Bombay High Court
M/S Vadilal Daiy International ... vs The State Of Maharashtra on 1 September, 2015
Bench: S.C. Dharmadhikari
Nalawade A.S. 1/26 STR-56-08
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SALES TAX REFERENCE NO.56 OF 2008
IN
REFERENCE APPLICATION NO.78 OF 2001
M/S. Vadilal Dairy International Ltd. ....Applicant.
Versus
The State of Maharashtra. ....Respondent.
Mr. P. C. Joshi for the Applicant.
Mr. V. A. Sonpal, Special Counsel for Respondent State.
CORAM : S.C. DHARMADHIKARI AND
G.S.KULKARNI, JJ.
Reserved on : 4th August, 2015
Pronounced on : 1st September, 2015.
JUDGMENT : (PER G.S. KULKARNI, J.)
The Tribunal, by its order dated 30th September, 2005, has
referred the following question of law for answer and opinion of this
court.
Nalawade A.S. 2/26 STR-56-08
"Whether on true and correct interpretation of
Schedule entry C-II-35(1) appended to the Bombay
Sales Tax Act, 1959, a Notification entry 374 issued
u/s. 41 of the said Act, Tribunal was correct in holding
that the product 'Ice cream' manufactured by the
applicant was not covered by the term "Sweet and
Sweetmeats" appearing in both the aforesaid entries
and thereby impugned item 'Ice cream' was not
eligible for the tax concession?"
2. The factual backdrop on which the above question has
been referred needs to be noted. The applicant assessee is a registered
dealer under the Bombay Sales Tax Act,1959 (For short "the Act") and
manufacturer of 'Ice cream' which is covered of Schedule Entry "C-II-
35(1)". The Government of Maharashtra had issued a Notification under
Section-41 of the Act with effect from 1 st April, 1994 and introduced
Entry 374 under which the effective rate of tax was reduced to 4% in
respect of "Sweet and Sweetmeats" covered by Schedule Entry "C-II-
35(1)".
Nalawade A.S. 3/26 STR-56-08
3. In view of the notification providing for a reduced rate of
tax, on 31st December, 1994, the applicant filed an application under
Section 52 of the Act before the Commissioner praying that the effective
tax rate in respect of sales on Ice cream made by the applicant under
Invoice 292 dated 1st May, 1994 be determined. This application came
to be decided by the Commissioner by an order dated 29th March, 1995,
wherein it was held that ice-cream in common parlance was not
considered as "Sweet and Sweetmeats" and therefore, was not covered
by the said term appearing in Scheduled Entry "C-II-35(1)". It was thus,
held that 'Ice cream' being distinct and separate from the term "Sweet
and Sweetmeats" was exigible to tax at the rate of 8%.
4. The applicant being aggrieved by the determination order
dated 29th March, 1995 passed by the Commissioner preferred an
appeal before the Tribunal. The Tribunal by its decision dated 23rd
March, 2001 upheld the decision of the Commissioner and confirmed
that the sale of 'Ice cream' as made by the applicant was not exigible to a
tax concession under Notification Entry No.374 and that the sales of the
applicant were liable to tax at the rate of 8% under Schedule Entry "C-II-
35(1)". The Tribunal however, directed that the decision of the Tribunal
Nalawade A.S. 4/26 STR-56-08
would be prospectively effective and shall not adversely affect the past
liability of the applicant provided the applicant had not collected tax in
excess of 4% in respect of which sales of 'Ice cream' effected during the
period 01st April 1994 till the date of communication of the decision of
the Tribunal.
5. The applicant being aggrieved by the orders dated 23 rd
March, 2001 passed by the Tribunal filed Reference Application No.78
of 2001 under Section 61 of the Act before the Tribunal. The Tribunal
by an order dated 30th September 2005 passed on the reference
application has referred the above question for opinion of this Court.
6. Before we deal with the contentions raised on behalf of the
parties, it would be appropriate that we extract the taxing entries which
call for interpretation in this reference. The basic entry in Schedule-C
which is brought into effect from 25th May, 1981 pertaining to the levy
of tax which included tax on 'Ice-cream' reads as under:-
Nalawade A.S. 5/26 STR-56-08
Sr. Description of goods Rate of Rate of
No. sales tax purchase
tax
35 (1) Sweets and sweetmeats, including Eight paise Eight paise
Shrikhand, Basundi and Doodhpak; in the in the
Cakes, pastries, biscuits and other rupee. rupee.
confectioneries, ice cream and kulfi and
non-alcoholic drinks containing ice-
cream or kulfi.
