M/S. Parle Agro (P) Ltd V/S Commissioner of Commercial Taxes, Trivandrum

The issues raised in these appeals being inter­related have been heard together and the appeals are being disposed of by this common Civil Appeals arising out of SLP(C) Nos 14697­98 of 2016 are being treated as leading case the facts of which case shall be noted in Civil Appeals arising out of SLP(C) Nos 14697­98 of 2016 and SLP(C) No.9467 of 2016 are between the same parties whereas Civil Appeals arising out of SLP(C) Nos.24460­61 of 2016 have The appellant­M s. Parle Agro Ltd. is a ‘Appy Fizz’ which has obtained certificate of registration under Kerala Value Added Tax Act appellant was classifying the product as fruit juice based drink under Entry 71 of the 2003 till 2007 and was paying @ 12.5% VAT. One M s. Trade Lines and the Commissioner of Commercial Taxes have filed this appeal challenging the judgment dated 5th October 2015 by which writ appeal filed by the Assistant Commissioner(Assessment) and another M s. We Six Traders Etc.Etc. is a dealer in Parle Agro Ltd. Assessment Commissioner has issued notices for assessment years 2010­11 to 2013­14 and April to June 2015 proposing to classify the product ‘Appy Fizz’ as ‘aerated branded soft drink’ @ 20% VAT. After the assessment was issued against which the assessee merits. The assessee filed writ petition in the submitted before the High Court that against the in the case of M s. Parle Agro Ltd. SLP has already been filed hence the assessee should not the demand made in the above cases shall remain stayed till disposal of the appeals on condition Civil Appeals arising out of SLP(C)Nos. 24460­61 of 2016 have been filed against the aforesaid 10. We have heard Shri K.K. Venugopal learned senior counsel for the assessee. Shri Jaideep 11. Shri K.K. Venugopal learned senior counsel submits that both High Court and Committee of of Appy Fizz under Entry 71 of S.R.O.No.1108. Classification of the product as aerated branded soft drinks excluding soda under Section 6(1)(a) is not the correct classification. It is submitted that the Revenue itself till 2007 has classified the product under Entry 71 with tax liability of 12.5%. He submits that judgment of Lines cannot be binding precedent since the said in which appellant was not a party and the revision proceedings were confined to the assessment order on the basis of facts on the amended there was no amendment to the schedule under Section 6(1)(a). He submits that had the intention of the legislation was to pick up the certain products earlier covered under Entry 71 and place them in Schedule under Section 6 then entry aerated branded soft drinks excluding soda which earlier did not cover the said time. He submits that if prior to 2007 Appy Fizz could not be considered as an aerated logic that the product would be so covered after said product had been removed ejected from Entry 12. Further he submits that common parlance test which has been applied by the High Court is not the correct test to determine the classification to include the product as entries under the VAT Act are technical or scientific in nature. Soft in question is not a synthetic product. It contains more than 10% fruit juice. It is fruit juice based drink and not covered by Section fruit juice than soft drink. Sub­clause of Entry 71 covers similar other products not specifically mentioned under any other entry in fully covered under alone entry. He further submits that Food Safety Authorities have recognized the product as a fruit drink 13. Shri Venugopal has placed reliance on the Service Tax Appellate Tribunal where based drink and the Revenue s appeal was dismissed by this Court on 18th July 2009. Shri Vanugopal further submits that neither the filed by the appellant along with proceedings under Section 94 of Act 2003. The scientific processed with CO2 which help in preserving the Apple Juice concentrate which is otherwise perishable in nature. The certifications fully proved the product as Thermally processed fruit 14. Learned counsel further submitted that products which are covered under Section 6(1)(a are all those products which are dangerous to health. They have deliberately been included on 15. Shri Jaideep Gupta learned senior counsel appearing for the State of Kerala refuting the submissions of Shri K.K. Venugopal contends that High Court has rightly held that product is an aerated branded soft drink within the meaning of “Fruit pulp or fruit based drink” it was clear indication of the legislation that the fruit covered into aerated branded soft drinks under Section 6(1)(a). He submits that it is not disputed that Appy Fizz is a branded drink and further it is aerated by CO2 hence it is aerated drink. He submits that amendment of Entry 71 by S.R.O.No.119 of 2008 made the legislative intent clear and the High Court has rightly relying on the said amendment has held that product is not under Section 6(1)(a). Learned counsel for the respondent further submits that CESTAT ruling under Act 2003 since the CESTAT ruling considered the different headings under Central Excise Tariff Act 1975 which is not relevant interpretation as contained in the Act 2003 the common parlance or commercial parlance test has 16. Learned counsel for the parties have placed learned counsel for the parties and perused the 18. From the submissions of learned counsel for the parties and the pleadings of the parties following are the main issues which arise for 1) What is inter­relation between Section 6(1)(a) and Section 6(1)(d) of Act 2003 2) What is scope and ambit of Item 5 of Court in M s. Trade Lines can preclude examine the materials filed by the appellant along with Clarification has any relevance with regard to the 7) Whether decision and opinion of Food