2000 (7) TMI 961 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of "Nannari syrup" under the Tamil Nadu General Sales Tax Act, 1959.
2. Applicability of entry 91 of the First Schedule to "Nannari syrup".
3. Burden of proof regarding taxability under a specific entry.
4. Interpretation of fiscal entries using doctrines like "noscitur a sociis" and "ejusdem generis".

Detailed Analysis:

1. Classification of "Nannari syrup" under the Tamil Nadu General Sales Tax Act, 1959:
The appellant, a dealer in syrup, was assessed for the year 1976-77 under section 7 of the Tamil Nadu General Sales Tax Act, 1959, with the sale of "Nannari syrup" being taxed at 8% under entry 103 of the First Schedule. The Appellate Assistant Commissioner later revised this to 4% under section 3(2), but the Joint Commissioner categorized it under entry 91, taxing it at 5%. The primary issue was whether "Nannari syrup" falls under entry 91.

2. Applicability of entry 91 of the First Schedule to "Nannari syrup":
The court examined whether "Nannari syrup" could be classified as a "soft drink" under entry 91. The appellant argued that "Nannari syrup" requires dilution and thus should not be considered a ready-to-drink beverage. The court considered various dictionary definitions and the doctrine of "noscitur a sociis" to determine that "soft drinks" include non-intoxicating and non-harmful beverages, whether aerated or not. Consequently, "Nannari syrup," being non-intoxicating and harmless, was classified as a "soft drink" under entry 91.

3. Burden of proof regarding taxability under a specific entry:
The appellant argued that the burden of proof lies with the Revenue to prove that "Nannari syrup" falls under a specific entry. The court referred to section 10 of the Act, which places the burden on the dealer to prove that their transactions are not liable to tax. The court clarified that this burden includes proving that a commodity does not fall under a particular entry proposed by the Revenue. The court held that the appellant failed to discharge this burden.

4. Interpretation of fiscal entries using doctrines like "noscitur a sociis" and "ejusdem generis":
The appellant invoked the doctrines "ejusdem generis" and "noscitur a sociis" to argue that "soft drinks" should be limited to aerated beverages. The court, however, found that these doctrines were not applicable as the terms "aerated waters" and "bottled soft drinks" are capable of independent existence. The court emphasized that legislative intent should be considered, which aims to include as many commodities as possible within the tax net. The court concluded that "Nannari syrup" falls within entry 91 based on its common parlance meaning.

Conclusion:
The court upheld the classification of "Nannari syrup" under entry 91 of the First Schedule, dismissing the appeal in Tax Case (A) No. 241 of 1983. For Tax Case (A) No. 242 of 1983, the court remitted the matter back to the assessing authority to revise the assessment in light of the findings, applying entry 91 up to May 24, 1977, and entry 139 thereafter. The decision in K.O. Angumanickam's case was affirmed as laying down the correct law.