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TMI Blog2023 (3) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... Food Adulteration Rules, 1955, it is but clear that the process undertaken by the opposite party conforms to the packaged drinking water . Mere addition of sodium and magnesium salts may not convert water into mineral water unless other ingredients as specified in the Prevention of Food Adulteration Rules, 1955 are demonstrated to be present. The Revenue has utterly failed to bring on record that the product which is sold by the opposite party does contain other contents as enumerated in Appendix-B to the said Rules - If the Revenue could bring on record the fact that the product in question contained the ingredients specified for water to fall within the comprehension of mineral water as per A.32 of Appendix-B appended to the Prevention of Food Adulteration Rules, the matter would have been different. On the contrary, the opposite party-company having demonstrated that it has produced packaged drinking water in conformity with the specification of A.33 of Appendix-B of said Rules, it has discharged its onus. The Hon ble Delhi High Court in Bottled Water Processors Association Vrs. Union of India, [ 2010 (5) TMI 956 - DELH HIGH COURT ], held that it is mandatory for pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at when Entry 39 of Tax-free List and Entry 4 of the Taxable List are pitted against each other is that what is taxable is sale of aerated water or mineral water. The scope of taxability cannot be expanded by giving the extended meaning to the excepted expressions for the purpose of narrowing down the exemption granted to water which falls within the ken of Entry 39 of Tax-free List - it is held that sale of packaged drinking water in the brand name KINLEY WATER falls within the expression water but not aerated or mineral water sold in bottles or sealed containers vide Entry No.39 of Tax-free List. The issue is answered in the negative, i.e., in favour of the opposite party-assessee and against the Revenue. - STREV No. 26 of 2017 with STREV Nos. 23, 24 and 25 of 2017 - - - Dated:- 27-2-2023 - CHIEF JUSTICE DR. S. MURALIDHAR AND JUSTICE MURAHARI SRI RAMAN Advocates appeared in the case: For the Petitioner : M/s. Susanta Kumar Pradhan and Sunil Mishra, Additional Standing Counsel (Commercial Taxes) For the Opposite party : M/s. Monish Panda, Anup Narayan Mohanty, Aditya Singh Mohanty, Advocates JUDGMENT MURAHARI SRI RAMAN, J. 1. Chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, this Court heard the arguments advanced by Sri Susanta Kumar Pradhan, learned Additional Standing Counsel (Commercial Taxes) appearing for the petitioner-State of Odisha and Sri Monish Panda, learned Advocate for the opposite party-company and permitted both the parties to file written note of submission. Accordingly, written notes of submission have come to be filed by Sri Monish Panda and Sri Anup Narayan Mohanty, learned counsel for the opposite party-company on 13.02.2023 and Sri Sunil Mishra, learned Additional Standing Counsel (Commercial Taxes) on 16.02.2023. 1.4. Though the petitioner has raised as many as four questions of law in the petition for revision being STREV No.26 of 2017, by filing written note of submission, the Revenue has confined its arguments to question No.A extracted herein above. Though many other questions, besides question akin to question No.A above, are raised in other petitions [vide STREV No.23 of 2017], neither the same are argued nor are they agitated in the written note of submission. This Court deems that the questions of law as not pressed and, therefore, declines to answer said questions. 1.5. It is worth noticing that vide Order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xempted from levy of sales tax (for short herein after referred to as Tax-free List ). 2.1. Since common question of law has been raised, the finding and observation rendered in Appellate Order dated 16.05.2006 passed in AA-202/BH-I/2005-06 by the Assistant Commissioner of Sales Tax (Appeal), Puri Range, Bhubaneswar in connection with Assessment framed under Section 12(4) of the OST Act the Year 2004-05 vide Order dated 20.01.2006 of the Taxing Authority, Bhubaneswar-I Circle, Bhubaneswar is taken as the lead case for discussions for convenience. 2.2. In the assessment for the Year 2004-05 under Section 12(4) of the Odisha Sales Tax Act, 1947 (for brevity, OST Act ), the Assessing Authority rejected such claim of exemption by holding as follows: *** Further the dealer has claimed deductions of Rs.48,82,97,648.82 and Rs.67,49,490.23 towards sale of tax exempted aerated water manufactured in its unit and resale of packaged drinking water respectively. *** From the wrapper itself it is evident that the ingredients of the products are treated water, minerals (sodium chloride, magnesium sulphate). So the water sold by the dealer is nothing but the water mixed with the disso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NLEY is nothing but natural water and does not come under the purview of mineral water. But the learned STO did not accept the claim