1999 (12) TMI 836 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether mineral water can be considered as aerated water under entry 95 of the notification dated June 27, 1990, for the purpose of sales tax under the Rajasthan Sales Tax Act.

Detailed Analysis:

Issue 1: Classification of Mineral Water as Aerated Water
Background:
The core issue in these sales tax revision petitions is to determine if mineral water qualifies as aerated water under entry 95 of the notification dated June 27, 1990, thereby subjecting it to sales tax.

Assessee's Argument:
The assessee argued that mineral water is essentially boiled and filtered water, making it potable but not aerated. They claimed exemption from sales tax under item 15 of the Schedule of exempted goods, which exempts water excluding distilled and aerated waters.

Revenue's Argument:
The Assistant Commercial Taxes Officer and the Deputy Commissioner contended that mineral water is akin to aerated water because the manufacturing process involves passing gas through the water to purify it. They relied on the definition of carbonated water under the Prevention of Food Adulteration Act to support their claim that mineral water, due to the gas-passing process, becomes aerated water.

Tribunal's Findings:
The Rajasthan Tax Board, referencing its earlier decision in R.N. Products v. Assistant Commercial Taxes Officer, held that mineral water is merely drinking water processed by boiling, without any gas or chemicals, thus not qualifying as aerated water. This decision was challenged by the Revenue.

Court's Analysis:
- Dictionary Definitions: The court examined definitions from the Oxford English Dictionary and Random House Dictionary, concluding that aerated water must be charged with air or gas, producing effervescence.
- Commercial Parlance: The court emphasized that in commercial terms, aerated water is understood to be water that produces bubbles or sensations due to being charged with gases like carbon dioxide.
- R.N. Products Case: The court noted that the Tribunal's finding in R.N. Products, which stated that mineral water does not contain gas or chemicals, was not contested by the Revenue.
- Distinction from Previous Cases: The court distinguished this case from Amin Chand and Co. v. State of Punjab, where the issue was whether carbonated water could be considered aerated water. The court clarified that the Punjab and Haryana High Court's decision was based on the specific context of carbonated water, not mineral water.

Conclusion:
The court concluded that mineral water, which does not undergo any gas treatment and does not produce effervescence, cannot be classified as aerated water. The court held that the legislative intent was to exempt all forms of water except distilled and aerated water from sales tax. Therefore, mineral water, being a form of drinking water, does not fall under the taxable category of aerated water.

Judgment:
The revision petitions were dismissed, affirming that mineral water is not subject to sales tax under entry 95 of the notification dated June 27, 1990, as it does not qualify as aerated water. The court emphasized that the scope of taxability should not be expanded by giving extended meanings to the terms used in the exemption schedule.