Safety Authorities on the product in 8) Whether the Committee of Joint has rightly discarded technical and of the learned counsel for the parties it is necessary to look into the statutory scheme and the relevant entries prior to amendment by S.R.O.No.119 of 2008. Section 6 of the Kerala on sale or purchase of goods. Section 6(1)(a before 1st April 2007 was as follows 6(1)(a) in the case of goods specified in theat the rates specified the rate of twenty percent at all 20. The State by various notifications under 71. Non­alcoholic beverages and their powders concentrates and soda water mineral water water ii) fruit juice fruit concentrate cordial (v) other under any other entry in this List 2) Water containing added sugar or 3) Fruit juices and vegetables juices unfermented and not containing added spirit whether or not sugar of Sharbat 2106.90.11 other all varieties” omitted by S.R.O 21. Omitted by S.R.O. No.543 2007 Gazette Extraordinary No.1167 21. Now we come to Section 6(1)(a) andwhich 1) Every dealer whose total or casual trader or agent of a non­resident dealer or dealer in jewellery of gold silver and platinum group metals or silver Government Central Government or any multi­level marketing entity their distributor and or agent engaged in multi­level marketing whatever be his total turnover for on his sales or purchases of goods as provided in this Act. The at all points of sale of such goods within the Cigars Cheroots 3A. Disposable plates cups 3B. Printed banners Explanation: The ‘Rules of Interpretation of the Schedules’ appended to the Schedules of this Act shall apply to the interpretation of the HSN codes xxx xxx xxx xxx sale of such goods within the State Government may notify a list of goods taxable at the 22. A legislative history of Section 6(1)(a clearly indicates that Section 6(1)(a) always covered aerated branded soft drinks excluding 23. By S.R.O.No.119 of 2008 Entry 71 has been substituted by another Entry. Entry 71 after amendment by S.R.O.No.119 of 2008 w.e.f. 1st NON­ALCOHOLIC BEVERAGES AND THEIR 1) Aerated water soda water Mineral water water sold in 2) Fruit juice fruit concentrates fruit squash fruit syrup and 3) Soft drinks other that aerated Similar other products not 24. As noted above the application was filed by August 2014 which has been decided by the November 2015. Section 94 of the Act 2003 is as “Section 94. Power of Authority to issue clarification.­ If any proceedings before any appellate or or tribunal as to whether for the b) any transaction is a sale or c) any particular dealer is any sale or purchase or if tax is payable the point and the rate goods amounts to or results in the of three officers in the rank of Joint Commissioner or Deputy Commissioner nominated by the Commissioner on application by a 1A) If the dispute relates to the tax rate of a commodity the manufacturer of such goods in the State as the case may be shall be furnished by the applicant and they shall be made necessary parties to 2) The Authority shall decide the to put forward their case and produce evidence and after considering such evidence and hearing the parties. Pass orders within three months or within such time as may be extended by the Commissioner. The Commissioner may ... ... ... ... ...” 25. We thus have to examine the classification of product in the light of provisions of Section 6(1)(a) and Entry 71 as existing after 1st April 26. We consider both the issues together According to Section 6(1) liability to pay tax shall be on the taxable turnover of every dealer specified in the Second and Third Schedules tax Sl.No. Description of goods HSN Code and Rate of in Section 6(1)(a) is 20% or more. The goods enumerated in Section 6(1)(a) are tobacco based goods pan masala other manufactured tobacco and manufactured tobacco substitutes. Other category contains plastic goods and goods made of polypropylene Chloride Polyethylene and other plastic sheets. All goods enumerated in Section 6(1)(a) by the Legislature itself indicates that which are harmful for environment and health Aerated branded soft drinks excluding soda is Schedule I Schedule II and Schedule III. Tax in 1% whereas rate of tax in Schedule III is 5% in contrast to legislative policy in fastening tax liability at very high level on goods under Section 6(1)(a) is thus clear and categorical environment are charged with higher tax level which is the purpose and object clear from the are taxable at the rate of 12.5% which does not fall under clause and c). The delegated legislative power of issuing notification to the State Government is thus The State of Kerala exercising its delegated legislative power has issued notification under 28. Now we proceed to examine the legislative the legislative changes effected from time to Kerala Finance Act 2007 w.e.f. from 1st April a) in the case of goods specified in theat the rates specified the rate of twenty percent at all The aerated branded soft drinks excluding prior to 1st April 2007 it bears HSN Code 2201.10.10. Entry 71 Item 4 also reads as “fruit pulp or fruit juice based drinks with HSN Code 2202.90.20”. When fruit juice based drinks were covered under Entry 71 the State Government knew Section 6(1)(a). Applicability of the power of 6(1)(a). Fruit juice based drinks thus were never treated as aerated branded soft drinks which was the understanding of State of Kerala while issuing notification under Section 6(1(d Had fruit juice based drinks were also to be i.e. the State Government to include such 30. Now we come to Entry 71 which was substituted by S.R.O. No.119 of 2008 dated 24.1.2008 w.e.f 71. Non­alcoholic beverages and their powders concentrates and 1) aerated water soda water 2) Fruit juice fruit concentrates fruit squash fruit syrup and pulp 3) Soft