NESTLE INDIA LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) The following are the substantial questions of law on which the above tax case (revisions) were admitted:

(2.) The assessee resisted the assessment by pointing out that the product sold by the assessee is pasteurized toned milk, sold under the brand name and at no stage of pasteurization, preservatives or additives are added to milk. Since the process undertaken had not resulted in milk different, the assessee sought for dropping of the proceedings, which included the levy of penalty. The assessee pointed out that fresh milk collected from villages is put through bactofugation and pasteurization process, i.e., heated up to a temperature of 74 degree centigrade for 15 seconds and then chilled at a temperature below 4 degree centigrade. Then it is transferred to Ultra Head Treatment 60 KL Silo and then sterilized in tetra therm aseptic. The term "pasteurization", when used in association with milk of different classes, meant heating (milk of different classes) by a heat treatment and cooling to a suitable temperature before distribution. The toned milk has minimum 3.5 per cent milk fat and minimum 8.5 per cent solid non-fat; thus the pasteurized milk sold by the assessee with its brand name merits to be exempted for taxation. The assessee reiterated that there was no preservatives or additives added to the milk. Thus pasteurization and UHT technology are heat treatment used for processing milk and this preserves most of the taste and nutrition, vitamin and protein value of the fresh product. As already pointed out, the claim of the assessee was rejected by the assessing officer. This led to the assessee filing an appeal before the Deputy Commissioner (Appeals).

(3.) The first appellate authority concurred with the assessing officer's view. Referring to entry 4(ii) of Part E of the First Schedule to the Tamil Nadu General Sales Tax Act, the first appellate authority viewed that the use of the expression "includes" brought within its fold, toned milk too. He held that apart from pasteurization, there are other processes such as flavouring and sterilization. Hence the product would not fall under entry 6, Part B of the Third Schedule to the Tamil Nadu General Sales Tax Act. In the circumstances, the appeal was rejected. Aggrieved by this, the assessee went on further appeal before the Tamil Nadu Sales Tax Appellate Tribunal.