1968 (6) TMI 49 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 49 in Schedule A of the Bombay Sales Tax Act, 1959 regarding the classification of Ipco Dental Creamy Snuff. Determination of whether the sale of the product falls under entry 49 or entry 13 in the Act.

Detailed Analysis:

The case involved a reference from the Tribunal regarding the classification of "Ipco Dental Creamy Snuff" under the Bombay Sales Tax Act, 1959. The applicant, a manufacturing chemist, sold this preparation which contained snuff, water, preservative, and flavoring agents. The Tribunal rejected the claim that it was a toilet article and referred two questions to the High Court for consideration.

The main issue revolved around the interpretation of entry 49 in Schedule A of the Act, which pertains to tobacco. The definition of tobacco under the Central Excises and Salt Act, 1944 was crucial in determining the scope of the term. The definition included any form of tobacco, whether manufactured or not, and encompassed various tobacco preparations like snuff.

The Advocate-General argued that the addition of other ingredients to snuff in the preparation of the product changed its essential character, making it a different commodity not covered under the exemption for tobacco. However, the applicant contended that despite the additions, the product retained its character as snuff and was sold in the market as such.

In analyzing similar legal precedents, the Court emphasized that as long as the essential character of the article remains unchanged, it should be taxed based on that commodity. The Court cited cases where processed products retained their original identity for taxation purposes, even if they underwent changes for marketability.

Ultimately, the Court held that the preparation in question, Ipco Dental Creamy Snuff, retained its essential character as snuff despite the addition of other substances. Therefore, it fell within the definition of tobacco under the Act. Consequently, the first question was answered in the affirmative, rendering the consideration of the second question unnecessary.

In conclusion, the Tribunal's decision was deemed incorrect, and the State was directed to bear the costs of the reference. The judgment clarified the interpretation of the relevant tax entry and affirmed the classification of the product as tobacco under the Act.