drinks other than aerated 4) Health drinks of all varieties 5) Similar other products not specifically mentioned under any other entry in this list or in any their powders concentrates and tablets in any form including ­ Item No.2 contains fruit juice fruit concentrates fruit squash fruit syrup and pulp and fruit cordial. Soft drinks other than aerated branded soft drinks are included in Item in Item No.4 and similar other products not specifically mentioned under any other entry in in Item No.5. The Entry of fruit juice based or affect the character and content of the under Section 6(1)(a) and Entry 71 of the notification S.R.O.No.119 of 2008 had applied common parlance test. The High Court has also the Appendix to Schedule to Act 2003. From the Appendix following Rule of Interpretation was “RULES OF INTERPRETATION OF are allotted with Code Numbers which are developed by the International Customs Organization HSN) and adopted by the Customs Tariff Act 1975. However there are which HSN Numbers are not given Those commodities which are given Act 1975. Those commodities which are not given with HSN Number should be interpreted as the case may be in common parlance of interpreting a commodity if any consistency is observed between the meaning of a commodity without HSN Number and the meaning of a commodity with HSN Number the commodity should be interpreted by 33. Applying the common parlance test the High Court has concluded that product in question is covered by aerated branded soft drink . Strictly in the Appendix to Act 2003 are the Rules of Interpretation of Schedules that is Schedule Nos.I II and III. Thus for interpretation of any item in the Schedule Rules of Interpretation as given in the Appendix are applicable. The items which fall for consideration in the present case No.119 of 2008 issued in exercise of power under Section 6(1)(d) which are the entries which are Section 6(1)(a). The explanation to Section 6(1 “Explanation: The Rules of Interpretation of the Schedules appended to the Schedules of this Act shall apply to the interpretation of the HSN codes 34. Although the above Explanation applies the Rules of Interpretation of the Schedules to the interpretation of the HSN codes mentioned in Section 6(1)(a) but Explanation does not say anything about the items where HSN code is not there. The Rules of Interpretation of the Schedules thus directly are not attracted with regard to the interpretation of the entry which although principle contained in such Rules of Interpretation may apply. Had the legislation intended the Rules of Interpretation of the Schedules should be made applicable both to the interpretation of the Schedules or those Rules of Interpretation of Schedules should have the commodities in the Schedules which are not given with HSN code is directly not applicable under Item 6(1)(a) hence applicability of other applied is not ruled out. Hence in the appropriate case apart from common parlance test or commercial test any other test can be applied Section 6(1)(a) apart from those which are given regard to a word in taxing statutes are well established. This Court in Porritts & Spencer Asia) Ltd. vs. State of Haryana 1979(1) SCC 82 or technical meaning and also an that in a taxing statute the word must be held to have been used meaning. In this context reference is made to judgment of this Court reported in Collector of Akbar Badruddin Jiwani vs. Collector of Customs a term as occurring in Tariff Item No.25.15 of Appendix I­B Schedule 1 to the Import uses the word aerated . This is scientific term and has been repeatedly used in different statutes including the Central Excise aerated . The word aerated is scientific and technical word used under different statutes and the scientific and technical meaning of the word aerated can be looked into for finding out the 39. In view of the above we are of the opinion was not the only test which could have been applied for interpreting the entries in items be looked into in technical and scientific Joint Commissioners discarded the evidence of technical and scientific meaning of word. The appellant has rightly relied on the technical use of carbon dioxide to the extent of 0.6 per packaging the commodities and the product was thermally processed and carbon dioxide was added Issue No.4: Principle of Noscitur a Sociis 40. The appellants before the Committee of Commissioners as well as High Court have pleaded that Entry 71 Item 5 mentioned “similar other products not specifically mentioned under any other entry in this list or any other schedule” was required to be considered in the light of commodities as included in other items mentioned in Entry 71. It was submitted that Appy Fizz which a fruit juice based drink is more akin to other commodities included in the Entry 71 other than that which was included in Section 6(1)(a noscitur a sociis is fully attracted. Justice in Principles of Statutory Interpretation 14th Edition has explained the noscitur a sociis in the following words: The rule of construction noscitur a sociis as explained by LORD MAC­MILLAN means: “The meaning of a word is to be judged by the Privy Council: “It is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them”. It is a rule wider than the rule of ejusdem generis rather the latter rule is only an application of the former. The rule has been lucidly explained by GAJENDERAGADKAR J. in the following words: “This rule according to MAXWELL means that when two or more words which are coupled together they are understood to be used in their their colour from each other that is the more general is restricted to a sence analogous to a less general. The same rule is thus interpreted in Words and Phrases.” from one another under the doctrine reference to the