1965 (4) TMI 104 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of whether biscuits fall under tax-free goods under item No. 41 of Schedule II to the C.P. and Berar Sales Tax Act, 1947.

Analysis:
The judgment involves six references under section 44 of the Madhya Pradesh General Sales Tax Act, 1958, arising from Sales Tax Tribunal's orders in appeals for assessment years from January 1, 1950, to June 30, 1956. The central question in each reference is whether biscuits are tax-free goods under item No. 41 of Schedule II to the C.P. and Berar Sales Tax Act, 1947. The Sales Tax Authorities initially rejected the assessee's claim that biscuits were exempt from sales tax, but the Sales Tax Tribunal, or the Board of Revenue, accepted the claim and directed the exclusion of biscuit sales from the taxable turnover for the relevant assessment years.

The interpretation of Schedule II to the Act, specifically entry No. 41, is crucial in determining the tax exemption for biscuits. The absence of defined terms such as "cooked food" or "biscuits" in the Act necessitates a common parlance understanding of these terms. Referring to the Supreme Court's guidance in tax statutes interpretation, the judgment emphasizes that terms should be construed in their popular meaning known to those dealing with the subject matter. The rule of strict construction for exemptions, as established by the Supreme Court in previous cases, requires that exemptions must clearly fall within the statutory language, with the burden of proof on the assessee to substantiate the claim.

The judgment delves into the definition of "cooked food" in common parlance, highlighting that it refers to food consumed at regular meal times to provide nourishment. While acknowledging that biscuits are a form of food and involve a cooking process, the court distinguishes between general food items and those typically consumed at meal hours. It notes that while pastries are explicitly excluded from the definition of cooked food in the entry, this exclusion does not justify expanding the definition to include items like biscuits that do not align with common understanding. Ultimately, the court concludes that biscuits do not qualify as "cooked food" under entry No. 41 of Schedule II and are not exempt from tax under the provision.

In conclusion, the court answers the question in each reference by ruling that biscuits do not fall within the definition of "cooked food" in the relevant entry, thereby denying the tax exemption claim. The parties are left to bear their own costs in all six cases, and the references are answered accordingly.