(2) Sweet drops, toffees and chocolates
ig Do Do
7. By a Government Notification dated 8th April, 1994 Entry
No.374 was issued under Section 41 of the Act whereby a concessional
rate of tax came to be introduced in respect of 'sweet and sweetmeats'
as covered under Schedule Entry "C-II-35(1)". It is this notification
entry of which the applicant has sought a benefit in respect of sale of
'Ice-cream' as the tax was 4% in place of 8% as prescribed under
regular entry No. "C-II-35(1)". Notification Entry 374 reads as under:-
Nalawade A.S. 6/26 STR-56-08
374 Sales or Purchases of Sweets To the extent to Nil. Government
and sweetmeats covered by which the amount Notification
sub entry (1) of entry 35 in of sales tax or as F.D.No.STA-
Part II of Schedule-C the case may be 1094/12/Taxation-
purchase tax 2 dated 8.4.94.
exceeds four paise
in the rupee
8. On behalf of the applicant, it is contended that the
legislative background pertaining to Entry "C-II-35(1)" would be of
relevance in order to appreciate the contentions as raised on behalf of
the applicant. The contention is that from the year 1960 till 30 th June,
1981 'Ice cream' was admittedly treated as "Sweet and Sweetmeats"
under the Act. On 1st July 1981 when the amendment was brought about
to Entry No. "C-II-35(1)" 'Ice-cream' was not placed as a separate entry
in the Schedule but was clubbed in the same schedule entry and thus
was generally considered to be "Sweet and Sweetmeats". The contention
is that a clear impression was created that 'Ice cream' would continue to
fall in Schedule Entry No. "C-II-35(1)" even after 1st July, 1981. Thus
after the notification entry 374 was brought into effect from 8 th April,
1994 the applicant believed that concessional rate of tax under the
notification entry would also apply to ice-cream as ice-cream was always
part of the entry pertaining to "sweet and sweet meat". It was for this
Nalawade A.S. 7/26 STR-56-08
reason the applicant acted upon the concessional notification and
assessed itself for a levy of tax at 4% instead of 8% on the sales as
made by the applicant.
9. Mr. Joshi learned counsel for the applicant in support of the
contention that notification entry no. 374 is applicable to ice-cream has
made the following submissions:
(i) Ice-cream was held and assessed as sweet and sweet meat for
past several years and in his contention since 1960 therefore 'Ice-
cream' was specifically shown in the inclusive part of "sweet and
sweetmeat" in schedule entry C-II-35 (1);
(ii) Taking into consideration the historical background,
notification entry 374 which provides for concessional rate of tax
for sweets and sweet meat is required to be made applicable also
to ice-cream though the word 'ice-cream' has not been specifically
included in notification entry No.374. In other words, historically
ice-cream has become and was treated as an inseparable part of
the basic schedule entry C-II-35(1).
(iii) Schedule entry C-II-35(1) cannot be read into different
parts so as to conclude that ice-cream is distinct from "sweet and
sweetmeat". For the purpose of notification entry 374, schedule
Nalawade A.S. 8/26 STR-56-08
entry C-II-35 (1) is required to be read as a whole as if the same
stands incorporated in the notification entry 374. The semicolon
appearing after the words "sweets and sweetmeat including
shrikand, basundi, and doodhpak", in schedule entry C-II-35 (1)
inserted in the amendment Act of 1981 cannot be relied upon
de'hors the interpretation as made by the revenue to include ice-
cream as sweet and sweetmeat. The use of semicolon as above
would not separate ice-cream from "sweet and sweetmeat" so as to
say that 'Ice-cream' is separated and forms a separate entry.
(iv)
As understood in common parlance, 'Ice-cream' is
consumed as a sweet and that therefore, it is required to be treated
as part of "sweet and sweetmeats".
(v) A plain reading of the schedule entry C-II-35(1) leads
only to one conclusion that it is inclusive entry and covers various
items which would form part of "sweet and sweet-meats" which
includes 'Ice-cream'. Other items being shrikand, basundi and
doodhpak, cakes, pasteries, biscuits, kulfi and non-alcoholic
drinks containing Ice-creams or kulfi. All these items are sweet
and therefore, ''Ice-cream' is required to be treated as a sweet.
