TAX CASE No.19 OF 1997 (Against the order dated 15.4.1997 passed by the Commercial Taxes Tribunal, Bihar in Reference Case No. PT-33/95) -------- COMMISSIONER OF COMMERCIAL TAXES,BIHAR-----Appellant Versus M/S ASSOCIATED DYES & STUFF CORPORATION------Respondent --------- For the Appellant : Mr. Lalit Kishore, Additional Advocate General No.III. Mr. Piyush Lall, J.C. to A.A.G.III. For the Respondent : None --------- P R E S E N T THE HON'BLE MR. JUSTICE CHANDRAMAULI KR. PRASAD THE HON'BLE DR. JUSTICE RAVI RANJAN -------- C.K.Prasad, J: This case has come up before us on a reference made by the Commercial Taxes Tribunal, Bihar under Section 48 of the Bihar Finance Act. Assessee, M/s Associated Dyes & Stuff Corporation is a dealer and commission Agent in dyes, colour, glucose and maize starch. In the return for the year 1985-86, it paid tax @ 4% on maize powder. The Assessing Officer by its order dated 7.8.1993, levied tax at the rate of 9% treating it as kirana good. The Assessee, aggrieved by the same, preferred appeal and the appellate authority by its order dated 17.8.1994 dismissed the same and confirmed the order of the Assessing Officer. Assessee thereafter filed revision before the Commercial Taxes Tribunal, which by order dated 6.6.1995 upset the orders of the Assessing Officer and the appellate authority and held that 2 maize powder is nothing but maize starch and hence taxable at the rate of 4% and not at the rate of 9% as kirana good. Accordingly, the Tribunal allowed the revision application and directed the Assessing Officer to issue fresh assessment order. The Commissioner of Commercial Taxes filed application under Section 48 of the Bihar Finance Act (hereinafter referred to as the “Act”) for making a reference to this Court. The Tribunal acceded to the request of Commissioner of Commercial Taxes and at its instance referred the following question for our opinion : “In the facts and circumstances of the case, it is to be decided as to what should be the rate of tax applicable on maize powder which has been termed as maize starch and whether maize starch falls under the category of kirana goods or cereals.” Mr. Lalit Kishore, Additional Advocate General No.III, appears on behalf of the Commissioner of Commercial Taxes. Although the Assessee had entered appearance, but when the matter is taken up, nobody has chosen to appear on its behalf. Mr. Lalit Kishore, submits that very assumption that maize starch is maize powder and, therefore, cereal taxable at the rate of 4% is absolutely illegal. It is relevant here to state that the State Government in exercise of its power under the second proviso to 3 Section 12 of the Bihar Finance Act has issued notification fixing rate of sales tax. Item No.12 thereof, which is relevant for the purpose, reads as follows: “12.Cereals (excluding atta, maida suji and paddy) including all forms of rice, peas millet, kodo, kutti, jowar and bajra, wheat, barley, maize, sago, besan and sattu and cereals as defined in Section 14 of the Central Sales Tax Act, 1956. Item No.75 specifies the tax on kirana goods at the rate of 9% and same has been described as follows :- 75. Kirana goods Explanation – kirana goods means – 1. xx xx 2. xx xx 3. xx All kinds of starch xx xx xx There is no controversy that if the maize starch comes within the category of cereal, tax at the rate of 4% is leviable and if it comes within the definition of kirana goods, tax at the rate of 9% is to be charged. In my opinion, the first thing needs to be decided as to whether maize starch is maize powder or in other words maize powder and maize starch is one and the same thing. The Encyclopaedia Britannica while dealing with the utilization of maize narrates that it is utilized in three principal ways as a feed for livestock, as a human food and as a raw material in Industry. 4 Chief amongst the industrial uses of maize is the manufacture of corn starch and its derivatives. The average starch content of maize according to the Encyclopaedia Britannica is 55-65 per cent. The purpose for which starch is manufactured can be classified under three heads:- (a) Industrial. These include sizing yarn and cloth in the textile industries; dressing cloth; thickening mordants and colours in calico printing; the preparation of British gums and dextrin, confectioners’ glucose or corn syrups, and sugars for use in the fermentation industries, (b) Food. Use alone in the form of cornflour, arrowroot,tapioca, sago, etc. or in conjuction with other substances in the preparation of custard and blanc manage powders, sauces, cocoa, confectionery, etc, (c) Woundry in pipe or crystal formed and powders, both “thick” and “thick boiling” preparations.” Maize is used for manufacture of maize powder and thereafter as maize starch. As observed earlier, average starch contents of maize powder is 55-65 per cent and it is natural therefore that in the maize and the maize powder there shall be contents of starch. In starch there are contents of maize powder, but in my opinion maize powder and maize starch cannot be said to be one and the same thing. Maize starch is used as food in the form of cornflour or in conjunction with other substances in the preparation of other edible like custard, confectioneries etc and is also used in laundary. Therefore, one may say that maize starch is cereal and therefore tax at the rate of 4% is leviable. In 5 my opinion, an item would not become a cereal and shall be covered under item no.12 of the notification only on the ground that it can be used as cereal. As observed earlier, maize starch and maize powder is different and distinct thing. Merely its use as one of the ingredients in a food item will not make the same cereal. It is well settled that in a fiscal statute if a particular product is specified in particular entry, it may indirectly come under any other entry will not permit its consideration under the later entry. Commercially speaking maize powder and maize starch are different goods and maize looses its identity when a new commodity viz maize powder is derived from it. Similarly a new commercial product comes into existence when maize starch is made from the maize powder and maize powder may contain maize starch, but from that it cannot be inferred that maize powder and maize starch are one and the same thing. The result of the aforesaid discussion leads me to conclude that maize powder and maize starch is different commodity. One of the commodities mentioned in entry no.75 is starch and there being specific entry in regard thereto, there cannot be escape from the conclusion that maize starch will come under that entry and tax at the rate of 9% shall be leviable on it. Maize starch even if indirectly covered under entry no.12 i.e. cereal shall not make it cereal for the purpose of tax at the rate of 4%. Accordingly, my answer to the question sent for our 6 opinion is that maize powder is not maize starch and maize starch falls under the category of kirana. The tax case stands disposed off accordingly. Let a copy of our opinion be forwarded to the Commercial Taxes Tribunal, Bihar. (Chandramauli Kr.Prasad, J.) Dr. Ravi Ranjan, J : I agree. (Dr. Ravi Ranjan, J.) . Patna High Court Dated, 28th August, 2008. AFR/Narendra/