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2016 (2) TMI 1069 - HC - VAT and Sales TaxTaxability of flavoured milk - classification of the product - case of Revenue is that flavoured milk being in the nature of soft beverages, is liable to tax under circular dated 12.10.1983 - flavoured milk, whether milk or milk product? - Held that - The department does not dispute the existence of this circular. It is well settled law that the circulars issued by the department are binding on it. According to the circular flavoured milk reaches best quality of being milk and does not cease to be milk and is to be taxed as such. Assessee contends that the benefit of this circular has been given in other districts to various dealers. The matter, therefore, requires reconsideration by the Tribunal - appeal allowed by way of remand.
Issues:
Taxability of flavoured milk Analysis: The judgment was delivered in a matter concerning the taxability of flavoured milk. The issue arose when a circular dated 27.11.2002 regarding the tax liability of flavoured milk was not presented before the Court by either the department or the assessee at the time of filing the revision petition. The circular clarified that flavoured milk falls under the definition of milk and should be taxed as such. The circular highlighted that the presence of flavor does not change the nature of milk. It was noted that in other districts, tax exemption on flavoured milk was allowed based on similar judgments. The Court emphasized that circulars issued by the department are binding and must be followed. The Tribunal was directed to reconsider the matter, taking into account the circular and allowing both parties to present relevant evidence. As a result, the review was allowed for further consideration by the Tribunal. In conclusion, the judgment addressed the taxability of flavoured milk based on a circular that defined flavoured milk as falling under the category of milk for taxation purposes. The Court emphasized the binding nature of departmental circulars and directed the Tribunal to reevaluate the case considering the circular and allowing both parties to present their arguments and evidence.
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