Full Judgment Text
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CASE NO.:
Appeal (civil) 6221 of 1999
PETITIONER:
The Commissioner, Trade Tax. U.P.
RESPONDENT:
S/S National Cereal Product
DATE OF JUDGMENT: 07/03/2005
BENCH:
Ruma Pal, Arijit Pasayat & C.K. Thakker
JUDGMENT:
J U D G M E N T
WITH
CA. Nos. 6222- 6225/1999
CA No. 4313/2001,
CA Nos \005\005\005\005..of 2005
@ SLP(C ) Nos.7423-25/2004
RUMA PAL, J.
Leave granted in special leave petitions.
The dispute in this case is whether germinated barley or malt is
a cereal for the purposes of three notifications. Malted barley is
barley which is soaked in water and upon germination, dried. The first
notification is issued under Section 3D of the U.P. Sales Tax Act,
1948 read with Section 21 of the U.P. General Clauses Act, 1904 and
is dated 30th May, 1975. It provided that with effect from 18th June,
1975 the turnover of first purchases of inter alia foodgrains including
cereals and pulses but excluding Sawan, Kodon, Mandua, Kakun,
Manjhri (or Ankri), Kutu, Ramkana and Paddy would be liable to tax
under clause (b) of sub-section (1) of Section 3D at the rates
mentioned against it.
The second Notification is dated 11th September, 1976. This
notification was issued under sub-section (2A) of Section 3A of the
UP Sales Tax Act, 1948. It provided that with effect from
11th September, 1976 the turnover in respect of foodgrains (including
cereals and pulses) other than cereals and pulses as defined in
Section 14 in the Central Sales Tax Act, 1956 shall be liable to tax at
the reduced rate of 4% at the point of sale to the consumer.
The third notification is dated 30th of April, 1977 issued under
Section 3D (1) of the U.P. Sales Tax Act, 1948. It provided that with
effect from 1st May, 1977, the turnover of first purchases of inter alia
foodgrains including cereals and pulses other than cereals and
pulses as defined in Section 14 of the Central Sales Tax Act, 1956
would be liable to tax at 4%.
Earlier the respondent assessee had claimed that the malted
barley sold by it was covered by the word "cereal" in Section 14 of the
Central Sales Tax Act 1956. The High Court had rejected this claim
by its judgment dated 16th September, 1993 and held that malted
barley was not a cereal within the meaning of Section 14 of the 1956
Act.
The respondent\027assessee then moved five rectification
applications before the High Court alleging that the alternative cases
that had been argued by the respondent had not been noted or dealt
with by the High Court in the order dated 16th September, 1993. The
alternative case of the respondent\027assessee was that even if the
malted barley was not a cereal within the meaning of Section 14 of
the Central Sales Tax Act, 1956 nevertheless it continued to be a
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foodgrain or cereal for the purposes of the three notifications. In the
further alternative it was urged by the respondent\027assessee that in
any case it was the duty of the Taxing Authority to tax the assessee
under the proper entry if the contention of the assessee had been
negatived by the authorities. The five rectification applications were
disposed of by judgment and order dated 21st September, 1994. The
High Court held that the determination of the alternative cases might
require evidence and therefore it was appropriate to send the case
back to the Sales Tax Tribunal. Accordingly, it was ordered that the
Sales Tax Tribunal shall decide the question whether the malt
prepared from barley is foodgrain including cereal within the meaning
of the three notifications. It was however, made clear that the Tribunal
would take the finding of the Court that malt and barley were two
different commodities and that malt did not fall within the definition of
word ’cereal’ for the purposes of Section 14 of the Central Sales Tax
Act, as final.
On remand, the Tribunal re-examined the meaning of the
definition "malt" and "cereal" in several dictionaries and
encyclopedias and came to the conclusion that the word ’malt’ was
covered by the word "cereal" in the three notifications.
The High Court dismissed the revision application of the
Department by independently considering the definitions given in
various dictionaries and other authoritative works and came to the
conclusion that malt is merely another form of barley and was a
foodgrain within the meaning of the three notifications.
Impugning the decision of the High Court learned counsel for
the Department submitted that the Tribunal and the High Court had
erred in holding that the malt was either a cereal or a foodgrain when
the order of remand, which had not been challenged by the
respondent\027assessee, had already held that the malt was not a
cereal.
The submission is mis-conceived. By the order dated 21st
September 1994, the High Court had merely held that the barley malt
was not a cereal for the purposes of Section 14 of the Central Sales
Tax Act. It was clearly envisaged by the order of remand that despite
such finding, barley malt could still be a cereal or a foodgrain for the
purposes of the three notifications.
Counsel for the appellant then referred to various other
dictionaries to contend that malt is neither cereal nor a foodgrain. The
grain, according to the appellant, is a seed which is yet to be
germinated. We have considered the various dictionary meanings
referred to by the appellant. In none of them has the word ’grain’
been limited to an un-germinated seed. On the contrary, malt has
been described as a foodgrain.
The notifications by which the rate of tax has been fixed in
respect of foodgrains makes it clear that the definition of foodgrains in
the notifications is wider than that in Section 14 of the Central Sales
Tax Act, 1956. It must be remembered that the notifications are not
exception notifications but contain charging provisions. As such the
onus to prove that the malted barley does not fall within foodgrains or
cereals was on the Revenue. They have failed to discharge the onus.
Both the Tribunal and the High Court have concurrently found that
malted barley is a foodgrain or cereal for the purposes of the three
notifications for reasons that cannot be discarded as perverse. We
therefore see no reason to interfere with their conclusion.
Additionally we find that the question of law formulated in the
Special Leave Petition was wholly incorrect. The question of law as
framed was whether the Tribunal was justified in holding that barley
malt falls under the category of cereals and pulses contained in
Section 14 of the Central Sales Tax Act. That was not the subject
matter of remand nor decided by the Tribunal nor affirmed by the
High Court.
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The appeals are accordingly dismissed without any order as to
costs.