Lazarus Alosius vs State Of Kerala on 23 February, 2005

    Lazarus Alosius vs State Of Kerala on 23/2/2005

JUDGMENT

   B. Subhashan Reddy, C.J.

   1. 'Whether sales tax varies with place of business' is the question for
consideration. This question has been referred to Full Bench by a reference
order made by Division Bench in S.T.Rev. Nos. 312 and 313 of 2003. There are two
previous judgments of this Court on this point The first is in Vilasini v. State
of Kerala, 2001 (1) KLT 320 = 2001 (9) KTR 411 (Ker.). Referring to Entry 87 of
Schedule I of Kerala General Sales Tax (for short 'K.G.S.T. Act'), it was held
that soda is taxable in the said Entry, and, then, on a question of fact, it was
held that the sales were not exigible to sales tax in the said case, as the
sales tax already suffered and being single point tax, second sales were held to
be not liable to tax. There were no arguments that soda is not traceable to
Entry 87, but taking that the above case laid down a proposition that sale of
soda in Bar attached hotels attracts sales tax in Entry 87, another Division
Bench, in T.R.C. No. 99 of 1999 held that sale of soda in Bar attached hotels
comes within the ambit of Entry 87 and that it is taxable at 20%. The Division
Bench, which referred the matter to the Full Bench, differed with the said view
and holding that the issue needs a fresh look, has referred the matter to the
Full Bench. Other similar matters also are clubbed later and that is how this
batch of cases has been heard.

   2. In S.T.Rev. No.355/2003, the assessment year is 1997-1998 while in
S.T.Rev. . Nos. 312 and 356 of 2003, the assessment year is 1998-1999.In
S.T.Rev. No. 245 of 2004, the assessment year is 2000-2001 and in S.T.Rev.
No.269 of 2004, the assessment year is 2001-2002. These revisions have been
filed aggrieved by the orders of the Sales Tax Appellate Tribunal that the sale
of soda in Bar attached hotels is exigible to tax under entry relating to the
sale of soda regardless of the place of sale.

   3. The Entries underwent change in the assessment years from 1997 to 2002.
For the period from 1.4.1997 to 31.3.1999, Entry 87 to Schedule 1 reads as
follows:

Entry No. Description of goods Point of levy Rate of tax 87 Non-alcoholic
drinks, At the point of 20 squashes, sauces, aerated first sale in the State
waters, mineral water,

              beverages, Glucose D,

              Glucovita and similar

              items whether bottled,

              canned or packed.

From 1.4.1999 to 31.12.1999, the relevant Entry was 124A, which reads as follows
:

Entry No. Description of goods Point of levy Rate of tax 124A Squashes, sauces,
soda, At the point of 20 mineral water, Horlicks, first sale in the State Boost,
Bournvita, Complan,

              Glucose D, Glucovita and

              similar items whether or

              not bottled, canned or

              packed.

From 1.1.2000, the Entry changes to 141, which reads as follows:

Entry No. Description of goods Point of levy Rate of tax 141 Squashes, sauces,
At the point of 20 fruit juices, fruit pulp, first sale in the State soda,
mineral water,

              Horlicks, Boost,

              Bournvita, Complan,

              Glucose D, Glucovita

              and similar other items

              whether or not bottled

              canned or packed.

   4. The above Entries dealt with the impost of sales tax on sale of goods
mentioned therein and relevant for the instant adjudication is the word 'aerated
waters' in Entry 87, 'soda' in Entry 124A and again 'soda' in Entry 141 basing
upon the amendments from time to time as mentioned supra. Counsel for the
petitioners state that soda, which is supplied at the Bar attached hotels is
differently dealt with for impost under old Entry 40 corresponding to new Entry
46, Entry 40 was in vogue upto 31.12.1999 and from 1.1,2000, it changed to Entry
46. There is slight change in the rate of taxation for the above assessment
years basing upon the changes effected from time to time. For cooked food and
beverages coming within the ambit of Entry 40 or 46, as the case may be, it was
6% up to 31.3.1999 and 8% thereafter.

   5. Learned Counsel for the petitioners strenuously contended that the Sales
Tax' Appellate Tribunal has erred in holding that sale of soda is not covered by
Entry 40 or 46 and that it is only covered by Entry 87 or 124A or 141 of
Schedule I of the K.G.S .T. Act. The purport of the argument of the learned
Counsel for the petitioners is that K.G.S.T. Act aims at charging sales, tax on
sale of soda differently while it is being supplied at Bar attached hotels and
that, place of sale assumes significance, and, that is the criteria for the
impost of tax and that while soda sold at places other than Bar attached hotels
is chargeable at 20%, it is only chargeable at the concessional rate when it is
supplied or sold at the Bar attached hotels and that Entry 40/46 being specific
and Entry 87/124A/141 being general, specific entry prevails over the general
entry and as such the sales tax leviable for sale of soda at Bar attached hotels
is traceable to Entry 40/46 and not Entry 87/124A/141.

   6. Mr.Raju Joseph, learned Government Pleader (Taxes), counters the above
argument and submits that specific entry is Entry 87/124A/141 and not Entry
40/46 and there is no indication by the Legislature that sale of soda was to be
taxed differently when served at Bar attached hotels and that the word
'beverages' has to be understood as cooked beverages and that soda, by no
stretch of imagination, can be brought within the ambit of cooked beverages and
that, consequently, it is only traceable to Entry 87/124A/141.