meaning of words broader than the maxim ejusdem generis.” In fact the latter maxim application of the broader maxim in mind that noscitur a sociis is deliberately used in order to make the scope of the defined word correspondingly wider. It is only where the intention of the Legislature in associating wider words with words of narrower significance is doubtful or Punjab 1997 E.L.T. 219(S.C.) considering Act 1948 in paragraph 9 has laid down following Sales tax and Excise statutes list some articles separately and some articles are grouped together. When in the Entry draws colour from the other words therein. This is the 42. Applying the aforesaid principle of construction of noscitur a sociis on Entry 71 colour and meaning from the other items included in Entry 71. Item 5 of Entry 71 uses the words under any other entry in this list or any other schedule”. Thus the products which are to be covered under Item No.5 are similar other fruit juice fruit concentrates fruit squash No.4 that is health drinks of all varieties are kept in mind the fruit juice based drink shall fall in Item No.5. Both High Court and Committee of Commissioners overlooked this principle while interpreting item No.5 of Entry of the Act 2003 filed several materials expert in question. The Committee of Commissioners although in its order has noted several contentions raised by the appellant but the Committee of Commissioners mainly relying on the OT Revision No.114 of 2013­M s. Trade Lines finalised the assessment by levying tax on the product Appy Fizz at the rate of 20% against which M s. Trade Lines has filed an appeal which the High Court and the High Court dismissed the of 20% tax. Proceeding under Section 94 of Act present case when the appellant has filed application under Section 94 the judgment of Division Bench in M s. Trade Lines was already rendered and in a writ petition filed by the appellant learned Single Judge has issued a direction on 31st August 2015 for deciding the by the learned Single Judge to decide the application was challenged by the Revenue before the Division Bench and the Division Bench contending that Single Judge ought not to have issued the direction since the matter had been decided in the High Court in M s. Trade Lines supra). The Division Bench rejected the said contention and dismissed the writ appeal on 15th October 2015 and in paragraph 4 of the judgment has dealt with the judgment of M s. Trade Lines case would not also have the efficacy of depleting the jurisdiction of the authority under clarification. The very purpose of to make different nature of considerations to conclude such issues necessarily show that no earlier proceedings could conclude in an application for clarification by the competent authority under 44. The order passed by the Division Bench in M s. Trade Lines was a case of assessment of another assessee which decision was based on the materials brought on the record by the said assessee and could not have precluded the appellant from filing the application under Section 94 and when the Division Bench by its judgment of 5th October 2015 dismissed the appeal of the Revenue the Committee of Commissioners ought to have followed the observation given by the Division Bench in paragraph 4 quoted above brought on the record by the appellant and although the Committee noticed all the pleadings and contentions but mainly relying on the ruling of M s. Trade Lines dismissed the clarification 45. Appellant had relied on the order of CESTAT dated 18.03.2008 reported in 2008 ELT 194(Tribunal­Delhi) which was in appeal filed by the M s. Parle Agro Pvt. Ltd. regarding classification of the same product Appy Fizz and the order passed by the Commissioner(Appeals whereby it was held that product Appy Fizz is classifiable under sub­heading No.22029020 of Central Excise Tariff on the ground that the product is fruit juice based drink. Revenue is classifiable under sub­heading No.22021010 of Central Excise Tariff as aerated water . The Tribunal vide its judgment dated 18.03.2008 dismissed the appeal. The order in paragraph 5 22029020 on which Revenue had relied is to the “2202 10 Waters including mineral containing added sugar or other sweetening matter or 22029020 Fruit pulp or fruit juice 46. The Revenue has contended that product in that the Commissioner has ignored the chemical examiner s report and Ministry of Food and Processing Industries opinion and Food and Processing Industries held in favour of the respondents The contention of the Revenue is that since the product in question is aerated therefore is classifiable as flavoured aerated water. The Revenue also relied upon 47. The above contention was rejected by the 6. The Revenue relied upon HSN find that our tariff is not fully aligned with the HSN Explanatory Notes. In the HSN Explanatory Notices there are two sub­headings waters containing added sugar or other sweetening matter or flavoured” and second is in respect of others. Whereas Central Excise Tariff under Sub­heading No.2202 there are specific headings in per the Central Excise Tariff the aerated waters containing added sugar or other sweetening matter or flavoured are classifiable under sub­heading No.2202.10. The drinks based on fruit juice are specifically classifiable under Heading No.22029020 of the Tariff In the present case there is no dispute regarding the contents of the product. Revenue is not disputing the certificate given by the Ministry of Food and Processing Industries New Delhi rather they are relying it in the ground of appeal and as per the certificate of apple juice therefore we find no infirmity in the impugned order 48. The Revenue had also filed Civil Appeal was dismissed by this Court on 8th July 2009 49. The judgment of CESTAT and the