2017 (11) TMI 1027 - HC - VAT and Sales Tax

Levy of Trade Tax - classification of goods - Poultry Feed Supplements - Whether the Poultry Feed Supplements as sold by the Revisionist/Assessee under its respective brand names are covered under the Entry Poultry Feed and accordingly, are liable for exemption from Trade Tax? - Held that - mere fact that certain items may cure disease or strengthen bones, liver etc., for that reason alone they may not be held medicine and not Balanced Cattle Feed or Poultry Feed. A Division Bench of this Court in Friends Medicon (P) Ltd. Vs State of U.P. and others, 1996 (12) TMI 402 - ALLAHABAD HIGH COURT , also considered true meaning and import of word Poultry Feed . It observed that word Feed means, food given to an animal fodder, pasture, meal etc. Poultry feed has acquired a definite connotation in livestock farming and there are certain ingredients used as concentrates in such feeds for the health and strengthening of poultry livestock. Feed simplicitor is essential for the maintenance of poultry feed but the concentrates like vitamins etc. in the food stuff enable the poultry to maintain energy, to perform the vital process of life and provide material to replace essential tissues, breakdown of which occurs in the body continuously - Even in the present case it could not be disputed that it composed of water, and organic and mineral matters. Organic matter is composed of proteins, ats, crude fibre and soluble carbohydrates. There are certain substances known as vitamins, medicines to remove toxins for strength and development of poultry. It is well settled that as also need of common parlance that an animal feed supplement or cattle feed supplement or poultry feed supplement or balanced cattle feed or poultry feed is actually used as energy nutrients as well as nutrients rich with substance needs for strengthening the body and its development so that a person engaged in such farming may have good yield of cattles and poultry as the case may be. Tribunal has erred in law in holding the items traded by revisionists by treating the same as medicines or drug and not as poultry feed supplements. The items in view of the circular of Trade Tax Commissioner have to be considered as balanced poultry feed and would have dealt with accordingly - revision allowed - decided in favor of revisionist.

Issues Involved:
1. Classification of Poultry Feed Supplements under the entry "Poultry Feed" for tax exemption.
2. Legality of the Trade Tax Tribunal's decision treating Poultry Feed Supplements as medicines.
3. Application of judicial decisions by the Trade Tax Tribunal.
4. Interpretation of "feed supplement" in common parlance and judicial precedents.

Issue-wise Detailed Analysis:

1. Classification of Poultry Feed Supplements under the entry "Poultry Feed" for tax exemption:
The primary issue was whether the Poultry Feed Supplements sold by the revisionist/assessee fall under the category of "Poultry Feed" and are thereby exempt from Trade Tax. The court examined various notifications and clarifications, including a notification dated 31.01.1985, which exempted "Balanced poultry feed" from Trade Tax. The court also referred to a clarification issued by the Trade Tax Commissioner, which stated that Animal Feed includes Animal Feed Supplement and Animal Feed Concentrant. The court concluded that the items sold by the revisionist, which include supplements like vitamins and minerals, should be considered as "Balanced Poultry Feed" and thus eligible for tax exemption.

2. Legality of the Trade Tax Tribunal's decision treating Poultry Feed Supplements as medicines:
The Tribunal had dismissed the revisionist's appeal, holding that the Poultry Feed Supplements acted as medicines and were therefore taxable. The court found this reasoning flawed, stating that the mere fact that certain items may cure diseases or strengthen bones does not necessarily categorize them as medicines. The court emphasized that these supplements are essential for the health and development of poultry and should be considered as part of "Balanced Poultry Feed."

3. Application of judicial decisions by the Trade Tax Tribunal:
The Tribunal had rejected the judicial decisions cited by the revisionist's counsel, stating that they were based on different facts. The court disagreed with this view, citing several precedents, including judgments from the Gujarat High Court and the Supreme Court, which supported the classification of supplements like vitamins and minerals as part of "Poultry Feed." The court highlighted that these judicial decisions clearly establish that feed supplements are integral to poultry feed and should not be treated as separate medicinal items.

4. Interpretation of "feed supplement" in common parlance and judicial precedents:
The court discussed the common parlance meaning of "feed supplement" and referred to several judicial decisions to support its interpretation. It cited the Gujarat High Court's judgment in Glaxo Laboratories (India) Ltd. vs. The State of Gujarat, which stated that feed additives or supplements like proteins, minerals, and vitamins constitute "cattle feed" or "poultry feed." The court also referred to the Supreme Court's judgment in Commissioner of Customs (Import), Mumbai vs. Dilip Kumar, which held that animal feed supplements should be considered as part of animal feed. The court concluded that the items sold by the revisionist, which include various supplements, should be classified as "Balanced Poultry Feed" and are thus exempt from Trade Tax.

Conclusion:
The court allowed the revision, setting aside the Tribunal's judgment and order dated 13.03.2008. It directed the respondent authorities to proceed in light of the observations made in the judgment, affirming that the Poultry Feed Supplements sold by the revisionist should be considered as "Balanced Poultry Feed" and are eligible for tax exemption. The court emphasized the importance of interpreting tax entries in line with common parlance and judicial precedents, ensuring that the items in question are treated fairly and consistently with established legal principles.

← Previous Next →