala for which tax rate is 16%.
9.
The
respondent itself has described Jaljira as spice on the packed containers of Jaljira
marketed by it. The officer also referred to the application dated 07.07.1984
filed by the proprietor of the Respondent firm for registration under Rajasthan
Sales Tax Act as well as under the Central Sales Tax Act. In both the
applications it is sated as follows: "Manufacturing of food products, mix MASALA,
AURVEDIC MEDICINES, all types of MEDICINES, MEDICATED - NON MEDICATED food for
sale."
10.
There
are other materials also which are referred to by the officer on record indicating
that the assessee itself described the product Jaljira as Masala. That is how
the product is described in the bill books of sale, even for the assessment
year 2001-2002.
11.
Placing
reliance on all those facts the assessing officer held that the product manufactured
by the assessee known and called as jaljira is a Masala falling under Entry
184. It is also undisputed fact in the present case that except for the
assessment year 2001-2002 with which we are concerned, the respondent assessee is
paying sales tax for subsequent assessment years for jaljira at the rate of 16%
in view of the notification dated 22.03.2002 wherein it categorically sated
that multi-ingredient packed masala would carry taxable rate of 16% in view of
entry No. 186. The assessing officer has specifically stated that jaljira is
multi-ingredient packed masala and therefore respondent is liable to pay sales tax
on the manufactured Jaljira at the rate of 16%. But the submission of the
Respondent is that for the assessment year in question, the said notification dated
22.03.2002 being not applicable and the earlier notification being applicable,
rate of sales tax at the rate of 10% for the same is only payable.
12.
Being
aggrieved by the aforesaid order passed by the assessing officer, the respondent
preferred an appeal before the Deputy Commissioner (Appeals) Commercial Taxes, Ajmer
6challenging the order passed by the Commercial Tax Officer, Special Circle-II,
Jodhpur. The Deputy Commissioner (Appeals) by his order dated 01.08.2005 held that
Jaljira is not a Masala and therefore tax levied at general rate of 10% was
justified and he set aside the demand raised by the Assessing Authority.
13.
Appellant
filed two appeals before the Rajasthan Tax Board, Ajmer challenging the aforesaid
order of Deputy Commissioner (Appeals), Ajmer. The Rajasthan Tax Board, Ajmer
by its common order dated 11.12.2002 set aside the order dated 01.08.2005
passed by the Deputy Commissioner (Appeals) and restored the orders passed by
the Assessing Authority.
14.
Being
aggrieved by the said order the respondent herein filed a Revision Petition
before the Rajasthan High Court which came to be allowed by the High Court under
the impugned judgment and order. Feeling aggrieved the appellant filed the
present appeals on which we heard learned counsel appearing for the parties and
also perused the records.
15.
In
the impugned judgment and order passed by the High Court it was held that
Jaljira cannot be termed as a Masala in itself, but it is a mixture of masalas and
other materials, which can be used for digestion. The High Court therefore held
that Jaljira is nothing but edible preparation ready for use either directly or
after dissolving in water for human consumption and as it is not used as
additional constituent in any food substance, therefore, it cannot be termed as
packed masala. The aforesaid findings were arrived at by the High Court after
referring to the contents of Jaljira shown to be as follows:Sr. No. Name of
Item Percentage1. Salt 40%2. Kala Namak 13%. Nimbu Ka Sat (Citric Acid) 84%. Sonth
10%5. Kalimirch 10%6. Pudina 10%7. Hing 1%8. Jira 18%. Lalmirch 2%According to the
High Court Jaljira would therefore fall in the residuary clause and therefore tax
should be levied at the rate of 10% and not 16%.
16.
The
aforesaid findings of the High Court are challenged before us by the appellant.
The counsel appearing for the appellant had taken us through all the documents
on record. He submitted that respondent has itself shown the product
manufactured by it Jaljira as Packed Masala and therefore the assessing officer
was justified in treating the respondent liable to pay sales tax at the rate of
16%.
17.
