1999 (6) TMI 477 - AT - VAT and Sales Tax

Issues Involved:
1. Classification of Horlicks under tax notifications.
2. Applicability of Notification No. 886-F.T. dated May 1, 1955.
3. Applicability of Notification No. 790-F.T. dated April 2, 1957.
4. Change in the composition of Horlicks.
5. Consistency of tax treatment of Horlicks since 1955.
6. Interpretation of statutory notifications and provisos.

Detailed Analysis:

1. Classification of Horlicks under Tax Notifications:
The primary issue was whether Horlicks should be classified as "powdered or condensed milk" under Notification No. 886-F.T. dated May 1, 1955, or as a "powder for food drinks" under Notification No. 790-F.T. dated April 2, 1957. The Tribunal examined the historical and compositional aspects of Horlicks, noting that since its inception, Horlicks had been treated as a milk food product.

2. Applicability of Notification No. 886-F.T. dated May 1, 1955:
The Tribunal noted that Horlicks was explicitly listed in Notification No. 886-F.T. dated May 1, 1955, which categorized it under "powdered or condensed milk." The proviso to this notification, which required the percentage of powdered milk to exceed 50%, was deemed inapplicable to Horlicks since it was explicitly named in the main part of the notification. The Tribunal emphasized that the named products, including Horlicks, were intended to be treated as powdered or condensed milk without the need to satisfy the proviso.

3. Applicability of Notification No. 790-F.T. dated April 2, 1957:
The Tribunal observed that Notification No. 790-F.T. dated April 2, 1957, and its subsequent substitution by Notification No. 763-F.T. dated March 29, 1994, did not include Horlicks by name. The Tribunal concluded that the legislative intent was to continue treating Horlicks under Notification No. 886-F.T. dated May 1, 1955, rather than reclassifying it under the food drink powders category.

4. Change in the Composition of Horlicks:
The Tribunal found no evidence of any change in the composition of Horlicks from 1955 to July 31, 1998. The Tribunal rejected the Revenue's assertion that Horlicks' composition had changed, noting that the applicants' claim of consistent composition was uncontroverted by the respondents. The Tribunal emphasized that any alleged changes in composition were not substantiated by evidence.

5. Consistency of Tax Treatment of Horlicks Since 1955:
The Tribunal highlighted that for 39 years, Horlicks had been consistently treated as falling under Notification No. 886-F.T. dated May 1, 1955. The Tribunal referenced the doctrine of contemporanea expositio, which implies that long-standing administrative practices under a statute indicate the intended meaning of its provisions. The Tribunal found it inappropriate to alter the established tax treatment of Horlicks without substantial justification.

6. Interpretation of Statutory Notifications and Provisos:
The Tribunal discussed the principles of statutory interpretation, emphasizing that the main part of Notification No. 886-F.T. dated May 1, 1955, named specific products, including Horlicks, as powdered or condensed milk. The proviso was intended to apply only to unnamed products within the notification. The Tribunal concluded that the named products, including Horlicks, were not subject to the proviso's condition.

Conclusion:
The Tribunal set aside the impugned orders of assessment, determination of interest, appellate order, and revisional order. It directed the assessing authority to make a fresh order of assessment for the period ending March 31, 1995, in accordance with the Tribunal's judgment, treating Horlicks under Notification No. 886-F.T. dated May 1, 1955, as powdered or condensed milk. No order was made for costs. The application was allowed.

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