(vi) When two meanings are possible then a meaning which is
favourable to the assessee is required to be applied and thus
notification entry No.374 which prescribes a concessional rate of
tax is applicable to 'Ice-cream'.
Nalawade A.S. 9/26 STR-56-08
(vii) The legislature had consciously clubbed sweet items in one
schedule entry namely in schedule entry C-II-35(1) and therefore,
necessarily benefit of the notification entry 374 was required to be
held applicable also to the item 'Ice-cream'.
10. In support of his submissions, Mr. Joshi has relied on the
following decisions. Commissioner of Sales Tax vs Kwality Frozen
Foods (2009) 19 VST 355 (Bom), Commissioner of Sales Tax vs Pure
Ice cream Company (1975) 36 STC 18 (Bom), Commissioner of
Sales Tax vs Mangharam & Company (1976) 37 STC 599 (Bom),
Commissioner of Sales Tax vs Radha Dyeing & Printers Mills
(1981) 48 STC 61 (Bom), Pappu Sweets and Biscuits vs
Commissioner of Trade Tax (1998) 111 STC 425 (SC), Godfery
Philips India Ltd & anr vs. State of U.P. & ors. (2005) 139 STC 537
(SC).
11. On the other hand, Mr. Sonpal, learned Special counsel
appearing for the respondents submits that notification entry 374 is
required to be interpreted strictly as it pertains to a concession in the
levy of sales tax. Rules of Strict interpretation as would be applicable to
an exemption notification are applicable. Mr. Sonpal submits that on a
plain reading of notification entry 374 the concessional rate of tax is
applicable only to "sweet and sweetmeats" which forms the first part of
Nalawade A.S. 10/26 STR-56-08
schedule entry C-II-35 (1) and 'Ice-cream' would definitely not fall
within the meaning of "sweet and sweetmeats". Mr. Sonpal submits that
schedule entry C-II-35 (1) is required to be read in three parts. The first
part pertains to "sweet and sweetmeats" including shrikand, basundi and
doodhpak. The second part is cakes, pastries biscuits and other
confectioneries and third part is 'Ice-cream' and kulfi and non-alcoholic
drinks containing 'Ice-cream' or kulfi. He submits that notification entry
374 pertains only to first part namely "sweet and sweetmeats" which
would include shrikand, basundi and doodhpak and thus the contention
as raised on behalf of the applicant that ice-cream would be included in
sweet and sweetmeat is misconceived. Mr. Sonpal submits that as a
illustration, "sweet and sweet meats" can never include biscuits. He
further submits that non-alcoholic drinks can never be "sweet and
sweetmeats" and therefore, necessarily biscuits and non-alcoholic drinks
which fall in the same entry namely entry C-II-35 (I), cannot be read to
be "sweet and sweetmeats" for the purpose of concessional rate of tax as
available under notification entry 374. Mr. Sonpal submits that the use
of semicolon and the use of word 'and' as contained in entry C-II-35 (1)
clearly reveals the legislative intent to treat "sweet and sweetmeats"
different from cakes, pastries and biscuits as also confectioneries, ice-
Nalawade A.S. 11/26 STR-56-08
cream and kulfi and non-alcoholic drinks containing ice-creams or kulfi.
Mr. Sonpal submits that it is in fact for these reasons in entry C-II-35
sweet drops, toffees, and chocolates has been separated by providing
sub clause (2) . Mr. Sonpal submits that the contention on behalf of the
applicant is too far stretched and in fact would do violence to the plain
language and the legislative intent as contained in notification entry 374,
which is only to make available concessional rate of tax to "sweet and
sweetmeats" which would include items like shrikand, basundi and
doodhpak. It is submitted that the intention of legislature is basically
to grant benefit to items like shrikand, basundi and doodhpak which are
items of common and mass consumption than other items like cakes,
pastries and ice-creams and non-alcoholic drinks. In support of his
submissions, Mr. Sonpal has placed reliance on the decision in
Commissioner of Central Excise, New Delhi vs Connaught Plaza
Restaurant Private Limited, New Delhi (2012) 13 Supreme Court
Cases 639.
