IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT :- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER WEDNESDAY, THE 26TH NOVEMBER 2008 / 5TH AGRAHAYANA 1930 ST.Rev..No.66 of 2007 ------------------------------------ (ORDER OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE DATED 25.8.2005 IN TA.No.75/2005) (ASSESSMENT YEAR 1999-2000). .................... PETITIONER/RESPONDENT/RESPONDENT/REVENUE:- ------------------------------------------------------------------------------ STATE OF KERALA., REPRESENTED BY JOINT COMMISSIONER (LAW) IN-CHARGE, COMMERCIAL TAXES, ERNAKULAM. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. RESPONDENT/APPELLANT/APPELLANT/ASSESSEE:- -------------------------------------------------------------------------- MALABAR REGIONAL CO.OP.MILK PRODUCERS UNION LIMITED, KANNUR DAIRY, KANNUR DISTRICT. THIS SALES TAX REVISION HAVING COME UP FOR ORDERS ON 26/11/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------------------ S.T.Rev.No. 66 of 2007 --------------------------------------------- Dated, this the 26th day of November, 2008 O R D E R H.L.Dattu, C.J. The State, being aggrieved by the orders passed by the Kerala Sales Tax Appellate Tribunal, Additional Bench, Kozhikode in T.A.No.75/2005 dated 25.8.2006 is before us in this tax revision petition. 2. The Revenue has framed the following questions of law framed for our consideration and decision. They are as under: “A. Whether the Appellate Tribunal is right in law in treating 'sambharam' in par with butter milk in the matter of classification for taxation? B. Can in any stretch of imagination, 'sambharam' which is made up of diluted butter milk with ginger, curry leaves, etc. in a definite proportion be treated in par with butter milk? C. Has not the interpretation drawn by the Appellate Tribunal against the rule of common parlance or commercial parlance theory in the matter of interpreting a commodity for taxation purpose?” 3. The one and only question that arises for our consideration and decision is, the rate of tax payable on the sale of 'sambharam'. The assessee had claimed reduced rate of tax on the ground, that, sambharam is nothing but butter milk, as envisaged under Entry 49 of the First Schedule to the Kerala General Sales Tax Act (“KGST Act” for short). However, the S.T.Rev.No.66/2007 -2- assessing authority was of the view, that, for the purpose of preparing sambharam, ginger, chilly, etc. are added to the butter milk, and, therefore, the identity of the butter milk changes, and, therefore it should be treated as an item falling under the Residuary clause, and, therefore, the assessing authority taxed it at 8%. Further, the assessing authority had relied upon the clarification issued by the Commissioner of Commercial Taxes, in Clarification No.C3.62774/01/CT/dt.15.2.03. 4. Aggrieved by the said order passed by the assessing authority, the assessee had carried the matter in appeal before the first appellate authority. In the first appeal, without considering the contention of the assessee that butter milk and sambharam are one and the same commodity and, therefore, they would fall under Entry 49 of the First Schedule to the KGST Act, the first appellate authority, relying upon the clarification issued by the Commissioner of Commercial Taxes, has proceeded to confirm the orders passed by the assessing authority. 5. The correctness or otherwise of the orders passed by the first appellate authority was questioned by the assessee before the Tribunal. After detailed consideration of the issue before them the Tribunal has granted relief to the assessee. It is the correctness or otherwise of the orders passed by the Tribunal is the subject matter of this revision petition. S.T.Rev.No.66/2007 -3- 6. The issue that would arise for our consideration and decision is, whether by adding of green chilly, ginger etc. to the butter milk, does the character of the butter milk would change, to fall it under the Entry other than Entry 49 of the First Schedule to the KGST Act? 7. Admittedly, the assessee is effecting sales of sambharam. For the preparation of sambharam, the assessee would add ginger, chilly and a pinch of salt to the butter milk. Mere addition of the ginger, chilly and a pinch of salt would not change the commodity as such. The sambharam continues to be the butter milk, and, therefore, in our opinion, the Tribunal was fully justified in annulling the orders passed by the assessing authority which was confirmed by the first appellate authority, and, further treating that sambharam is an item which would fall under Entry 49 of the First Schedule to the KGST Act. 8. In that view of the matter, while affirming the orders passed by the Tribunal, we reject the tax revision petition. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE MS