of appellant and treated the same as mineral water and added the amount to the taxable turnover. *** 27. Coming to the dispute relating to disallowance of the sale of packaged drinking water in the brand name of KINLEY from the exempted turnover and taxing the same @12%. In the present case the appellant during the assessment years 2001-2002, 2002-2003, 2003-2004 and 2004-2005 inadvertently paid tax on the sale of KINLEY water under a bona fide mistake of law. But the moment come to the knowledge of the appellant that Entry No.39 is there, in the rate chart under Orissa Sales Tax Laws, he filed revised return adhering to the provisions available under the Orissa Sales Tax Act. There is catena of decisions where delayed filing of revised returns have been accepted. Hence, this cannot be ground raised by the revenue for disallowance essential on our part to appreciate the details under the Entry No.39 of List-A and Entry No.4 of List C of the rate chart under Orissa Sales Tax Laws: Entry SI.No.39 of List-A: Water but not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over and taxing the same @12%. Thus, grounds taken by the revenue for 2001-02, 2002-03, 2003-04 and 2004-05 merits no consideration. 2.6. The State of Odisha-Commissioner of Sales Tax, therefore, preferred revision invoking provision for further proceeding under Section 24 raising question of law on the ground that the learned Odisha Sales Tax Tribunal erroneously decided the issue. Argument(s) advanced by the learned Counsel for Hindustan Coca- Cola Beverages Pvt. Ltd.: 3. The manufacturing process adopted by the company for preparing packaged drinking water potable drinking water is used as base and it is put through the Double Reverse Osmosis process (RO) for treating and purifying water. The double RO process also eliminates pesticides at PPT levels (parts per trillion). During the osmosis process some of the mineral salts present in water also gets removed which impacts the taste profile of water. For improving taste, mineral salts are required to be added back to the filtered and purified water as per standards laid down by then prevailing Prevention of Food Adulteration Act, 1954 (now, the Food Safety and Standards Act, 2006). The entire process was undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed containers used therein obviously means packaged form . In absence of definition of the terms, in view of principles laid down in Akbar Badruddin Jiwani Vrs. Commissioner (Customs), 1990 (47) ELT 161 (SC) [paragraphs 53 and 55]; and CCE, Kanpur Vrs. Krishna Carbon Paper Co., 1988 (37) ELT 480 (SC) [paragraph 11], they are to be understood in common sense or commercial parlance; in contrast with scientific or technological meaning attributed to it. Added to such interpretation with regard to classification of commodity, drawing distinction between the prices of mineral water and packaged drinking water , the learned counsel submitted that the price of former is much higher than the latter one. 3.4. In such view of the matter, Sri Monish Panda submitted that packaged drinking water sold by the company under brand name KINLEY WATER does fall within the ambit of Entry 39 of the Tax-free List and not Entry 4 of the Taxable List. Argument(s) advanced by the Additional Standing Counsel: 4. Sri Susanta Kumar Pradhan, learned Additional Standing Counsel (Commercial Taxes) attempted to justify the stance of the Revenue by referring to the information available on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties: 5. For better comprehension, the entries as it stood at the relevant point of time are placed hereunder: TAX-FREE LIST Sl. No. Description of goods 39. Water but not aerated or mineral water sold in bottles or sealed containers. TAXABLE LIST Sl. No. Description of goods Rate of tax 4. Aerated or mineral water sold in bottles or in sealed containers 12% 5.1. Upon perusal of label on the body of the KINLEY water bottle sold in the market, the Assessing Authority has made the following remarks in the Order of assessment: Packaged Drinking Water Ingredients: Treated water, minerals (sodium chloride, magnesium sulphate). Manufactured by Himjal Beverages (P) Ltd., Plot No.7, Phase-III, IDA, Pashamylaram, Patancheru (M), Medak District, A.P., for and on behalf of Hindustan Coca-Cola Beverages Pvt. Ltd., Enkay Towers, Udyog Vihar, Phase-5, Gurgaon, Haryana-122106 under the authority of Coca-Cola Company 5.2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king water because: a) it is obtained directly from natural or drilled sources from underground water-bearing strata for which all possible precautions should be taken within the protected perimeters to avoid any pollution of, or external influence on, the chemical and physical qualities; b) it is characterized by its content of certain mineral salts and their relative proportions and the presence of trace elements or of other constituents; c) of the constancy of its composition and the stability of its discharge and its temperature, due account being taken of the cycles of minor natural fluctuations; d) it is collected under conditions which guarantee the original microbiological purity and chemical composition of essential components; e) it is packaged close to the point of emergence of the source with particular hygienic precautions; and f) it is not subjected to any treatment other than those permitted by this standard. 