12. Having considered the rival submissions as made on behalf
of the parties, we now proceed to examine the question of law as to what
is the correct interpretation of schedule entry C-II-35 (1) and notification
Nalawade A.S. 12/26 STR-56-08
entry 374 issued under section 41 of the Act and as to whether the
Tribunal has correctly held that the product "Ice-cream" as
manufactured by the applicant was not covered by terms 'sweet and
sweetmeats', as used in schedule entry C-II-35 (1) and as also
notification entry 374 and thus not eligible for tax concession.
13. A plain reading of schedule entry C-II-35 (1) (supra) would
clearly indicate that it takes within its ambit several items. A perusal of
each of these items indicates these items are capable of being categorized
differently. It is also pertinent that these items are separated by use of a
'semicolon' as also use of the word "and" which would differentiate the
category of items from each other. For the sake of appreciation, we
extract hereinbelow items contained in schedule entry C-II-35 (1) as
they stand without any variations grammatically or otherwise however
in a separated form.
"35(1) Sweets and sweetmeats, including Shrikhand,
Basundi and Doodhpak;
Cakes, pastries, biscuits and other confectioneries,
ice cream and kulfi and non-alcoholic drinks
containing ice-cream or kulfi.
(2) Sweet drops, toffees and chocolates. "
Nalawade A.S. 13/26 STR-56-08
14. From a perusal of the above entry what is apparent is that
the first part of the entry namely "sweets and sweet meats" includes
shrikand, basundi and doodhpak to form one category. It is pertinent to
note that when the entry says sweet and sweet meats items like shrikand,
basundi and doodhpak are expressly included and thus the meaning of
the words "sweet and sweet meats" is required to be gathered and
understood in that context. In other words, "sweet and sweet-meats"
would include items which belong to are akin to the category of
shrikand, basundi and doodhpak. The use of semicolon after the words
"doodhpak" is significant. It separates first category from the other
category which includes items like cakes, pastries, biscuits and other
confectioneries. These items form the second category. A plain reading
of the items in the second category makes it quite clear that all these are
items connected and commonly sold in bakery establishments. The third
category contains the item in dispute namely ice cream along with kulfi
and non-alcoholic drinks containing ice-creams or kulfi. The third
category therefore, is quite distinct and different from the first two
categories of this entry. A careful examination of these three categories
indicates that the items contained therein are distinct from each other.
Nalawade A.S. 14/26 STR-56-08
We would interpret the entry by giving to its contents a plain and natural
meaning and as to how the items would be commonly understood.
When the entry uses the word "sweet and sweet meats" to include
shrikand, basundi and doodhpak, we would have no hesitation to come to
a conclusion that the words "sweet and sweet meat" would include only
such other items which would be of a category akin to the items
contained in the entry namely shrikand, basundi and doodhpak. We may
also observe that a distinct feature of the first category of the entry is that
these are of categories of Indian sweets which are commonly available
and items of large scale consumption in Indian households. The intention
of the legislature is therefore to include in the words "sweet and
sweetmeats", those items which would belong to a similar category or
go hand in hand with items like shrikhand, basundi or doodhpak. A
hypothetical example to be considered as to what could be included in
first category of "sweet and sweetmeat" which can be clubbed with
items like shrikand, basundi and doodhpak, would be items like pedha
or barfi. We have enumerated these items purely as an illustration and
taking note of the fact that notification entry 374 has outlived its
existence and is no more relevant after 30 th September, 2005 inasmuch as
period of dispute in this reference from is from 1st April, 1994 to 30 th
Nalawade A.S. 15/26 STR-56-08
September, 2005 during which period the concessional rate of tax vide
notification entry 374 was kept operational.
15. The items in second category namely cakes, pastries,
biscuits and other confectioneries are definitely different form items in
the first category and cannot be considered to be sweet and sweet meats.
Similarly, the third category which include ice-creams and kulfi and non-
alcoholic drinks containing ice-cream or kulfi cannot be understood to be
items in the first category which is sweet and sweet meat and include
shrikand, basundi and doodhpak. Items in second category and third
category by no interpretation can be stretched so as to be included in the
first category to mean that they are sweet and sweetmeat. In our opinion
the applicants are thus not correct in contending that the words "sweet
and sweetmeats" would include ice-cream. The submission militates
against a plain reading of entry C-II-35 (1). Moreover, inclusion of
clause (2) under entry C-II-35(1), namely toffees, chocolates would
fortify and adds credence to our observation that the legislature has
found it appropriate to include certain more items however, in a separate
entry.
