COMMISSIONER OF SALES TAX Vs. FOOD SPECIALITIES LTD

JUDGEMENT

(1.) BY this reference made under section 61 (1) of the Bombay Sales Tax Act, 1959, the Maharashtra Sales Tax Tribunal has referred the following questions of law to this Court for opinion at the instance of the Revenue : (1) Whether on a true and proper interpretation of entry 33 (2) of Schedule "c" of the Bombay Sales Tax Act, 1959 (as it stood prior to July 1, 1981) the Tribunal was correct in holding that the product "paloma lime tea mix" (packed in a scaled container of 100 gms. net weight) sold by the present opponent under invoice No. Bom-1174 dated January 14, 1980, for Rs. 31.10 is not covered by the scope of entry C-33 (2) but is covered by the residuary entry E-22 ? (2) Whether the article would be covered under entry E-6 ?

(2.) ON January 14, 1980, the assessee, M/s. Food Specialities Limited, filed an application before the Commissioner of Sales Tax, Maharashtra State, Bombay under section 52 of the Bombay Sales Tax Act, 1959 ("the Act") seeking determination of the correct rate of tax payable under the Act on the sales of its product "paloma lime tea mix" (packed in sealed container of 100 gms. net weight ). It was stated by the assessee in the above application that it was a powdered soft drink which dissolves instantly in cold water and gives a very delicious and refreshing lime tea drink. The contention of the assessee was that it was not a beverage within the meaning of entry 33 (2) of Schedule C to the Act and hence it would fall under the residuary entry being entry 22 of Schedule E to the Act. The Commissioner interpreted entry 33 (2) of Schedule C and held that the expression "non-alcoholic beverages" appearing therein was wide enough to include products which can be used as beverage by admixing water. According to him, the word "beverages" was not restricted to mean only prepared drinks. He, therefore, held that the product in question namely, "paloma lime tea mix" would fall under entry 33 (2) of Schedule C to the Act and the sales thereof would be subject to tax at the rate applicable on the sales of goods covered by the said entry, which at the material time was 12 paise in a rupee. Aggrieved by the determination of the Commissioner, the assessee appealed to the Maharashtra Sales Tax Tribunal ("the Tribunal" ). The Tribunal accepted the contention of the assessee and allowed the appeal and held that the product "paloma lime tea mix" sold by the assessee was not covered either by entry 33 (2) of Schedule C or entry 6 of Schedule E to the Act and that it would fall under the residuary entry, entry 22 of Schedule E to the Act. Hence this reference at the instance of the Revenue.

(3.) WE have carefully considered the rival submissions. "beverage", as commonly understood, means "any liquid for drinking other than water". It is a name applied to drinks. In WEbster's 3rd International Dictionary, "beverage" has been described as "liquid for drinking especially such liquid other than water (as tea, milk, fruit juice, beer) usually prepared (as by flavoring, heating, admixing) before being consumed". The Random House Dictionary of the English language (College Edition) describes "beverages" as "any liquid for drinking especially such liquid other than water". There is no dispute about the fact that the products sold by the assessee are not in liquid form. It is in a powder form - when dissolved in water it may take the form of beverage. The ingredients used in its manufacture are : (1) Sugar, (2) Niligiri's instant tea, (3) Maltodextrine, (4) Citric acid, (5) Tartaric acid, (6) High quality orange flavour made from natural oils, and (7) Vitamin C. The "directions for use" are also indicated on the packet, which says that the contents of the packet are to be emptied in a jug of cold water (1 litre/5 tumblers) and then stirred and served by adding ice cubes. It is evident from the above description that it is not a beverage but a powder from which non-alcoholic beverage can be prepared. In that view of the matter, it is difficult to hold that the product "paloma lime tea mix" sold in powder form by the assessee in packs of 100 gms. net weight falls under entry 33 (2) of Schedule "c" to the Act.