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TMI Blog2003 (8) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... inalised the assessment as a case of nil demand . 3.. The petitioner had also filed its return for the assessment year 1997-98. It had a total turnover of Rs. 3,24,64,241.52. Out of this, the sale of milk was for an amount of Rs. 2,95,10.412.82. Exemption was claimed in respect of the sale of milk. 4.. On January 18, 2002, the assessing authority issued a notice under section 17(3) of the Act informing the petitioner that the sale of pasteurised milk for the year 1997-98 was exigible to the levy of tax. A copy of the notice is exhibit P2. Reliance was placed on the decision of a division Bench of this Court in Ernakulam Regional Cooperative Milk Producers Union Ltd. v. State of Kerala (2001) 9 KTR 459. Thereafter, on January 19, 2002, a notice was issued to the petitioner under section 19 informing him that in view of the decision in Ernakulam Regional Co-operative Milk Producers Union (2001) 9 KTR 459 (Ker), it was proposed to revise the assessment for the year 1996-97 under section 19 of the Act .. . The tax was proposed to be levied at the rate of 10 per cent on the total turnover of Rs. 35,51,706.65. It was also proposed to levy surcharge. A copy of the notice is exhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be sustained. On the other hand, Mr. Raju Joseph, learned counsel for the respondents, submitted that the statute grants exemption only in respect of the sale of fresh milk. Sale of pasteurised milk was not exempted from the levy of the tax till the entry was amended with effect from January 1, 2000. He also submitted that even while granting exemption vide notification dated March 22, 2001, the benefit was confined to the sale by the co-operative societies and was not given to the other dealers. The sequence of events is indicative of the legislative intent. Thus, the sale of pasteurised milk is not exempted from the levy of tax and the notices issued to the petitioner are legal and valid. 8.. In view of the contentions raised by the learned counsel, the short question that arises for consideration is Does pasteurised milk fall outside entry 23 in the Third Schedule to the Act? 9.. Section 5 provides for the levy of tax on sale or purchase of goods. Sale under the statute means transfer of property in goods by one person to another in the course of trade or business . Thus, every sale would be exigible to the levy of tax unless it is specifically exempted. 10.. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of heating and cooling does not result in a new product, the milk continues to be fresh milk and its sale cannot be subjected to the levy of tax. 13. Even the respondents have accepted this position continuously. In this behalf, it deserves mention that vide letter dated December 10, 1998, the Principal Secretary, Department of Taxes, had written to the Commissioner of Commercial Taxes that the process of pasteurisation does not amount to a manufacturing activity. It does not convert fresh milk into a commercially different commodity. Pasteurised milk is the same thing as fresh milk . Similarly, even the asessing authority had accepted the petitioner's claim vide its order dated March 21, 2001 and granted exemption under section 9. In fact, the Sales Tax Appellate Tribunal had even gone to the extent of exempting milk prepared after adding water to the skimmed milk powder. 14.. Mr. Raju Joseph, learned counsel for the Revenue, pointed out that the matter had been considered by a division Bench of this Court in Ernakulam Regional Co-operative Milk Producers Union Ltd. v. State of Kerala (2001) 9 KTR 459. It was held that the pasteurised milk is not exempted from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factual position, the impugned notices for the levy of tax at the rate of 10 per cent as well as the surcharge would clearly place an unbearable burden on the petitioners. It is true that hardship is not a valid ground while considering the validity of a levy. It is also true that some distinction may be permissible in case of co-operative societies. Yet, the arbitrariness of the respondents' action cannot be overlooked. 17.. Even the precedents support the plea raised on behalf of the petitioners. In Tungabhadra Industries Ltd. v. Commercial Tax Officer, Kurnool [1960] 11 STC 827, their Lordships of the Supreme Court were considering the question whether hydrogenated oil ceases to be groundnut oil. It was held that even though after the process the relative proportion of the different types of fatty acids undergoes a slight change , in its essential nature, no change occurs and it remains oil. Thus, the assessee was held entitled to deduction. Similarly, in Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 304 (SC), the issue was whether parched rice and puffed rice were rice and fell within the meaning of entry 66(b) of First Schedule to the Andhra Prad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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