Nalawade A.S. 16/26 STR-56-08
16. In the light of the above discussion, we now consider
notification entry 374. This entry encompasses a concessional rate of
tax. The entry recites "374 Sales or purchase of sweet and sweet meats
covered by sub-entry 1 of entry 35 in part II of schedule C." The words
"sweet and sweetmeats" in schedule entry C-II 35 (1) as used in
notification entry 374, as observed by us, cannot be extended to ice-
cream which falls in third category of entry C-II 35 (1) nor can it be
included in the second category namely cakes, pasteries, biscuits etc. and
thus the applicant would not be correct in contenting that the benefit of
notification entry 374 would be available to the applicant in sale of 'ice-
cream' undertaken by it.
17. Mr. Joshi, learned counsel for the petitioner in support of his
submissions has placed reliance on the decision of the Division Bench of
this Court in the case of Commissioner of Sales Tax vs. Kwality
Frozen Foods Ltd. (supra). The issue in this case had arisen from the
very same decision of the Tribunal as in the present case whereby in
regard to the applicant as also the companion litigants the Tribunal had
directed prospective effect to be given to the orders passed by the
Commissioner who had declined the benefit of the concessional rate of
Nalawade A.S. 17/26 STR-56-08
tax under notification entry 374 on sale of ice-cream. The Revenue had
challenged this direction in an appeal before this Court. The Division
Bench upheld the decision of the Tribunal accepting the contention on
the part of the assessee that historically 'Ice-cream' was treated to be a
part of entry C-II(35)(1) and therefore, bonafide the assessee had
presumed that notification entry 374 will be applicable and thus, had
taken benefit of Notification Entry 374 by collecting tax at the
concessional rate. In our opinion, this judgment would not support the
case of the applicant, inasmuch as the issue in the present reference
which falls for our consideration is as to whether the words "sweet and
sweetmeats" as contained in the notification entry 374 would include
'Ice-cream'. This judgment does not determine this question, except for
recognizing that historically 'Ice- cream' came to be treated as part of
schedule entry C-II-35(1). This position is not disputed by the Revenue.
18. The next decision as relied on behalf of the applicant is in
the case of Commissioner of Sales Tax vs. Pure Ice-cream Company
(supra) . The issue in this decision was regarding sale of 'Ice cream' by
the assessee at certain places which are described as "depots". The
dispute was pertaining to the assessment years 1st January, 1960 to
Nalawade A.S. 18/26 STR-56-08
31st March, 1960 and 1 st April, 1960 to 31st March, 1961. For this
period the assessee claimed an exemption for entire production under
entry 14 of schedule A under the Act in respect of the sales of 'Ice-
cream' made by them in their depots at a price not exceeding one rupee
per person. The Sales Tax Officer had disallowed the claim of the
assessee and held that 'Ice-cream' manufactured and sold by the assessee
was not 'cooked food' but was a sweet and therefore, taxable under
entry 31 of schedule C of the Act. The assessee had filed appeals
before the Assistant Commissioner against the assessment orders. The
appeals were dismissed. The respondent therefore, approached the
Tribunal in a second appeal. The Tribunal allowed the appeals and held
that 'Ice-cream' even though a sweet was "cooked food" and the "depots"
where it was sold for consumption were eating houses and therefore,
assessee was entitled for exemption. Reference was thereafter made to
this Court on the question :- "Whether, on a true and proper
interpretation of entry No.14 of Schedule A to the Bombay Sales Tax Act,
1959, the Tribunal was justified in holding that the sales of ice-cream
effected by the respondents at their depots were covered by the said
entry No.14 of Schedule A and as such exempt from tax?" Entry No. 14
under which exemption was sought read as follows :- "Cooked food
Nalawade A.S. 19/26 STR-56-08
and non alcoholic drink is served at one time at a price of not more than
one rupee per person, for consumption at or outside any eating house,
restaurant, hotel, refreshment room or boarding establishment which is
not a shop or establishment conducted primarily for the sale of
sweetmeats, confectionery, cakes, biscuits or pastries.". On this
background, the Division Bench held that entry 14 exempted cooked
food subject to conditions contained therein and held that it would be
wholly wrong to cut down the ambit of the exemption granted by the
said entry to what can be eaten only at fixed hours of the day or in the
course of a regular breakfast, lunch or dinner. What was observed was
that the entry does not mention of a "Meal". It uses the word "food" to
distinguish it from 'drink' namely what one can eat. It was thus, observed
that 'Ice-cream' sold by the assessee could be consumed by the
customers of the assessee in the assessee's depots. The question as
referred was thus answered in the affirmative. We do not see how the
judgment would assist the applicant in the present context. The entry
which fell for consideration of this Court in the said decision is in no
manner comparable to the entry in the present case. There the Court
was concerned on the issue whether 'Ice-cream' is a food and whether it
is cooked food for the purposes of interpreting the entry no.14. We are
Nalawade A.S. 20/26 STR-56-08
therefore, of the clear opinion that this decision in any manner would
not assist the applicant.