   7. Special law prevails over general law is a settled proposition. Likewise,
in taxation laws, special entries of impost always prevail over general entries.
Again, words carrying general meaning have to give way to the specific words
while tracing the impost in taxation laws. If there is any ambiguity in the
interpretation of tax provisions casting doubt on the charging section or the
entry, then the said benefit of doubt has to go to tax payer and not to Revenue.
But, if the words in the statute are clear and unambiguous, the same have to be
read literally without making any assumptions. This view of ours is fortified by
the Judgment of the Supreme Court in Member Secretary, A.P.S.B. for P&C.W.P. v.
A.P. Rayons Ltd., AIR 1989 SC 611. Dealing with interpretation of taxing
provision very comprehensively and referring to the earlier Judgments on the
point, the Supreme Court has authoritatively held:

     "In a Taxing Act, one has to look merely at what is clearly said. There is
no room for any intendment. There is no equity about a tax. There is no
presumption as to tax. Nothing is to be read in, nothing is to be implied. One
has to look fairly at the language used and it must be found out from the
language according to its natural meaning fairly and squarely read. It was also
held that one of the well recognized cannons of construction is that
Legislature, speaks its mind by use of correct expression and unless there is
any ambiguity on the language or any provision, the Court should adopt literal
construction, if it does not lead to absurdity."

   8. In the light of the above legal principles, we proceed further to consider
as to whether there is any ambiguity in Entries 87/124A/141 or the other Entries
40/46 and also as to whether soda is clearly covered by Entry 40/46 or Entry
87/124A/141.

   9. Relevant is the word 'beverages'. In generic sense, any potable liquid
except water is a beverage. Beverage may be alcoholic or non-alcoholic. Again,
among nonalcoholic, it may be hot beverage like tea, coffee or cold beverage
like cola and soda. Beverages like cola and soda come within the meaning of
'aerated waters'. Aerate is a process of exposing product to air for the purpose
of mixing with air. Water mixed or charged with gas or air under pressure is
'aerated water'. Soda is aerated with carbon dioxide. Thus, it is clear that
'aerated water' is a special word to the general word 'beverage' and soda is a
specific word to the word 'aerated water'. We need to examine whether the
Legislature intended to employ the generic word 'beverage' in Entry 40/46 so as
to include soda therein.

   10. It is apt to extract the entries as they underwent changes for the
relevant assessment years:

For the year 1.4.1997 to 31.3.1999

Entry No. Description of goods Point of levy Rate of tax 40 Cooked food
including At the point of 6 beverages not falling first sale in the

                under Entries 53 and State

                54 of this Schedule

                sold or served in

                Bar attached hotels

                and/ or star

                hotels/restaurants.

1.4.1999 to 31.12.1999

Entry No. Description of goods Point of levy Rate of tax 40 Cooked food
including At the point of 8 beverages other than first sale in

                those falling under the State

                Entries 53, 54,

                87 and 124A of

                this Schedule.

From 1.1.2000 on wards

Entry No. Description of goods Point of levy Rate of tax 46 Cooked food,
including At the point of 8 beverages not falling first sale in

                under Entry 60 of this the State

                Schedule, sold or

                served in Bar attached

                hotels and/or star

                hotels.

   11. The word 'beverages' in the above Entries cannot be stretched to cover
all beverages. It is controlled by the preceding word 'cooked food'. Soda is not
a beverage, which can be said to be egusdem generis with cooked food. Only
drinks like tea and coffee can be brought within the meaning of 'beverages' as
being related and inclusive of cooked food in Entries 40/46. Reference to some
case law relating to interpretation of word 'cooked food' may be relevant.

   12. In Annapurna Biscuit (Mfg.) Co. and Anr. v. State of U.P. and Anr.,
(1975) 35 STC 127, Allahabad High Court was dealing with the point whether
biscuit is either a 'cooked food' or 'sweetmeats' or 'confectionary'. The sales
tax authorities construed biscuit as a confectionary and the same was set aside
by the Court. In Commissioner of Sales Tax v. Jassu Ram Bakery Dealer, (1976) 35
STC 461, the same question arose as to whether biscuit comes within the category
of 'cooked food'. It was held that biscuit did not answer the description of
'cooked food'. The said view was followed in another judgment in Commissioner of
Sales Tax, U.P., Lucknow v. Vinod Bakery, (1978) 42 STC

   471. In yet another judgment of Allahabad High Court in Commissioner of Sales
Tax, U.P. v. Hira Ice Candy, (1979) 44 STC 158, the same view was taken while
construing whether ice candy comes within the definition of 'cooked food'. It
was held that ice candy cannot be called as 'cooked food'. The said views were
affirmed by the Supreme Court in Annapurna Biscuit Manufacturing Co., Kanpur v.
Commissioner of Sales Tax, U.P., Lucknow (AIR 1981 SC 1656). It was held in the
above case that the words used in law imposing tax should be construed in the
same way in which they are understood in ordinary parlance in the area in which
the law is in force and that if an expression is capable of a wider meaning as
well as narrower meaning, the question whether the wider or the narrower meaning
should be given depends on the context and background of the case. The Supreme
Court held that the process of making an eatable by way of cooking is absent in
the business of manufacture and sale of biscuits, even if they are intended for
human consumption. The above legal principles laid down by the Supreme Court
squarely apply to the instant cases and soda cannot be brought within the
Entries 40/46 of Schedule I of the K.G.S.T. Act.

   In the result, the Sales Tax Revisions fail and they are accordingly
dismissed.