1956 (5) TMI 30 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether nimkis and singaras are forms of bread and their sales are exempt from taxation under the Assam Sales Tax Act, 1947.
2. Whether the sale of sweets, which are prepared from milk, flour, and sugar, are exempt from taxation under the Assam Sales Tax Act, 1947.

Issue-wise Detailed Analysis:

1. Nimkis and Singaras as Forms of Bread:

The primary argument presented by the assessee was that nimkis and singaras fall within the ambit of the term "bread" as used in item No. 4 of Schedule III of the Assam Sales Tax Act, 1947, and are thus exempt from sales tax. The term "bread" was not defined in the Act, leading to reliance on its dictionary meaning. According to the Oxford English Dictionary, "bread" is a well-known article of food prepared by moistening, kneading, and baking meal or flour, generally with the addition of yeast or leaven. The argument extended to include products like chapathis and tanure-ki-roti as bread, based on their preparation method.

However, the court distinguished between different forms of bread and products like nimkis and singaras. It was noted that these items are salted snacks, often served as luxury items, and are not considered staple food or bread in any part of India. The court emphasized that nimkis and singaras include additional ingredients such as ghee, fat, potatoes, vegetables, or minced meat, which disqualifies them from being categorized as bread. The court concluded that these items do not fall under the term "bread" as used in the Act, and thus, their sales are not exempt from taxation.

2. Exemption of Sweets Prepared from Milk, Flour, and Sugar:

The second issue addressed whether sweets prepared from milk, flour, and sugar are exempt from taxation, given that their individual ingredients are exempt under Schedule III of the Act. The court found no merit in this contention. It was held that sweets, in their final form, cannot be described as milk, flour, or sugar. The process of preparing sweets involves mixing these ingredients with others, such as vegetable ghee, which is not exempt from sales tax. Additionally, sweets undergo significant transformation during their preparation, making them distinct from their original ingredients.

The court referred to the Hyderabad case, which held that articles prepared from exempted substances are not themselves exempt. It was noted that the combination and transformation of ingredients into sweets result in a new product that does not qualify for exemption. Therefore, the sale of sweets is subject to taxation under the Assam Sales Tax Act, 1947.

Conclusion:

The court answered both questions in the negative, affirming that nimkis and singaras are not forms of bread and their sales are not exempt from taxation. Similarly, the sale of sweets, despite being prepared from exempt ingredients, is not exempt from taxation due to the transformation and combination of ingredients during their preparation. The reference was thus answered in the negative, upholding the decisions of the taxing authorities.