3.1.1 Naturally Carbonated Natural Mineral Water Natural mineral water which, after possible treatment in accordance with 4.1 and re-incorporation of gas from the same source and after packaging taking into conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aeration, filtration with membrane filter, depth filter, cartridge filter, activated carbon filtration, demineralization, remineralization, reverse osmosis or any other method to meet the prescribed standard and packed. It may be disinfected to a level that will not lead to harmful contamination in the drinking water. It may be disinfected by means of chemical agents and/or physical methods to reduce of the number of micro-organism to a level that does not compromise food safety or suitability. It shall be filled in sealed containers of various compositions, forms and capacities that is suitable for direct consumption without further treatment. In case remineralization is a part of the treatment process, the ingredients used shall conform to the requirements of the Prevention of Food Adulteration Act, 1954 and the Rules framed thereunder. 5.7. As this Court is concerned with Assessment Years 2001-02, 2002-03, 2003-04 and 2004-05, the Revenue having not placed on record contemporaneous material, the argument by way of written note of submission advanced by it referring to recent information available in the web-portal is inappropriate. Rather this Court prefers to consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ources from underground water-bearing strata and not from public water supply for which all possible precautions should be taken within the protected perimeters to avoid any pollution of, or external influence the chemical and physical qualities of natural mineral water; (c) of the constancy of its composition and the stability of its discharge and its temperature, due account being taken of the cycles of minor natural fluctuations; (d) it is collected under conditions which guarantee the original microbiological purity and chemical composition of essential components; (e) it is packaged close to the point of emergence of the source with particular hygienic precautions; (f) it is not subjected to any treatment other than those permitted by this standard. (ii) Naturally Carbonated Natural Mineral Water A naturally carbonated natural mineral water is a natural mineral water which, after possible treatment as given hereunder and re-incorporation of gas from the same source and after packaging, taking into consideration usual technical tolerance, has the same content of carbon dioxide spontaneously and visibly given off under normal conditions of te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an, hygienic, colourless, transparent and tamperproof bottles/ containers made of polyethylene (PE) conforming to IS: 10146 or polyvinyl chloride (PVC) conforming to IS: 10151 or polyalkylene terephthalate (PET and PBT) conforming to IS: 12252 or polypropylene conforming to IS: 10910 or foodgrade polycarbonate or sterile glass bottles suitable for preventing possible adulteration or contamination of the water. 5.12. On comparison of definitions of mineral water and packaged drinking water as defined in the Prevention of Food Adulteration Rules, 1955, it is but clear that the process undertaken by the opposite party conforms to the packaged drinking water . Mere addition of sodium and magnesium salts may not convert water into mineral water unless other ingredients as specified in the Prevention of Food Adulteration Rules, 1955 are demonstrated to be present. The Revenue has utterly failed to bring on record that the product which is sold by the opposite party does contain other contents as enumerated in Appendix-B to the said Rules. Rather the opposite party having shown to have sold packaged drinking water has confirmed that the product sold is not mineral water a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not deny its obligation to pay due tax rate as per the statutory prescriptions. 5.15. It seems the petitioner-State of Odisha represented by the Commissioner of Sales Tax has failed to understand the purport of penal action visited with in the event there is non-compliance of statutory mandate in the Prevention of Food Adulteration Act read with the Bureau of Indian Standards Act. Such a contention/objection cannot be countenanced in law. Therefore, there is no doubt in mind to safely conclude that the product packaged drinking water is nothing but water sold in bottles which is encompassed within Entry 39 of the Tax-free List Water but not aerated or mineral water sold in bottles or sealed container . 