order of the Supreme Court were specifically relied by the appellant before the High Court. The High Court without giving cogent reason has refused to rely HSN Code which found place in Central Excise authorities were to adjudicate regarding the Fruit juice based drink” on which CESTAT had ruled that product is not included in aerated water and was included in entry as fruit juice based drink. The product was not held to be even though in the entries under the Act 2003 50. Even though the order of CESTAT did not conclude the controversy in favour of the appellant but fact that the CESTAT did not hold factor which necessitated a more deeper whether the product is aerated branded soft drink or not. The High Court in its judgment found that since the product charged with air or carbon dioxide was an aerated drink. From the submitted on behalf of the appellant clearly preservative of Appy Fizz as Fruit Drink under the Food Safety and Standards Regulations 2011. The statutory regulations require that beverages must contain minimum of 10% fruit juice to be called a Fruit Drink. Regulation 2.3.10 of 2011 Regulations “2.3.10: Thermally Processed Fruit Beverages Fruit Drink Ready to 1. Thermally Processed Fruit Beverages Fruit Drink Ready to Serve Fruit Beverages means an unfermented but fermentable product which is prepared from juice or pulp or sound mature fruit. The substances that may be added to oil fruit essences and flavours salt sugar invert sugar liquid appropriate to the product and in a container so as to prevent additives permitted in these regulations including Appendix A The product shall conform to the microbiological requirements given in Appendix B. The product shall i) Total Soluble Solid Lime Lemon ready to serve b) All other beverage drink Not less ... ... ...” product of Appy Fizz are more than 10%. In Section 94 proceedings the appellant has filed as Appy Fizz ”. In the letter the Government “This is with reference to your letter No. KS­DEL­PAL dated 4th March 2005 on the above mentioned of products specified under the should contain a minimum of 10% of fruit juice. The product is commonly known as 2. Flavored sweetened aerated waters. The product which contains less than 10% of in this category. The product is commonly known as soft drink such as Pepsi Cola 3. Sweetened aerated mixtures The product should contain a pulp or bits. This category of 53. Thus according to the Government of India containing 10% of fruit juice are commonly known order of 19th August 2015 issued by the Food of Health & Family Welfare where following permission was granted by Food Safety and “It is to inform you that you are now allowed to Manufacture Store i.e. Thermally Processed Fruit Fruit Beverages of Food Safety and Standards Regulations 2011 which you are already holding a deciding the application under Section 94 has noted the aforesaid orders passed by the Food Safety Authorities which were relied by the appellant but it discarded the above said orders and opinion relying on the order passed by the taxable at the rate of 20% as per Sl.No.2 of 55. What is the process for manufacture in 2011 and the Regulations framed therein and what is the nature and characteristic of the product appellant cannot be said to be an irrelevant the product. Whether the product is an aerated the manufacture licence orders issued by Food Safety and Standards Authority of India were relevant facts which were although cited before the Committee of Joint Commissioners but were brushed aside relying on the Kerala High Court s order in M s. Trade Lines. We thus are of the opinion that the manufacture licence dated 19th of the Government of India Ministry of Food Processing Industries dated 28.03.2005 were the appellant for the purpose of classification and the Committee of Joint Commissioners as well as High Court erred in not adverting to and Joint Commissioners produced the technical 2011 in clause 2.3.10 deals with thermally processed fruit beverages fruit drink ready to serve fruit beverages which has already been extracted above. The appellant has filed a above certificate which is to the following Appy Fizz is a fruit product manufactured using apple juice The ingredients declared on the label include Water Sugar Apple dioxide(290) malic acid citric acid preservatives(sodium benzoate potassium sorbate) ascorbic acid and added nature identical flavouring substances and natural colour. The juice content of APPY FIZZ is 12.7% m m and Total solids content is 13%. The product is manufactured under FSSAI licence category ­ Ready to Serve fruit The manufacturing process involves 1. Addition of all the ingredients to treated water except carbon dioxide and making a 4. Filing the product into bottles cans followed 5. Filed bottles cans are then passed through warmer to increase the temperature to room The technical opinion is given with of the product should be FSSAI(Food 2.3.10(Thermally processed Fruit Beverages Fruit drink Ready to serve • It compiles with respect to the juice content and solids content percentage which is more than 10% required as per • It mentions CONTAINS APPLE JUICE on the • After the Thermal processing the ready ..sic.. as required in 2.3.10 FRUITS action of preservation to create Technical Opinion on why the category of the product should NOT be classified under FSSA is agent preservative foaming agent by CODEX ALIMENTATIRUs and its use is Carbon dioxide along with other preservatives help in extending the shelf life of the product as the In view of the above mentioned APPY FIZZ is a THERMALLY PROCESSED FRUIT BEVERAGE READY TO SERVE FRUIT BEVERAGE complying with category 2.3.10 as per FSSAI Regulations 2011 despite having carbon dioxide as an ingredient which is used for preservation