9911796707
TMI Blog1999 (6) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... in the State of Punjab. Horlicks Ltd. acquired 41 per cent of its shares and the balance being held by Indian citizens. Since then Horlicks has been manufactured and sold in India. Prior to that, Horlicks was being sold in India by importation from U.K. In 1969 Beecham Plc, another U.K. based company, acquired the assets and liabilities of Horlicks Ltd., and finally in 1979 its Indian company known as Beecham India Pvt. Ltd. of Bombay, was merged with Hindustan Milk Food Manufacturers Pvt. Ltd. Later, the merged company was renamed as HMM Ltd. and manufactured Horlicks in India. In 1991, Beecham Group of U.K. merged with Smithkline of U.S.A. and the new name was Smithkline Beecham Consumer Brands Ltd. In 1994, that name was changed to the present name, i.e., Smithkline Beecham Consumer Healthcare Ltd. 3.. Applicant No. 2 is a shareholder of applicant No. 1 company and is a citizen of India. Applicant No. 1 is a registered dealer under the West Bengal Sales Tax Act, 1954 (in short, "the 1954 Act") as also under the Central Sales Tax Act, 1956 and the West Bengal Sales Tax Act, 1994 (in short, "the 1994 Act"). According to the applicants, the ingredients of Horlicks remained the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted May 1, 1955 under "powdered or condensed milk". 4.. The present grievance relates to two orders passed by respondent No. 2, Assistant Commissioner, Commercial Taxes, Assessment Wing, Group-L, dated June 3, 1997 under section 9(2) and 9(5) of 1954 Act for the period of 12 months ending March 31, 1995 and the consolidated order dated February 25, 1998 passed by respondent No. 1, Deputy Commissioner, Commercial Taxes, Corporate Division under section 12 of the 1954 Act which was the appellate order from the orders passed by respondent No. 2 dated June 3, 1997. The appellate order was confirmed by the West Bengal Commercial Taxes Appellate and Revisional Board by an order dated October 13, 1998. By the said order of assessment dated June 3, 1997 respondent No. 2 for the first time held that Horlicks was a food drink and hence, he charged sales of Horlicks to sales tax at 15 per cent and hence, he also made a demand of interest amounting to Rs. 83,25,198. In the appeals, respondent No. 1 furnished all facts relating to manufacture of Horlicks including particulars of ingredients thereof. Both the appellate authority and the Board maintained the orders of assessment and demand of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Horlicks is known in the common parlance as a powdered or condensed milk like Glaxo, Lactogen, Ostermilk, etc. It is also contended that in order to bring a product under the rate chart meant for powders for food drinks, the major ingredients must be cocoa, chocolate or malt or soyabean, wheat flour, rice powder or combination of two or more of such ingredients. Applicants are relying on a judgment of the Madras High Court wherein it was held that Horlicks per 1,000 grams contained milk 69 per cent by weight which is the major ingredient. One of the grounds of challenge is that the impugned assessment order was made taking a view different from all other orders of assessment made since 1955 up to the period ending March 31, 1994. 5.. The case of the respondents in their affidavit-in-opposition is that the overall inputs which go into manufacture of Horlicks as stated in the application, do not support the contention of applicants that Horlicks is a powdered or condensed milk within Notification No. 886-F.T. dated May 1, 1955, because Horlicks has got substances other than powdered milk, like wheat flour, malt, etc. They maintain that Horlicks comes under powders for food dri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessing authority that Horlicks was a powdered food drink. The following observation of the Board, before which the revision was preferred by the applicants, is significant in the context that the applicants have made a grievance before us that the Board came to the conclusion regarding change in the composition of Horlicks out of nothing: "It may be mentioned that whatever composition has been mentioned either in the appellate order or in the judgment and order passed by the honourable Madras High Court in the matter of H.M.M. Limited v. Deputy Commercial Tax Officer [1990] 79 STC 421, relates to earlier periods. There is no doubt about the fact that thereafter there had been sufficient changes in the composition of "Horlicks". It may further be mentioned that sugar, chocolate or cocoa are added to the manufacture of "Horlicks", which many of us find in various advertisements either on T.V. or in newspapers. Therefore, there is no doubt that "Horlicks" is being used as food drinks............... (Para. 8 at internal pages 5 and 6 of the judgment of the Board)...................It has rightly been taxed at 15 per cent with effect from April 11, 1994".................(para 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions are resorted to, have been pointed out by the Supreme Court in Hira Lal Rattan Lal v. Sales Tax Officer, Section III, Kanpur [1973] 31 STC 178 at page 190. Had there been an intention to exclude Horlicks from the category of powdered or condensed milk under Notification No. 886-F.T. dated May 1, 1955, it was easy for the authority issuing the notifications to exclude Horlicks from that notification, and if there was an intention to include Horlicks in the category of powders for food drinks, the authority issuing the notifications might easily include Horlicks in Notification No. 790-F.T. on April 2, 1957 or any time thereafter, or at least in the latest Notification No. 763-F.T. dated March 29, 1994. Having not done so, the legislating authority has clearly given out an intention that Horlicks is not to be treated in the category of powders for food drinks, but should continue to be considered in the category of powdered or condensed milk, whether skimmed or not, or whether mixed with any other substance or not, under Notification No. 886-F.T. dated May 1, 1955. This is one aspect of the matter. 10.. It is true that apart from the products named in Notification Nos. 790-F. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "The effect of an expecting or qualifying proviso, according to the ordinary rules of construction, is to except out of the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it; and such a proviso cannot be construed as enlarging the scope of an enactment when it can be fairly and properly construed without attributing to it that effect."-Page 218, Craies on Statute Law, 7th Edition, 1971. According to Statutory Interpretation by Francis Bennion, Butterworths, 1984, Reprint 1988, "A proviso is a formula......which is placed at the end of a section or sub-section of an Act, or of a paragraph or subparagraph of a Schedule and the intention of which is to narrow the effect of the preceding words"-(page 570). In Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Subhash Chandra Yograj Sinha AIR 1961 SC 1596 at page 1600, it was held that "as a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment, and ordinarily, a proviso is not interpreted as stating a general rule". Dr. D. Pal appearing for the applicants, relied on Commissioner of Sales Tax, Orissa v. Hal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the illustrated products including Horlicks in the main part of Notification No. 886-F.T. dated May 1, 1955. 14.. There is one more significant point contended by the applicants. The finding of the authorities below is that Horlicks should be treated as a powder for food drinks under Notification No. 790-F.T. dated April 2, 1957 as substituted by Notification No. 763-F.T. dated March 29, 1994. It was contended on behalf of the assessee that since 1955 till the period preceding the impugned period of 12 months ending March, 1995, namely, up to the period ending March, 1994, for about 39 years, Horlicks had been consistently treated for the purpose of assessment of tax by the sales tax authorities as falling under the main part of Notification No. 886F.T. dated May 1, 1955. Dr. Pal on behalf of the applicants relied on Radhasoami Satsang v. Commissioner of Income-tax [1992] 193 ITR 321 (SC) at page 329. In that case the following observation was made: "We are aware of the fact that, strictly speaking, res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamen ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
