1974 (5) TMI 104 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of the term "flour" in item No. 2 of Schedule I of the Bengal Finance (Sales Tax) Act, 1941.
2. Determination of whether barley powder falls under the exemption for "flour" or is taxable as a cereal under item No. 1.

Issue-wise Detailed Analysis:

1. Interpretation of the term "flour" in item No. 2 of Schedule I:

The central issue in this case is the interpretation of the word "flour" as it appears in item No. 2 of Schedule I of the Bengal Finance (Sales Tax) Act, 1941, prior to its amendment by West Bengal Act 14 of 1963. The assessee argued that "flour" should be interpreted to include "barley powder," based on the dictionary meaning of "flour" as "finely-ground meal of wheat or other grain." The argument posited that since barley is a type of grain, barley powder should be considered "flour" and thus be exempt from sales tax.

The revenue authority, however, contended that "flour" in its popular sense is understood to mean "maida" (wheat flour) and does not include barley powder. The court noted that the term "flour" is not defined in the Act and should be construed in its popular sense, not in a technical or botanical sense. The court emphasized that "flour" in common parlance is understood to mean "maida" (wheat flour), and the inclusion of "atta, suji, and bran" in item No. 2 was intended to emphasize this popular meaning. The court concluded that the word "flour" in its popular sense does not include barley powder.

2. Determination of whether barley powder falls under the exemption for "flour" or is taxable as a cereal under item No. 1:

The court examined whether barley powder could be considered exempt from sales tax under item No. 2 or if it should be taxed as a cereal under item No. 1. The assessee's argument relied on the subsequent amendment in 1963, which replaced "flour including atta, suji, and bran" with "wheat flour including atta and suji," suggesting that prior to the amendment, "flour" could have included barley powder. The court, however, found that the amendment was introduced by way of abundant precaution and did not alter the popular meaning of "flour" as wheat flour.

The court also considered the introduction of item No. 52 in the schedule, which specifically mentioned barley products such as "flour, suji, atta, and dalia made from barley." The court held that this specific mention indicated that barley products were not covered under the general term "flour" in item No. 2 and were separately categorized to avoid confusion.

The court concluded that barley powder is not included in the exemption for "flour" under item No. 2 and must be considered a kind of cereal included in item No. 1, making it taxable.

Conclusion:

The court held that on a true and proper construction of item No. 2 of Schedule I of the Bengal Finance (Sales Tax) Act, 1941, as it stood prior to its amendment by West Bengal Act 14 of 1963, the word "flour" did not include barley powder, and barley powder was not exempt from sales tax. Barley powder, therefore, falls under item No. 1 and is taxable. The reference was answered accordingly, with no order as to costs.