6. It is not in dispute and cannot be disputed that the interpretation qua classification of commodity as enunciated by the Supreme Court in Connaught Plaza Restaurant Pvt. Ltd. (supra), Akbar Badruddin Jiwani (supra) and CCE Vrs. Krishna Carbon Paper Co., 1988 (37) ELT 480 (SC) is applicable in the present context. It has been laid down that in absence of definition, the words used in the entry in schedule is understood according to common sense or bearing in mind p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conversant with the subject-matter with which the statute is dealing, would attribute to it . Such words must be understood in their popular sense . The particular terms used by the legislature in the denomination of articles are to be understood according to the common, commercial understanding of those terms used and not in their scientific and technical sense for the legislature does not suppose our merchants to be naturalists or geologists or botanists . 6.5. In Ramavatar Budhaiprasad Vrs. The Assistant Sales Tax Officer, Akola, (1961) 12 STC 286 (SC) the Supreme Court had to decide whether betel leaves can be considered as vegetables and it said that it cannot be so considered and observed: Reliance was placed on the dictionary meaning of the word vegetable as given in Shorter Oxford Dictionary where the word is defined as of or pertaining to, comprised or consisting of, or derived, or obtained from plants or their parts . But this word must be construed not in technical sense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of everyday use it must be construed in its popular se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer-Hindustan Coca-Cola Beverages Pvt. Ltd. and sellers of the product have the understanding that packaged drinking water is different from mineral water in view of different standards prescribed by the BIS and in the PFA Act. Furthermore, the buyers would purchase the commodity chiefly for quenching thirst while at the same time ensuring that it is safe for drinking. Therefore, the buyer is interested in packaged drinking water rather than mineral water . 6.9. In CST Vrs. Melrose Biscuit Co., (2006) 146 STC 701 (All) it has been emphasized that the item in taxing statute must be construed in the sense in which they are sold by the dealer and purchased by the customer and the words or expressions used in a notification must be construed in the sense in which they are understood by the trade and by the consumer and not by what is understood by the department. 6.10. The specifications laid in the publications of Bureau of Indian Standards are well-known in the trade and therefore, the specifications and definitions given in such publications can be considered to be an authoritative indicator of the meaning of any particular term as popularly understood in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simpliciter for classification. This Court is called upon to adjudicate whether packaged drinking water sold in the brand name KINLEY WATER falls within the sweep of expression water but not aerated or mineral water sold in bottles or sealed containers . The key words are sold , aerated water and mineral water . The word sold in the entry is indicative that it is the trade circle in which the commodity is traded or understood by the manufacturer, the trader and the consumer. In the trade mineral water and packaged drinking water are understood in the same sense in which Bureau of Indian Standards and the Prevention of Food Adulteration Act have specified/defined. Thus considered, the contention of the petitioner-Revenue deserves to be rejected. 6.12. Another significant factor which the petitioner-Revenue did not dispute is that the price of mineral water is much higher than the price at which packaged drinking water is sold in the market. This additional fact coupled with understanding of the commodity in common parlance and trade circles, would lead to no ambiguity that water sold under the brand name KINLEY is nothing but packaged drinking water . 6.13. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Analysing the commodity in question keeping in mind the common sense approach, trade parlance understanding and statutory specifications, this Court is left with no option but to affirm the finding of fact by the learned Odisha Sales Tax Tribunal that KINLEY WATER fulfils the criteria of packaged drinking water to be classified under Entry 39 of List-A of Rate Chart under the OST Act as the label itself shows and packaged in bottling plant to provide hygienic and safe drinking water to the customers . Conclusion : 11. In view of aforesaid analysis of facts, position of law as discussed supra and reasons ascribed in the foregoing paragraphs, in the result, the question, whether KINLEY WATER sold by the opposite party-Hindustan Coca-Cola Beverages Pvt. Ltd. falls within the scope of Entry No.4 of Taxable List so as to attract levy of sales tax @ 12%, is answered in the negative, i.e., in favour of the opposite party-assessee and against the Revenue. 11.1. In other words, it is held that sale of packaged drinking water in the brand name KINLEY WATER falls within the expression water but not aerated or mineral water sold in bottles or sealed containers vide Entry N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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