19. Mr. Joshi then relied on the decision of the Division Bench
of this Court in the case of Commissioner of Sales Tax vs. Mangharam
and Company (supra). The issue which fell for consideration of the
Division Bench was similar to one which was fell for consideration in
the case of Pure Ice-cream Company as to whether 'Ice-cream' is a
cooked food in entry no.14 of schedule A and as such, exempted from
tax. The claim of the assessee was that the 'Ice-cream' sold by it at its
place of business at Apollo Bunder was exempted from tax as per entry
14 of schedule A of the Act. This is the same entry which was subject
matter of the decision of the Division Bench in Pure Ice-cream
Company (supra). The Assessing Officer had accepted this claim for
exemption however, the Assistant Commissioner issued a notice to the
assessee as to why the assessment orders for the period in question
should not be revised thereby deleting the exemption in respect of sale of
Ice cream. By an order passed by the Assistant Commissioner it was held
that sale of 'Ice-cream' effected by the assessee was taxable under entry
31 of schedule C of the Act. The assessee's appeal against the orders of
Nalawade A.S. 21/26 STR-56-08
the Assistant Commissioner failed. The assessee thereafter, approached
the Tribunal in appeal, the Tribunal allowed the same holding that 'Ice
cream' sold by the assessee was exempted from tax under entry 14 of
schedule A of the Act. Entry No.14 pertained to cooked food and non
alcoholic drinks etc. as we have noted above while discussing the
decision of the Division Bench of this Court in Pure Ice-cream
Company. The revenue contended that assessee was not entitled to
obtain exemption under entry 14 because the place of business was
conducted primarily for the sale of "Sweet and sweetmeats" and that
'Ice-cream' sold by the assessee was "Sweetmeats". This contention of
the Revenue was repelled by the Division Bench by observing that entry
31 of schedule C makes a distinction between "Sweet and Sweetmeats".
It was observed that the term "Sweet" is a wider generic term, which
comprehends within it the species of sweets known as sweetmeats, but
from this it does not follow that every sweet is a sweetmeat. It was
observed that words "sweet food" are merely descriptive of a "sweet
and a sweetmeat"', and do not define or bring out the essential
distinction between the two. It was observed that the shorter Oxford
English Dictionary defines "Sweetmeat" as preserved or candied fruits,
sugared nuts, etc.; also, globules, lozenges, "drops", or "sticks" made of
Nalawade A.S. 22/26 STR-56-08
sugar with fruit or other flavoring or filling". It was observed that sweet
which is not a sweetmeat and a sweetmeat both normally taste sweet,
but all that tastes sweet is not and cannot be sweetmeat, and both on
dictionary meaning and according to the commonly understood notions
of what an ice-cream is and what sweetmeats are. The Division Bench
did not accept the submission on behalf of the Revenue that 'Ice cream' is
a sweetmeat. We fail to appreciate as to how this Judgment would
support the case of the applicant. In fact, it completely supports the
Revenue inasmuch as the Division Bench has categorically held that
term sweet and sweetmeat would not include ice-cream.
20. Mr. Joshi then placed reliance on the decision of the
Supreme Court in the case of Pappu Sweets and Biscutis vs.
