The Commissioner Commercial Tax ... vs S/S Amrit Vanaspati Co Ltd.
2019 Latest Caselaw 4176 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

?A.F.R.
 
Court No. - 5
 

 
Case :- SALES/TRADE TAX REVISION No. - 538 of 2014
 

 
Applicant :- The Commissioner Commercial Tax U.P.
 
Opposite Party :- S/S Amrit Vanaspati Co Ltd.
 
Counsel for Applicant :- S.C.
 
Counsel for Opposite Party :- Shubham Agarwal
 

 
Hon'ble Ashok Kumar,J.

Heard Sri Avinash Chandra Tripathi, learned counsel for the revisionist and Sri Bharat Ji Agrawal, Senior Advocate, assisted by Sri Shubham Agarwal and Miss Sayunkta Singh, counsel for the respondent/assessee.

This revision has been filed under Section 58 of U.P. Value Added Tax Act, 2008 by the Commissioner, Commercial Tax, U.P. against the judgment and order of the Trade Tax Tribunal dated 05.09.2009.

The dispute in the instant revision is confined to rate of tax on cream milk mixed and flavoured milk which are sold by the assessee/ respondent. The revision petition relates to assessment year 2000-01 under the Central Sales Tax Act.

Brief facts of the case are that the respondent/ dealer carries on business of manufacture and sale of Cream Milk Mixed and Flavoured Milk.

The assessing authority of the respondent-assessee has passed an assessment order on 19.06.2003 accepted the books of account and turnover and has held that the flavoured milk is taxable at the rate of 8%.

Thereafter the re-assessment proceedings under Section 21(2) of the Act were initiated on 12.07.2007 and based on the decision of this Court in the case of S/S Gujarat Cooperative Milk Marketing Federation Ltd. the assessing authority has imposed the tax on flavoured milk at the rate of 16% as unclassified item.

The assessing authority has also imposed the tax in re-assessment proceedings on cream milk mixed at the rate of 10%.

The dealer- assessee has challenged the order of re-assessment, passed under Section 21 of the Act, before the Joint Commissioner (Appeals). The Joint Commissioner (Appeals) vide order dated 22.09.2008 has allowed the appeal and has confirmed the original order passed by the assessing authority dated 19.06.2003 by which the assessing authority of the respondent-assessee has imposed the tax on cream milk mixed and flavoured milk at the rate of 8%.

Aggrieved by the order of the first appellate authority, the revenue has preferred the second appeal before the Tribunal which was dismissed by the order dated 05.09.2009. Hence the present revision.

Learned Standing Counsel has submitted that the order of the Tribunal is not acceptable and the re-assessment proceedings were rightly initiated against the respondent-dealer.

Learned counsel representing the respondent- dealer has submitted that the controversy involved in the instant revision petition is concluded by the judgment of this Court in Sales/Trade Tax Revision No.101 of 2017 (Commissioner, Commercial Tax U.P., Lucknow vs S/S Gujarat Cooperative Milk Marketing Federation Ltd.) decided on 10.04.2017 reported in 2017 UPTC 518.

Learned counsel for the respondent-dealer has also placed reliance on a decision of this Court in Sales/Trade Tax Revision No.75 of 2007 (The Commissioner, Trade tax, U.P. Lucknow vs. Amrit Vanaspati Co. Ltd, G.T. Road, Ghaziabad) decided on 30.05.2014.

In both the above decisions, this Court has held that the flavoured milk sold by the dealer is taxable at the rate of 8%.

While deciding the Sales/Trade Tax Revision No.101 of 2017 this Court has examined the decision of the Apex Court in Civil Appeal No. 1146 of 2006. The relevant extract of the said decision reads as under:-

"1. After arguing the matter for quite some time, Shri S. Ganesh, learned senior counsel appearing for the appellant, on instructions, seeks permission of this Court to withdraw the appeal, with liberty to file an appropriate Review Petition before the High Court.

2. Permission sought for is granted and the Civil Appeal is disposed of as withdrawn.

3. We grant one week time to the appellant to file appropriate Review Petition before the High Court. If such a Review Petition is filed, we request the High Court to decide the same on merits without reference to the period of limitation."

Thereafter a review application was preferred by the assessee which was allowed by High Court on 22.02.2016 and the order reads as under:-

"Order on the Review Application No.52415 of 2014

Heard Sri Bharat Ji Agrawal, learned Senior Counsel assisted by Sri Piyush Agrawal, learned Counsel for the assessee and Sri B.K. Pandey, learned Standing Counsel for the State.

This matter has come on remand from Hon'ble Apex Court by way of an order dated 30.01.2014. The order of Hon'ble Apex Court is quoted here-under:-

"1 After arguing the matter for quite some time, Shri S. Ganesh, learned Senior Counsel appearing for the appellant, on instructions, seeks permission of this Court to withdraw the appeal, which liberty to file an appropriate Review Petition before the High Court.

2. Permission sought for is granted and the Civil Appeal is disposed of as withdrawn.

3. We grant one week time to the appellant to file appropriate Review Petition before the High Court. If such a Review Petition is filed, we request the High Court to decide the same on merits without reference to the period of limitation.

