1991 (7) TMI 313 - HC - VAT and Sales Tax

Issues Involved:
1. Classification of "mori basudi" for tax purposes under the Gujarat Sales Tax Act, 1969.
2. Applicability of entry 10 of Schedule I (tax-free entry) to "mori basudi."
3. Applicability of entry 50 of Schedule II, Part A to "mori basudi."
4. Applicability of residuary entry 13 of Schedule III to "mori basudi."
5. Application of the principle of popular parlance in determining the tax category.

Detailed Analysis:

1. Classification of "mori basudi" for tax purposes under the Gujarat Sales Tax Act, 1969:
The primary issue was whether "mori basudi" sold by the assessee was taxable under entry 50 of Schedule II, Part A, or exempt under entry 10 of Schedule I of the Gujarat Sales Tax Act, 1969. The assessee argued that "mori basudi," a form of condensed milk without sugar or masala, should be tax-free under entry 10 of Schedule I, which covers milk and milk products. However, the Deputy Commissioner and the Tribunal concluded that "mori basudi" did not fall under the tax-free category but within entry 50 of Schedule II, Part A, which pertains to sweets and sweetmeats.

2. Applicability of entry 10 of Schedule I (tax-free entry) to "mori basudi":
Entry 10 of Schedule I includes "Milk, whole or separated or reconstituted," along with buttermilk, curds, lassi, and chakka, which are tax-free. The Tribunal and the High Court applied the principle of popular parlance, determining that "mori basudi" is not considered milk by the general public. The court emphasized that a customer looking to buy milk would not consider "mori basudi" as milk, and thus it does not fall under entry 10 of Schedule I.

3. Applicability of entry 50 of Schedule II, Part A to "mori basudi":
Entry 50 of Schedule II, Part A, includes "Sweets and sweetmeats (including shrikhand, basudi, and doodpak)." The Tribunal concluded that "mori basudi," despite being unsweetened, is generally regarded as a sweetmeat. The High Court agreed with this classification, noting that "mori basudi" is treated and sold as a sweet prepared from milk, and thus falls under entry 50 of Schedule II, Part A.

4. Applicability of residuary entry 13 of Schedule III to "mori basudi":
The Deputy Commissioner initially classified "mori basudi" under the residuary entry 13 of Schedule III, which covers all goods not specified in other entries. However, the Tribunal overruled this classification, and the High Court upheld the Tribunal's decision, affirming that "mori basudi" falls within entry 50 of Schedule II, Part A, and not under the residuary entry.

5. Application of the principle of popular parlance in determining the tax category:
The principle of popular parlance, as established in Supreme Court decisions (Ramavatar Budhaiprasad v. Assistant Sales Tax Officer and Commissioner of Sales Tax v. Jaswant Charan Singh), was applied. This principle states that the classification of a commodity should be based on how it is commonly understood by people in the relevant area. The High Court noted that "mori basudi" is popularly understood as a sweet and not as milk, reinforcing its classification under entry 50 of Schedule II, Part A.

In conclusion, the High Court affirmed that "mori basudi" does not qualify for tax exemption under entry 10 of Schedule I and is correctly taxable under entry 50 of Schedule II, Part A. The reference was answered in the affirmative, in favor of the Revenue and against the assessee, with no order as to costs.

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