purpose only. This opinion is purely based on Dept. of Food Engineering that carbon dioxide is used for preservation purpose only. Before the Committee of orders and certificates of Food Safety Authorities. It was stated that the Experts in their opinions and certifications have mentioned that product is commercially and technically distinct from products which have classified as aerated branded soft drinks . The certifications which were relied by the appellant indicate that in the case of Appy Fizz the product does not undergo aeration or carbonation the product is thermally processed with CO2 which help in preserving the Apple Juice concentrate which is 58. In the application which was filed for clarification which has been brought on the 59. Other relevant materials which were part of the clarification application were mentioned in 28.02.2005 issued by the authority under Fruit Processing Order 1955 i.e. Director Food & Vegetable Processing Industry working as licensing officer under Fruit Product Order 1955 in ministry of Government of India.(Copy of the said certificate is enclosed manufacture storage and sale of product to the factory at Varanasi issued by Central Licensing Authority having their office at confirming the classification of product “Appy Fizz” under category 02.03.2010 i.e. Fruit Juice based Drink and also held that we are c) Technical expert opinion issued by 11.06.2015 classifying the said product as ready to serve Fruit beverage falling under the category of 02.03.2010 of FSSAI Regulation 2011 and specifically stated that d) Technical Note and Photographs explaining the use of impregnated Carbon Dioxide for the purpose of preservation as well as for the strengthening the wall of PET bottles due to expansion of Carbon Dioxide from inside providing the strength to wall of PET bottle during the transit so as to withstand with the handling hazards while delivering the product to remote area. Note and photocopies are enclosed herewith as Exhibit K e) Classification of the product “Appy Fizz” has been recognized by a legislative body of Kerala Government based on the white paper issued by empowered committed of state Finance Minister while introducing the White Paper on 17.01.2005 and has issued the dated 21.01.2006 and classified the product based on Central Excise Tariff which inter­alia is based on Notification and White Paper is enclosed herewith as Exhibit M and f) The said classification under Entry No.71 sr.No.4 of the product under Kerala VAT remained in Entry No.71 at Sr.5 despite the substitution brought by Notification SRO 119 of 2008 dated 24.01.2008.(Copy of the said Notification is enclosed g) The Kerala VAT dept. had raised an issue regarding the classification of the product Appy Fizz in 2009 However the Company had explained the reason as to why the product Appy Fizz has been classified as a fruit juice based drink. The said explanation of the company has been accepted and no order has been passed by the KVAT Department accepted assessment order passed by h) The said assessment orders have attained the finality being not of Kerala VAT Act 2003 which inter­alia contemplates that if the dispute relates to tax rate of a commodity the details of first seller or the manufacturer of such goods in the state as the case may be shall be furnished by the applicant. Accordingly we are submitting sales tax Assessment the manufacturer is located in Tamilnadu Exhibit Q. Hence the said party may please be made a j) The issue of classification of the product “Appy Fizz” is decided by other dealer namely Trade Lines However Hon’ble Kerala High has decided that in Revision and the facts of our case are totally when the facts are different and therefore in our case the facts subject matter of consideration 60. The above materials which were filed by the relevant materials for understanding the ultimate product. The expert authority and its opinion which were relied by the appellant were required to be adverted to both by the Clarification Authority as well as by the High Court and we are of the opinion that expert opinion and materials have been erroneously 61. It is further relevant to note that Revenue has not filed any material on the record either before the Clarification Authority or before the covered under Section 6(1)(a) that is aerated branded soft drink . This Court in several cases has observed that onus to prove that particular goods fall in particular tariff item is on the Court in Hindustan Ferodo Ltd. vs. Collector of Central Excise Bombay 1997(89) ELT 16(SC) in us as it cannot be that the onus of establishing that the said rings fell within Item 22F lay upon the Revenue. The Revenue led no evidence. The onus was not the evidence that was produced on should nonetheless have been 62. We thus conclude that orders of Food Safety materials and Clarification Authority and High the State Government to issue notification under Section 6(1)(d) arises “in the case of goods not of Act 2003 Section 6(1)(a) from the very beginning included aerated branded soft drink 71 clearly proved that fruit juice based drinks were never treated to be included in aerated were also included in aerated branded soft drinks the State could not have exercised its power under Section 6(1)(d) to include such products in Entry 71. Whether after amendment of was earlier included in Entry 71 shall now stand but there is no amendment in Entry 2 of Section 6(1)(a) so as to include something not included in Section 6(1)(a). By S.R.O. No.119 of 2008 residuary entry by Item No.5 is added which is under any other entry in this list” which is subsumed in Item No.5 of Entry 71 after its amendment. We have already observed that items all those items where higher tax slab has been well settled