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1990 (8) TMI 352 - HC - VAT and Sales Tax
Issues:
Interpretation of entry 1(2)(b) of Schedule D, Part II of the Bombay Sales Tax Act, 1959 regarding the classification of beer containing less than 5% alcohol as either "mild liquor" or "fermented liquor." Analysis: The assessee, a hotel, applied for registration under the Act and was found liable for sales tax on beer sold between 1972 and 1973. The beer was classified under entry 1(2)(b) of Schedule D, Part II by the authorities. The assessee argued that beer should be classified under the residuary entry 22 of Schedule E as it was considered mild liquor under the Bombay Foreign Liquor Rules, 1953. The Court noted that the residuary entry is applicable only when no other entry is relevant. The entry 1(2)(b) of Schedule D, Part II underwent changes over time, with the inclusion of "mild liquors" from May 11, 1973, onwards. The term "foreign liquor" was crucial in determining the classification, as it encompassed spirits, wines, fermented liquors, and mild liquors. The definition of "foreign liquor" from the Rules clarified that mild liquor refers to any foreign liquor with an alcoholic strength not exceeding 5%. Beer with less than 5% alcohol falls under the category of mild liquor, while beer exceeding 5% alcohol is considered fermented liquor. The Court highlighted that even prior to the specific mention of mild liquor, it was subsumed under the broader term "foreign liquor." The Court emphasized that until mild liquor was explicitly identified as a separate category, it was encompassed within foreign liquor. Therefore, the assessment by the Tribunal, considering beer as falling under entry 1(2)(b), was deemed correct. The Court answered the question in the affirmative, with no costs awarded. In conclusion, the judgment clarified the classification of beer with less than 5% alcohol under the relevant entry of the Bombay Sales Tax Act, emphasizing the interpretation of "mild liquor" within the scope of "foreign liquor" until its explicit mention as a separate category.
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