Ordered accordingly."

The issue in this matter was with regard to the taxability of flavoured milk. At the time when the revision petition was filed the circular dated 27.11.2002 had not been placed before this Court by the department or even by the assessee. The circular reads as here-under:-

"Letter No.-Legal-1(1)-M-9(2002-2003) 169/Trade Tax

From,

Commissioner, Trade Tax,

Uttar Pradesh \

To,

The Additional Commissioner Grade-1, Trade Tax,

Ghaziabad Region, Ghaziabad.

Date:Lucknow: November 27, 2002

Dear Sir,

Please refer to your letter no. Vidhi-P32440/Dated 16.10.2002 which relates to the application clarifying position of tax liability in respect of flavoured milk by Sarvashri District Tax Bar Association, Ghaziabad. In the application submission has been made clarifying the position whether there is Trade Tax liability or not on the flavoured milk as also some decided judgements have been referred to. It also has mention of the case of Sarvashri Indodon Milk Products Vs. Commissioner, Trade Tax, which relates to the period when in the definition of milk in Section 4 terms subsequently separated from other forms of milks were not included. Case reported in 1999 STI 439 Commissioner, Trade Tax Vs. Sarvashri Neera Drinks is also referred wherein it has been held that "Badam Milk" under Section 4 is covered by tax exempted milk in as much as by such mixture/ mixing milk shall remain only milk. In the case of Commissioner, Trade Tax Vs. Nainital Milk Produce Cooperative Federation Ltd. -2001 NTN 471 the Hon'ble Allahabad High Court has laid down that in order to improve quality of the milk by mixing powder in it the nature of goods shall not change and milk shall remain only milk. It has also been mentioned in the application that in the cases covered by the aforesaid judgments the Trade Assessing Officers at other places are not imposing tax but in regard to flavoured milk, officers of Ghaziabad have their doubts.

You have mentioned in your aforesaid letter that in district Aligarh, Kanpur, Agra and Lucknow etc. the officers are allowing tax exemption on flavoured milk and have recommended that it will be appropriate to take a decision in the light of judgments rendered in the cases of Sarvashri Nainital Milk Produce Cooperative Federation and Sarvashri Neera Drinks.

In this regard it is relevant to mention that Shri J.P. Sharma, IAS, Secretary, Dairy Development Department, Government of Uttar Pradesh, Lucknow vide his letter dated 26.2.1999 has sent here some documents which also contains a circular issued by the Government of India, Ministry of Agriculture and Animal Husbandry in which milk has been defined as under:

"Milk means cow buffalo, sheep or goat milk or mixture of such milk either in original raw form or is processed as follows or by any other method - Pasteurized, Sterilized, Recombined, Flavoured., Acidified, Skimmed, Toned, Double Toned, Standardized or Full Cream Milk."

From above flavoured milk appears to be covered by the Entry of milk. It is relevant to mention that some persons like less or more quantity of sugar in milk and others like its special flavour. Thus only because of flavour milk shall not become a commodity different from milk.

Earlier some Tax Assessment Officers had passed orders imposing tax on toned and other kinds of improved milk, after the said orders were set aside by the Hon'ble Tribunal the matter was referred to the Secretary Committee on which vide Government letter no.K.N.-2-R-01/11-2002-15-(553) dated 17.01.2002 it has been informed that:

"In the impugned case it has been decided to comply with the judgment of the Hon'ble Tribunal dated 3.4.2001. Kindly ensure taking action accordingly."

Kindly inform the Tax Assessing Officers accordingly.

Yours faithfully, Sd/-illegible.

(Soti Ravendra Chandra)

Additional Commissioner (Law) Trade Tax,

Uttar Pradesh"

The department does not dispute the existence of this circular. It is well settled law that the circulars issued by the department are binding on it. According to the circular flavoured milk reaches best quality of being milk and does not cease to be milk and is to be taxed as such.

It is the contention of the learned Counsel for the assessee that the benefit of this circular has been given in other districts to various dealers.

The matter, therefore, requires reconsideration by the Tribunal. The Tribunal may re-decide the matter after hearing both parties and after taking into consideration the circular dated 27.11.2002 and whether it applies to the dealer too or not. The Tribunal may allow both sides to produce such materials as may be necessary to establish their individual cases.

With the above observations the review stands allowed."

The order passed by this Court in Review Application dated 22.02.2016 therefore has attained finality.

The Tribunal has considered the circulars issued by the Commissioner time to time.

From pleading and from the perusal of the documents enclosed along with the present revision, it is not in dispute that the dealer/assessee has sold flavoured milk and cream milk mixed. The department itself has issued a circular clearly holding that the flavoured milk is covered by the entry 'milk'.

In the instant case, the Tribunal has rightly dismissed the appeal filed by the Commissioner while affirming the order of the first appellate authority. The first appellate authority has quashed the proceedings under Section 21 of the Act. Assessee itself has admitted the tax on cream milk mixed and flavoured milk at the rate of 8%.

In view of above, the orders passed by the first appellate authority and Commercial Tax Tribunal are upheld. The revision filed by the Commissioner Trade Tax U.P. is dismissed.

Order Date :- 7.5.2019

A.Kr.*