that all tobacco based goods which to health the use of the plastic polythene etc drinks which are included in Section 6(1)(a) health drinks of all varieties are included in Entry 71 as amended. Aerated branded soft drinks drinks can be regarded as health drinks as pepsi cola coka cola etc. We are thus of the by relevant scientific and technical materials that the product in question that is Appy Fizz The High Court discarded scientific and expert opinion with regard to manufacturing process and for considering the nature and contents of product. The adjudication by CESTAT was relevant at least on the aspect that the Appy Fizz is not considered opinion that the appellant has the record that the product Appy Fizz was required to be classified under Item No.5 of the Entry 71 as amended with tax liability at 12.5 64. Now coming to the appeal arising out of SLP(C)No.9467 of 2016. The appeal has been filed was issued to the Committee of the Commissioners to decide the application filed by the appellant under Section 94 of Act 2003. Learned Single appellant was also given liberty to produce all reliance to substantiate their contention with regard to the classification of the product in question. In writ petition filed by the Revenue before the Division Bench the Division Bench affirmed the order and while referring to that where any question arises from any order already passed or any proceedings recorded under the KVAT Act or any earlier law no such question shall be entertained for Insofar as the issue raised by the respondent through the application before the authority is concerned there is no order that has already been passed or there is no proceedings recorded as against it which could be treated as a final one. All what has been done is the a proposal in relation to the not also have the efficacy of depleting the jurisdiction of the authority under Section 94 of the form of Section 94 and clothing authority with power to make different nature of considerations order of this Court in an earlier proceedings could conclude the issues which could be considered in an application for clarification by the competent authority under dismissing the appeal and observing that no revisional order of this Court in an earlier by the competent authority under Section 94 of Act 2003. We do not find any error in the Division Bench and this appeal deserves to be 66. Now coming to Civil Appeals arising out of SLP(C)Nos.24460­61 of 2016. These appeals have been filed by the assessee against an order of learned Single Judge by which order the learned Single Judge disposed of the writ petition by Accordingly these writ petitions are disposed of in the following i) The demand made in the disposal of the appeals on condition of the petitioners depositing 50% of the amount Nos. 14697 146916 M S. PARLE AGROLTD. ... Appellant(s COMMISSIONER OF COMMERCIAL TAXES TRIVANDRUM ... Respondent(s Civil Appeal Nos.6471 64717 Arising out of SLP(C) No. 24460 244616 Civil Appeal No.64717 Arising out of SLP(C) No. 94616 Date : 09 05 2017 These matters were called on for hearing today Mr. Aditya Bhattacharya Adv Mr. Victor Das Adv Mr. M. P. Devanath Adv Ms. L. Charanya Adv Mr. Ramesh Babu M. R. Adv Mr. G. Prakash Adv Mr. Jishnu M. L. Adv Ms. Priyanka Prakash Adv Ms. Beena Prakash Adv Mr. Manu Srinath Adv Mr. Rajesh Kumar Adv Hon ble Mr. Justice Ashok Bhushan pronounced the judgment of the Bench comprising Hon ble Mr. Justice A.K.Sikri and His Lordship Civil Appeals arising out of SLP (C)Nos. 14697 14698 of 2016 are allowed Civil Appeal arising out of SLP C)No. 94616 is dismissed and Civil Appeals arising out of SLP (C)Nos. 24460 61 of 2016 are disposed of in terms of the signed reportable judgment (Nidhi Ahuja Court Master (Mala Kumari Sharma Court Master Signed reportable judgment is placed on the file

Summary: Common Parlance Test must be avoided in the face of requirements of scientific definitions.  The appellant M/s. Parle Agro (P) Ltd. is a dealer engaged in fruit juice-based drink known as ‘Appy Fizz’ which has obtained certificate of registration under Kerala Value Added Tax Act, 2003 (hereinafter referred to as “Act, 2003”). The appellant was classifying the product as fruit juice-based drink under Entry 71 of the notification issued under Section 6(1)(d) of Act, 2003 till 2007 and was paying @ 12.5% VAT.On 4th August, 2015 the assessment notices were issued to the appellant for Assessment Year 200915 proposing classification of ‘Appy Fizz’ under Section 6(1)(a)of the Act, 2003 as “aerated branded soft drink” and tax liability @ 20%. After receipt of the notice’s appellant filed an application dated 24th August, 2014 under Section 94 of the Act, 2003 seeking clarification of product ‘Appy Fizz’.In the clarification application the appellant claimed that product ‘Appy Fizz’ had rightly been clarified as ‘fruit juice-based drink’ and which has tax liability of 12.5%. Along with the clarification application appellant has filed certificates and expert opinions.Writ Petition No.26279/2015 was filed by the appellant before Kerala High Court seeking direction to the Commissioner of Commercial Taxes to consider and pass order on the application for clarification within a specified time and the proceedings initiated by the Commissioner of Commercial Taxes by different notices be kept in abeyance which the learned single judge directed vide its order dated 31.08.2015.A writ petition filed by the Joint commissioners against the same by dismissed by the division bench vide order dated 05.10.2015 following which clarification was released by the Joint Commissioner Committee on 6th November, 2015 classifying the drink as aerated branded soft drink at the rate of 20%.Against the order passed under Section 94 of Act, 2003, the