Each
one of the contents of the product referred to above and relied upon by the
High Court would indicate that most of the items used in the manufacture of
Jaljira are nothing else but spices. They are grinded and mixed. When spices are
grinded and mixed, it gives rise to a new product, which is a mixed masala. Different
ingredients are used in preparation of Masala after grinding and mixing several
ingredients and when they are so grinded they lose their own identity and character
and a new product separately known to the commercial world comes into
existence. Sales tax is levied on sale of commercial commodities, therefore, individual
spices could be termed as different commercial commodities. When they are
grinded and mixed they give rise to a separate commercial commodity altogether
which could be taxed separately. It is settled law that when one particular
item is covered by one specified entry, then the Revenue is not permitted to
travel to the residuary entry. If from the records it is established that the product
in question could be brought under a specific entry then there is no reason to
take resort to the residuary entry. There is no doubt that Jaljira is a drink. The
contents of Jaljira is put into water and taken as digestive drink but when we look
into the manner and method of preparation of the product Jaljira, we find that it
is a mixture of different spices after grinding and mixing. Therefore, it is
nothing but a Masala packed into packets of different nature/quantity and sold to
the consumers. It would, therefore, for all practical purposes would come within
the Entry No. 184 and it cannot be said that it would come under the residuary entry
as held by the High Court.
18.
The
clarificatory letter dated 12.11.2001 which was issued by the Deputy Secretary,
Finance Department, Tax Division, Government of Rajasthan is also placed on
record which specifically states that "Packed Masala" used in entry number
184 means, a Masala where two or more ingredients are mixed and sold in packed
conditions. The said letter is in the nature of clarification of entry number
184 with which we are concerned. Although the said letter is an inter departmental
communication, the revenue authorities, namely, the appellant is governed and
bound by the aforesaid letter although the said letter may not have been circulated
to the respondent but it cannot be said that clarification given by the
Department cannot be made use of for interpreting the entry in the
notification.
19.
Even
otherwise, in our considered opinion the entries in the notification by
themselves are quite clear to include the product in question within the ambit
and parameters of the expression packed masala and therefore the assessing officer
was justified in demanding sales tax from the respondent at the rate of 16%
holding that the product manufactured by the respondent falls within the
category of items included in Entry No. 184.
20.
Therefore,
appeals arising out of SLP (C) Nos. 11358 of 2008, 15883 of 2008, 27432 of 2008
and 27433 of 2008 are allowed and 10the judgment and order passed by the High
Court is set aside. The order dated 15.03.2004 passed by the Tax Assessment Officer
is restored.
21.
Having
held thus, we may now examine the facts of the appeal arising out of SLP (C)
Nos. 4304 of 2009. In this appeal, we are concerned with the two financial years,
namely, financial years of 1999-2000 and 2001-2002. The aforesaid discussion and
the findings and the conclusions arrived at would also be applicable so far the
products of the respondent herein are concerned but except for product like
Idli Mix and Dosa Mix.
22.
Other
products of the assessee such as Aachar Masala, Jaljeera powder, Anar Masala, Methi
Chatani, Pudina, Lehsoon Chatni, Chat Masala, Kitchen Masala, Mangodi Masala, Sambhar
Masala, Dal Masala, Kasuri Methi, Heena Powder, Shikkai Powder, Lahsoon powder,
must be held to be Masala packed falling under Entry No. 184 of the
notification dated 29.03.2001.
23.
So
far as Masala and other products are concerned the same principle would apply but
at the same time Idli Mix and Dosa Mix cannot be said to be Masala and therefore
the same would be excluded from being assessed for the purpose of sales tax
assessment as `masala'.
24.
In
view of the above, appeal arising out of SLP (C) No. 4304 of 2009 is also
allowed and the judgment and order passed by the 11High Court is set aside. The
order passed by the Tax Assessment Officer is restored.
............................................J
[Dr. Mukundakam Sharma ]
............................................J
[ Anil R. Dave ]
New
Delhi,
March
17, 2011.
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