Commissioner of Trade Tax, U.P. Lucknow (supra). In our opinion,
this decision is also no avail to the applicant. The issue which fell for
consideration of the Supreme Court was as to whether the assessee was
entitled for exemption from payment of sales tax under the exemption
notification in respect of toffees. The issue was whether toffee is a
sweetmeat or commodity of a like nature and whether the assessee's
industrial unit making toffees would not be entitled for exemption. The
Nalawade A.S. 23/26 STR-56-08
Supreme Court while applying the test of strict interpretation to the
exemption notification observed as under :-
"7. It is true that dictionary meaning of the word
"sweetmeats"is a very wide and any food which is
sweet and rich in sugar can be described as
"sweetmeat". Toffee is a confection of sugar and other
materials and being rich in sugar would be
":sweetmeat" in its wider sense. But for deciding
whether toffee is "sweetmeat" as contemplated by the
exemption notification, what is required to be
considered is the object of the notification and the
context in which that word is used in the notification.
11. The High Court has also not correctly applied
the popular parlance test. As can be seen from the
observations made by it that 'there is no doubt that a
toffee is a sweetmeat, as understood by the people
where toffee originated" and that "toffee and other
things of that nature are of foreign origin and are
sweets or sweetmeat according to those people and
their nature cannot be changed simply because their
origin is different from what is usually conveyed by the
word 'mithai' in this part of the country", the High
Court preferred to decide the issue by relying upon
how toffee is understood by the people of the country
where originated rather than by considering how
"toffee" is understood in India and more particularly
in the State of U.P. As held by this Court in Collector
of Central Excise v. Parle Exports (P) Ltd. [1989] 75
STC 105 ; (1989) 1 SCC 345 "the words used in the
provision, imposing taxes or granting exemption
should be understood in the same way for which they
are understood in ordinary parlance in the area in
which the law is in force or by the people who
ordinarily deal with them". In that case, the question
that had arisen for consideration was whether non-
Nalawade A.S. 24/26 STR-56-08
alcoholic beverage bases are food products or food
preparations in terms of the Central Excise
Notification No.55/75 dated March 1, 1975. This Court
observed that non alcoholic beverages are not
understood in India as food products or food
preparations, though they might have been regarded as
such in foreign countries. The High Court, therefore,
should have applied the rest of popular parlance by
finding out how toffee is understood in the country and
more particularly in the State of U.P. No evidence was
led by the State to substantiate its case that "toffee" is
considered as sweetmeat either by the dealers in
toffees or by the consumers. On the other hand,
evidence was led by the appellant in C.A.N.1692 of
1997 indicating that toffee is not considered as
sweetmeat, that they are not sold in shops selling
sweetmeats but are sold in shops selling
confectioneries or other types of goods, and that the
consumers do not buy toffees as sweetmeat or treat
them as such. It was, however, contended by the
learned counsel for the State that sometime before this
exemption notification was issued by the State, the
Allahabad High Court had in two cases held that toffee
is a sweetmeat. But it was so held in a different context
and no evidence was led by the State to show that
thereafter, the dealers in toffees and consumers started
treating them as sweetmeat. In the Hindi version of the
notification for the word sweetmeat the word "mithai"
is used. The word "mithai" has a definite connotation
and it can be said with reasonable amount of certainty
that people in this country do not consider toffee as
"mithai". The High Court committed a grave error in
holding that as some manufacturers of toffees sell their
products by describing them as sweets it can be said
that in commercial circles toffee is known as
sweetmeat."
(emphasis supplied)
Nalawade A.S. 25/26 STR-56-08
21. Mr. Sonpal, learned special counsel for the respondent has
appropriately relied on the decision of the Supreme Court in the case of
Connaught Plaza Restaurant Private Limited. In this decision the
Supreme Court has held that interpreting entries and items in taxing
statutes must be construed in terms of their commercial or trade
understanding or according to their popular meaning .These entries and
items are required to be construed in the sense that the people conversant
with the subject matter of the statute, would attribute to it.
22. Adverting to the above settled norms of interpretation as
laid down by the Supreme Court in the context of the present case, we
may observe that in ordinary parlance as also considering the object of
the notification entry 374, we are certain that the contention on behalf of
the applicant that 'Ice-cream' can be included within the words "sweet
and sweetmeats" as contained in notification entry 374 cannot be
accepted.
23. As a sequel to our above discussion, we do not agree to
the contentions as raised on behalf of the applicant and noted by us
above. We are in complete agreement with the submissions as made on
Nalawade A.S. 26/26 STR-56-08
behalf of the Revenue. We therefore, answer the above reference in
favour of the revenue and against the assessee.
24. Reference Application accordingly stands disposed of in above
terms. No order as to costs.
(G.S.KULKARNI, J.) ( S.C. DHARMADHIKARI, J.)