appellant filed O.T. Appeal No.7 of 2015 in the Kerala High Court. The Division Bench by its judgment and order dated 5th February, 2016 dismissed the appeal filed by the appellant upholding the order dated 6th November, 2015. A review application was also filed by the appellant to review the judgment dated 5th February, 2016 which has was dismissed on 23rd March, 2016.Civil Appeals arising out of SLP(C) No.14697-98 of 2016 were filed against the aforesaid order dated 5th February, 2016 and the review order dated 23rd March, 2016 by the appellant. ISSUE BEFORE THE COURT: What is interrelation between Section 6(1)(a) and Section 6(1)(d) of Act, 2003?What is scope and ambit of Item 5 of Entry 71 as amended?Whether common parlance test is the only test to be applied for understanding the different entries under Section 6(1)(a) and Section 6(1)(d)?Whether the Principle of Noscitur a Sociis would apply?Whether the Division Bench of Kerala High Court in M/s. Trade Lines can preclude the Committee of Joint Commissioners to examine the materials filed by the appellant along with Clarification Application under Section 94.Whether CESTAT decision dated 18.03.2008 has any relevance with regard to the classification of product in question?Whether decision and opinion of Food Safety Authorities on the product in question were relevant?Whether the Committee of Joint Commissioners as well as the High Court has rightly discarded technical and expert opinion relied by the appellant? RATIO OF THE COURT While referring to Section 6(1)(a) and Section 6(1)(d) the court noticed that the power of the State Government to issue notification under Section 6(1)(d) arises “in the case of goods not falling under clause (a) or (c)”. After enactment of Act, 2003 Section 6(1)(a) from the very beginning included ‘aerated branded soft drink’.The inclusion of fruit juice-based drinks in Entry 71 clearly proved that fruit juice-based drinks were never treated to be included in ‘aerated branded soft drinks’. Had fruit juice-based drinks were also included in ‘aerated branded soft drinks’, the State could not have exercised its power under Section 6(1)(d) to include such products in Entry 71.By S.R.O. No.119 of 2008, residuary entry by Item No.5 was added which is “similar other products not specifically mentioned under any other entry in this list” which is potent enough to include fruit juice based drinks and it became clear that fruit juice based drinks are subsumed in Item No.5 of Entry 71 after its amendment.In contrast to ‘aerated branded soft drinks’ which are included in Section 6(1)(a), health drinks of all varieties are included in Entry 71 as amended. Aerated branded soft drinks which are referred to in Section 6(1)(a) cannot be drinks which are health drinks. Fruit juice based drinks can be regarded as health drinks as compared to other aerated branded soft drinks like pepsi cola, coca cola etc.This court observed that the high court had not taken into account the fact that the Rules of Interpretation of Schedules did not cover the commodities where the HSN codes did not apply.The court held that if the lawmakers had intended to cover the items under 6(1)(a), the rules must have been made applicable for them. Since, that was not the case common parlance test between the items of sec 6(1)(a) and Entry 71 could not be applied. The court relied upon, Porritts &amp; Spencer (Asia) Ltd. vs. State of Haryana, 1979(1) SCC 82 and Collector of Akbar Badruddin Jiwani vs. Collector of Customs, 1990(47)ELT 161 to emphasize the same.The court also observed that the High Court had failed to take into account the scientific definitions while defining aerated branded drinks. Common Parlance test could not be applied this way.Addressing whether the principle of Noscitur a Sociis should be applied, the court observed that Appy Fizz which is a fruit-based drink is more akin to the ‘other items’ included in Entry 71.This Court in Pardeep Aggarbatti Vs. State of Punjab, 1997 (96) E.L.T. 219(S.C.), considering Entry 16 of Schedule A of Punjab General Sales Tax Act, 1948, in paragraph 9 has laid down following: “9. Entries in the Schedules of Sales tax and Excise statutes list some articles separately and some articles are grouped together. When they are grouped together, each word in the Entry draws colour from the other words therein. This is the principle of noscitur a sociis.” Hence, it became clear that clause 5 of Entry 71 would take color from ‘other commodities’ included in entry 71 and the fruit juice-based drink would have to include within the meaning of clause 5.The High Court discarded scientific and expert opinion with regard to manufacturing process and contents of the product. The orders of Food Safety Authority were also discarded which were relevant for considering the nature and contents of product. The adjudication by CESTAT was relevant at least on the aspect that the ‘Appy Fizz’ is not aerated which was also discarded by the High Court as well as by the Committee of the Commissioners.The certifications which were relied by the appellant indicate that in the case of ‘Appy Fizz’ the product does not undergo aeration or carbonation; the product is thermally processed with CO2 which help in preserving the Apple Juice concentrate which is otherwise perishable in nature.In view of the aforesaid discussion, the court opined that the appellant had successfully proved from the materials brought on the record that the product ‘Appy Fizz’ was required to be classified under Item No.5 of the Entry 71 as amended with tax liability at 12.5% after amendment by S.R.O. No.119 of 2008 (now at the rate of 14.5%). DECISION HELD BY COURT: The court held that the High Court had erred in its decision and the appeal was allowed.