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TMI Blog1990 (8) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... red cow and buffalo milk for its said dairy at Bhadurgarh from in and around Bhadurgarh. The milk so procured is thereafter converted into skimmed milk powder (hereinafter referred to as "milk powder"). The milk powder is prepared by removing its fat contents and evaporating water contents of the milk. This milk powder serves every purpose for which liquid milk is used and dehydration is made only for the purpose of preservation and convenience of transportation and storage without damaging or depreciating the food value. The applicants import milk powder from its dairy at Bhadurgarh into West Bengal for the purpose of sale in West Bengal. The applicant No. I is a registered dealer under the Bengal Finance (Sales Tax) Act, 1941 and also under the Central Sales Tax Act, 1956. Under an erroneous impression and a mistake of law the applicant No. 1 also got itself registered as a dealer under the West Bengal Sales Tax Act, 1954, in respect of the sale of milk powder. No tax is leviable under the 1941 Act or the 1954 Act on the sale of milk powder. The applicant No. I under a mistake of law paid taxes in respect of sales of milk powder within the State of West Bengal. Milk is an item wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bengal Finance (Sales Tax) Act, 1941, was amended with retrospective effect by the West Bengal Taxation Laws (Amendment) and Repealing Act (8 of 1983) whereby after the word "milk" the following words were added, namely, "other than powdered or condensed milk". By the said amendment the exemption from payment of sales tax in respect of powdered or condensed milk was withdrawn retrospectively. The amendment is arbitrary and discriminatory and is also unreasonable. The sale of milk of all types were exempt from payment of tax under the 1941 Act. The effect of the amendment is that powdered or condensed milk would no longer be treated as tax-free goods. There is practically no qualitative difference between milk in liquid form or powdered form. The purported classification sought to be made between milk powder and milk by the said amendment is without jurisdiction and is violative of article 14 of the Constitution of India. Commercially, milk powder and liquid milk are treated in all essential respects as one and the same commodity. The Legislature is not competent to tax a part of the same or similar goods and exempt the other part. Principally, on these allegations the applicants h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amendments with retrospective effect. The Act was made retrospective in operation by express words. This apart, the amendment being merely clarificatory in nature, has to be, by necessary implication, retrospective. The respondents, therefore, prayed for dismissal of the cases. 7.. From the contentions as stated above the points that arise for determination are: (1) whether milk and powdered milk are identical commodities and whether one includes the other as well? (2) if not, whether the notification dated May 1, 1955, issued under section 25 of the 1954 Act could have been validly issued? (3) whether the retrospective operation of the amending Act of 1983 is arbitrary, unreasonable and violative of articles 14 and 19(1)(g) of the Constitution of India? 8.. The points enumerated above as emerging from the respective cases of the parties clearly indicate that the principal point at issue is whether milk and powdered milk are identical commodities. If the answer to this question be in favour of the applicants, the other two points would have to be considered in detail. If, however, the point is answered in favour of the Revenue, the subsequent points would lose much of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and natural condition as possible (emphasis* ours), and that dried milk is nothing but milk and can be used as liquid milk and is also dealt with as milk in the trade. 13.. The authorities quoted have particularly emphasised the fact that drying is resorted to principally for the purpose of preservation in bacteria-free condition for long period and convenience of transportation, in as nearly an unchanged and natural condition as possible. This necessarily takes us to the question as to what is the natural condition and form of *Here italicised. milk. In Schedule I of the Bengal Finance (Sales Tax) Act, the expression "milk" only is used in item 11 (before the amendment in 1983 by which the words "other than powdered or condensed milk" were added). When the expression "milk" only is used we have naturally to look for its natural meaning from other sources and accepted modes of interpretation. In appropriate cases, a reference to authoritative treatises and dictionaries may be conveniently and usefully made for the purpose. In the Oxford Dictionary, the term is defined as an opaque white fluid secreted by the mammary gland of female mammals for the nourishment of their young. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the character and identity of the commodity. May be it is milk in some form other than fresh milk but, nonethe-less, it remains milk for all practical purposes. 17.. Mr. Ghosh, on the other hand, argued that the average common man whose interests were sought to be protected by enumerating the exempted items from serial I up to 11 of Schedule I would clearly suggest that the expression "milk" as used in item 11 was nothing other than milk in liquid form as ordinarily understood by the common man and not powdered milk usually sold in containers at a relatively higher price. 