1990 (10) TMI 331 - HC - VAT and Sales Tax

Issues Involved:
1. Interpretation of entry 24 and entry 103 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959.
2. Classification of "Spert" under entry 24 or entry 103.
3. Provisional assessment of "Horlicks" under entry 103.
4. Classification of "Soyal" and "Prosoyal spray dried powder" under entry 103.
5. Validity of the provisional assessment under section 13 of the Tamil Nadu General Sales Tax Act.

Detailed Analysis:

1. Interpretation of Entry 24 and Entry 103 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959:
The court examined the interpretation of entry 24 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, as it stood before Tamil Nadu Act 39 of 1983, and entry 103 as amended by Tamil Nadu Act 39 of 1983. Entry 24 covered "Milk foods (excluding milk but including milk powder)" taxed at 4 per cent, while entry 103 included various food items, including preparations of milk, cereals, flour, starch, etc., taxed at 10 per cent. The court noted that entry 24 was specifically introduced to cover pure milk food and baby food only, and was deleted effective from 1st July, 1983, to include such items under entry 103. The court emphasized that the intention of the Legislature was to levy a higher rate of tax on milk foods with effect from 1st July, 1983.

2. Classification of "Spert" Under Entry 24 or Entry 103:
The court analyzed whether "Spert" should be classified under entry 24 or entry 103. The assessing officer had treated "Spert" as food made of milk, cereals, flour, and starch falling under entry 103, attracting 10 per cent sales tax. The Tribunal, however, concluded that "Spert" constituted milk food and not milk preparation or food, thus falling under entry 24 with a lower tax rate. The court agreed with the Tribunal's finding that "Spert" is a product obtained by blending skimmed milk powder with malted extract, and the addition of vitamins and minerals does not change its classification as milk food. Therefore, "Spert" falls under entry 24.

3. Provisional Assessment of "Horlicks" Under Entry 103:
The court examined the provisional assessment of "Horlicks" under entry 103. The respondent had provisionally assessed "Horlicks" at 10 per cent, rejecting the petitioner's claim that it should be taxed at 4 per cent as milk food. The court noted that "Horlicks" was predominantly made of milk and should be treated as a milk food. The court rejected the contention that "Horlicks" being a beverage cannot be classified as milk food, stating that milk powder, which is also consumed as a beverage, falls under milk foods. The court concluded that "Horlicks" falls under entry 103(viii) as milk food and is eligible for the reduced tax rate under the notification dated 17th March, 1986.

4. Classification of "Soyal" and "Prosoyal Spray Dried Powder" Under Entry 103:
The court addressed the classification of "Soyal" and "Prosoyal spray dried powder" manufactured by M/s. F.D.C. Limited. The petitioners claimed these products as baby milk food or life-saving drugs, seeking a reduced tax rate. The court found that these products, made from soya bean powder, do not contain milk and cannot be classified as milk food. Therefore, they fall under entry 103(x) as foods made from extracts of cereal or vegetables, attracting 10 per cent tax. The court dismissed the writ petitions related to these products.

5. Validity of the Provisional Assessment Under Section 13 of the Tamil Nadu General Sales Tax Act:
The court addressed the validity of the provisional assessment of "Horlicks" under section 13 of the Act. The petitioner contended that the respondent had no jurisdiction to pass a provisional assessment after the expiry of the assessment year. The court agreed, stating that provisional assessment after the end of the assessment year is not permissible. Consequently, the court quashed the provisional assessment order and allowed the writ petition.

Conclusion:
- Writ Petitions Nos. 9079, 11204, and 13828 of 1990 were dismissed.
- Writ Petition No. 6318 of 1990 was allowed, quashing the provisional assessment order.
- Tax Case No. 1145 of 1987 filed by the Revenue was dismissed.
- No costs were ordered in any of the cases.

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