1979 (7) TMI 221 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of the term "milk product" under the U. P. Sales Tax Act
- Whether ice-cream qualifies as a milk product for tax exemption

Analysis:
The judgment revolves around the interpretation of the term "milk product" under the U. P. Sales Tax Act and specifically focuses on whether ice-cream falls within this category for tax exemption. The State Government, through a notification, exempted certain goods including milk and milk products from sales tax. The notification listed various milk products such as chhena, dahi, khoa, butter, and cream, with specific exclusions. The notification did not provide a definition of "milk product," leading to the need for interpretation.

The court analyzed the common parlance understanding of a product of a commodity, stating that a product can be something made out of or from a commodity. It highlighted that while items like chhena and dahi are easily identifiable as milk products since they are produced out of milk, the challenge arises with items prepared from milk, such as sweetmeats. The court emphasized that the legislative intent behind the notification was to extend the exemption to all things produced out of milk, as indicated by the broad language used.

The judgment delved into the specific ingredients and manufacturing process of ice-cream, which primarily consists of milk and its products. The court referenced previous cases where lassi and kulfi were considered milk products despite being prepared from milk. Citing precedents, the court concluded that ice-cream qualifies as a milk product and is therefore exempt from sales tax. The revising authority correctly excluded the turnover related to ice-cream and directed the assessing authority to adjust the order accordingly.

In the final decision, the court dismissed the revisions, affirming that ice-cream is indeed a milk product exempt from sales tax. The judgment clarified the legal standing of ice-cream as a milk product based on the ingredients and preparation process, aligning with the broader legislative intent of the notification. The court awarded costs to the assessee and provided a clear ruling on the tax exemption status of ice-cream under the U. P. Sales Tax Act.