COMMISSIONER OF SALES TAX Vs. JOY ICE CREAM

JUDGEMENT

(1.) This is a reference under section 61(1) of the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the said Act"), made at the instance of the Commissioner of Sales Tax. The question referred to us for our determination is as follows :

(2.) The facts giving rise to this reference are as follows : The respondents are registered as a dealer and hold a recognition certificate under the said Act. The respondents manufacture ice-cream on a large scale. In the assessment of the respondents for the period 1st April, 1964, to 31st March, 1965, it appears that the respondents claimed that sales of ice-cream amounting to Rs. 2,07,790 were free from tax as being sales of ice-cream sold within the premises of the respondents at less than Re. 1 per person. It may be noticed that the actual exemption at the relevant time was in respect of ice-cream sold at not more than Re. 1-50 per person. This contention was not accepted by the Sales Tax Officer as he was of the view that ice-cream was covered by entry 31 of Schedule C to the said Act and not entry 14 of Schedule A thereof. The Assistant Commissioner of Sales Tax accepted the contention of the respondents that sales of ice-cream effected by the respondents within their premises at less than Re. 1 per person were covered by entry 14 of Schedule A to the said Act and were thus exempt from the levy of sales tax. The Assistant Commissioner, however, held that the respondents had contravened the recitals of the certificate in form 15 on the strength of which they had made purchases of certain raw materials like milk powder, dry fruits, fresh cream, etc., which were used in the manufacture of ice-cream the sales of which amounting to Rs. 2,07,790 were allowed by him as exempt from the levy of tax and, accordingly, purchase tax under section 14 of the said Act amounting to Rs. 3,636.91 was levied by him on the respondents. The respondents preferred an appeals against this decision to the Deputy Commissioner of Sales Tax but without success. The respondents then went by way of revision to the Tribunal. The Tribunal observed that it failed to understand as to how it could be said that when 81.5 per cent of the sales of ice-cream made by the respondents were subjects to tax, ice-cream could be held to be a tax-free item to the extent of about 19 per cent where no tax was leviable. The Tribunal held that it was not the sale aspect of certain goods which was to be taken into consideration to find out as to whether there was any contravention of the recitals of the aforesaid certificate. Ice-cream as such is not in any of the entries in Schedule A to the said Act and hence it must be held to be a taxable commodity. The Tribunal upheld the contention of the respondent and directed that purchase tax levied under section 14 of the said Act should be deleted and if recovered from the respondents should be refunded to them. The present reference aries out of this decision of the Tribunal.

(3.) In order to appreciate the contentions raised before us, it is useful to take note of certain provisions of the said Act at this stage. The material portion of section 11 of the said Act, as it stood at the relevant time, read thus :