18.. Both parties, therefore, rely on the common parlance theory. But before coming to consider this aspect we may now consider the cases relied on by Dr. Pal. The first case is the one reported in [1974] 33 STC 381 (All.) [FB] (Indodan Milk Products Ltd. v. Commissioner of Sales Tax, U.P.). The assessee was a dealer in condensed milk, etc. The name of the company prima facie, suggests how the company itself treated the commodity of which it was a dealer. It was treated as a milk product. In this case, it was held that milk meant milk in any form including condensed milk and not merely as milk obtained and sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.. The Allahabad High Court observed that "by no stretch of imagination can it be said that water is an essential constituent of milk and if its proportion is reduced, milk ceases to be milk". We have the authority of David Pearson (referred to earlier) that milk can be considered as containing some basic components of which water is one. We know that the water content in natural milk is the largest in proportion to other components. 22.. A reference was made to the decision of the Supreme Court in the case of State of Gujarat v. Sakarwala Brothers [1967] 19 STC 24. The question that arose for consideration before the Supreme Court was whether patasa, harda and alchidana fall within the definition of "sugar" in entry 47 of Schedule A to the Bombay Sales Tax Act, 1959, and whether their sales were exempt from payment of sales tax. The Supreme Court held that patasa, etc., were various forms of sugar. Relying on this decision, the Allahabad High Court observed that by evaporating water from milk its essential characteristic remains the same and what is obtained is milk in a concentrated form. The decision of the Supreme Court was rendered in the context of sugar as defined in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e one reported in [1980] 45 STC 498 (Mad.) (State of Tamil Nadu v. Indodan Milk Products). The decision in this case is based primarily on [1974] 33 STC 381 (All.) [FB] (Indodan Milk Products Ltd. v. Commissioner of Sales Tax). Practically, no further reasonings are given in the Madras case. We preferred to discuss the Allahabad case in some detail as the other two cases relied on this case for the ultimate decision. We have already indicated our views on the subject. 27.. Mr. Ghosh, besides distinguishing the cases referred to by Dr. Pal, also relied on an observation of the Supreme Court in the case of Healthways Dairy Products Co. v. Union of India reported in AIR 1976 SC 2221. The Supreme Court observed that in common parlance milk means milk as milched from cattle. 28.. Mr. Ghosh relied on a number of decisions to indicate how different commodities made from the same commodity have been treated as commercially different commodities, such as raw hides and skins and tanned hides and skins [A. Hajee Abdul Shukoor and Co. v. State of Madras [1964] 15 STC 719 (SC), raw tobacco and chewing tobacco [State of Madras v. Swasthik Tobacco Factory [1966] 17 STC 316 (SC)], groundnut oi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he stomach where food encounters pepsin and hydrochloric acid. Pepsin has a unique capacity to digest native protein, that is, protein that has not been altered by the action of other reagents or by heat. Dehydration of the watery content of milk is obviously done by means of heating whether by spraying or rolling methods. Therefore, the nature of protein as obtained in powdered milk is different and deficient from the native protein found in natural milk. The nutritional value is thereby partly affected. Similarly, albumin in milk is denaturised by the drying process employed to transform it into powder form. In such a situation it is difficult to accept the contention that simply by adding water to powdered milk one gets milk with all its essential qualities and constituents intact. They are undoubtedly transformed and that is why it is treated as a milk product and not as milk simpliciter. 32.. In fine, therefore, milk powder is a milk product. Some of the essential characteristics of milk and its constituents are, if not lost, at least diminished considerably. They are also different in appearance. In common parlance, one does not take milk and milk powder as synonymous. One ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as to how the tradesmen in general dealing with the articles took it to mean. It is also significant to note that the applicant-company, i.e., Milk Food Limited, after setting up their office in Calcutta, got themselves registered as dealers, filed returns and even paid taxes for sometime. They say that they did so under a mistake of law and came forward with the challenge when they were properly advised. The initial reaction on their part and the inaction by other traders in the line for such a long span of time beginning from 1955, is suggestive of how the traders accepted it. True, there is no question of estoppel, but their silence is certainly a significant pointer as to the meaning and effect of the notification. 35.. Having considered all the pros and cons of the matter, we are of the opinion that "milk" and powdered milk are not identical commodities and that powdered milk being a milk product was not an item exempted from tax under item 11 of Schedule I to the Bengal Finance (Sales Tax) Act, 1941. The first point formulated for consideration is, therefore, answered against the applicants. In view of this finding, the second point, namely, whether the notification da ..... X X X X Extracts X X X X X X X X Extracts X X X X
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