1977 (4) TMI 54 - AT - VAT and Sales Tax

Issues Involved:
1. Whether the sale of sausages, salami, and pressed ham are exempt from levy of sales tax under entry No. 4 of the Second Schedule appended to the Bengal Finance (Sales Tax) Act, 1941.
2. Whether the authorities were justified in not allowing the concessional rate of tax in respect of sales made to registered dealers under the Central Sales Tax Act, 1956.
3. Whether cooked pressed ham and salami are considered 'meat' and thus exempt from sales tax for the year 1967-68.

Issue-wise Detailed Analysis:

Issue 1: Exemption from Levy of Sales Tax for Sausages, Salami, and Pressed Ham
The dealer, M/s. Essex Farms Pvt. Ltd., claimed that sausages, salami, and pressed ham are exempt from sales tax under entry No. 4 of the Second Schedule appended to the Bengal Finance (Sales Tax) Act, 1941, which states "Meat (except when sold in sealed containers)." The assessing authority taxed these items at 5%, but the Assistant Commissioner exempted ham and bacon, deeming them not directly consumable without cooking, while sausages and salami were taxed as they could be eaten directly.

The tribunal reviewed multiple definitions and precedents, including:
- Webster's Dictionary: Defined 'meat' as flesh of domesticated animals.
- Chambers Dictionary: Defined 'meat' as the flesh of animals used as food.
- Precedents: Various cases such as Kapildeo Ram Baijnath Prasad vs. J.K. Das, Collector of Sales Tax, Bombay vs. Gaurimal Mahajan, and Tungabhadra Industries Ltd. vs. Commercial Tax Officer, which established that processing (boiling, parching, adding preservatives) does not change the essential character of the product.

The tribunal concluded that the processes used (smoking, curing, adding preservatives) do not alter the essential nature of meat. Thus, sausages, salami, and pressed ham are considered 'meat' and are exempt from sales tax under entry No. 4.

Issue 2: Concessional Rate of Tax for Sales to Registered Dealers
The dealer claimed a concessional tax rate under the Central Sales Tax Act, 1956, for sales made to registered dealers against 'C' forms. The assessing authority found defects in the 'C' forms and noted that some were not produced. Despite opportunities, the dealer failed to rectify these defects. Consequently, the claim for the concessional rate was disallowed.

The tribunal upheld the decision of the authorities, noting that the dealer did not establish that the findings regarding the defects in 'C' forms were erroneous. Additionally, the dealer's claim for sales outside India was rejected due to a lack of necessary proof.

Issue 3: Classification of Cooked Pressed Ham and Salami for the Year 1967-68
For the year 1967-68, the assessing authority held that cooked pressed ham and salami were not 'meat' and thus taxable. The dealer argued that these items had been previously classified as 'meat' and exempted from tax, citing past decisions by the Assistant Commissioner and Commissioner of Sales Tax.

The tribunal found that the assessing authority did not follow the established precedent that these items are considered 'meat'. It was noted that the processes of cooking and adding preservatives do not change the essential character of meat. Therefore, cooked pressed ham and salami should be classified as 'meat' and exempt from sales tax.

Judgments:
1. Appeal No. 78/STT: Allowed. The tribunal reversed the lower authorities' decision, holding that sausages, salami, and pressed ham are 'meat' and exempt from sales tax.
2. Appeal No. 79/STT: Dismissed. The tribunal upheld the authorities' decision not to allow the concessional rate of tax due to defects in 'C' forms and lack of proof for sales outside India.
3. Appeal No. 80/STT: Allowed in part. The tribunal modified the order to hold that cooked pressed ham and salami are 'meat' and exempt from sales tax but confirmed the rest of the order regarding sales to the Grocery Shop, Ministry of Defence, and Air Force Canteen.

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