HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR. S.B. Sales Tax Revision / Reference No. 204 / Versus

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1 HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR S.B. Sales Tax Revision / Reference No. 204 / 2014 Asstt Commissioner Spl Circle-IV, Jaipur M/S Cedilla Pharmaceuticals Ltd., 64-65, Venkteshwar Colony, Sodala, Jaipur Connected With S.B. Sales Tax Revision / Reference No. 447 / 2008 Asstt Commissioner, Commercial Tax, Circle-I, Rajasthan, Jaipur. M/S Cadbury India Ltd., B-8, Govind Marg, Sethi Colony, Jaipur. Rajasthan Tax Board, Ajmer. S.B. Sales Tax Revision / Reference No. 450 / 2008 Asstt Commissioner, Commercial Tax, Circle-I, Rajasthan, Jaipur. M/S Cadbury India Ltd., B-8, Govind Marg, Sethi Colony, Jaipur. S.B. Sales Tax Revision / Reference No. 21 / 2014 Asstt Commissioner, Special Circle-Rajasthan, Commercial Taxes Department, Jaipur. M/S Cadbury India Ltd., B-8, Govind Marg, Sethi Colony, Jaipur. S.B. Sales Tax Revision / Reference No. 22 / 2014 Asstt Commissioner, Special Circle-Rajasthan, Commercial Taxes Department, Jaipur.

2 (2 of 10) M/S Cadbury India Ltd., B-8, Govind Marg, Sethi Colony, Jaipur. S.B. Sales Tax Revision / Reference No. 23 / 2014 Asstt Commissioner, Special Circle-Rajasthan, Commercial Taxes Department, Jaipur. M/S Cadbury India Ltd., B-8, Govind Marg, Sethi Colony, Jaipur. Reserved on : 17 th February 2017 Pronounced on : 7 th April 2017 For Petitioner(s) : Mr. R.B. Mathur with Ms. Meenal Ghiya For Respondent(s) : Mr. Vivek Singhal Mr. Sarvesh Jain HON'BLE MR. JUSTICE JAINENDRA KUMAR RANKA Reportable Judgment 1. In both the batch of cases, the issue being identical, is being decided by a common order. It is relevant for the assessment years to In the cases of M/s Cadbury India Ltd., preferred by the Revenue, this court had admitted the petitions on the following specific questions of law which would cover the controversy :-

3 (3 of 10) (i) Whether the impugned orders of learned Tax Board and Appellate Authority ignoring the material evidence on record and considering the material which is not the part of record, vitiates the order under law? (ii) Whether the Tax Board as well as Appellate Authority was justified in creating a case in favour of the respondent which never existed by misinterpreting the notifications of the State Government dt , and ? (iii) Whether Coco, Drinking Chocolate and Bournvita can be excluded from the list of products indicated at serial nos.179 and 184 so as to make them item/commodities upon which tax is payable at the rate of 10%? 3. While in the case of M/s Cedilla Pharmaceuticals Ltd., though the coordinate Bench earlier taking into consideration the facts, connected with the batch of M/s Cadbury India Ltd., and the petition was not admitted. 4. After having heard learned counsel for the parties in the case of M/s Cedilla Pharmaceuticals Ltd., following question of law emerges for consideration:- (i) Whether in the facts and circumstances of the case of Rajasthan Tax Board was justified in law in classifying Mileage Drinking Powder at general rate and not the rate of tax for the specific entry in which it falls? 5. The brief facts noticed are that both the respondent assessees are limited companies and carring on manufacturing activities of products which are being used in most of the households. 6. In the cases of M/s Cadbury India Ltd. the controversy is relating to Coco, Drinking Chocolate and Bournvita, where the assessee collected 10% taking into consideration the

4 (4 of 10) notification dt (entry no.184/186) and thus for entry no.184/186 the rate applicable being 10%, accordingly the same was being paid. While in the case of M/s Cedilla Pharmaceuticals Ltd., the issue is about Mileage Drinking Powder, where too, the assessee was collecting and paying 10%, whereas the claim of Revenue is that it falls within entry 184/186 as per notification dt where a rate of 16% is applicable as these products are categorised as eatables & non-alcoholic potable liquids falling in the same category as that of fruit syrups, distilled juices, jams (chatani, murabbas), fruit juices, drink concentrates etc. 7. A show cause notice was given by the Assessing Officer as to why the above products be not taken into entry 184/186 of notification dt and be not 16%. A detailed explanation was furnished by the assessee, inter alia, claiming that the products are not covered under entry 184/186 and these are dietary supplements only and are basically prescribed by doctors and specially Mileage Drinking Powder is only for women (females), that too, to be taken at the time of pregnancy, lactation, malnutrition and post-operative condition. However, the AO was not satisfied and categorised the same to be falling in entry 184/186 with the rate 16%, and accordingly levied 16% and simultaneously also charged interest as well as penalty u/s 61 of the RST Act, The matter was assailed by the respective assessees before the Dy. Commissioner (Appeals), who however, was

5 (5 of 10) satisfied that the products do not fall in entry 184/186 and accordingly held in favour of the assessee. Since the appeals were allowed on merits, the surcharge, interest as well as penalty automatically came to an end. 9. The Revenue preferred appeals before the Tax Board, who was satisfied with the order passed by the DC(A) and thus upheld the order of the DC(A). 10. Learned counsel for the Revenue vehemently contended that the products, as they are shown, are eatables or to be used as a drink, and if entry 184/186 is perused it would squarely fall within entry 184/186 and to the specific rate of 16% which was applicable at the particular point of time. Learned counsel further contended that merely because they are dietary supplements or used only for women in the case of M/s Cedilla Pharmaceuticals Ltd. or on account of some problems, the nature of the products cannot change. Learned counsel contended that the claim of assessee is wrong that these are being prescribed by doctors. Coco, Drinking Chocolate and Bournvita are products which cannot be said to be prescribed by doctors, rather in most of the families of middle class and upper middle class, every child is being provided with such products which may be mixed normally with milk or water to improve the taste of milk. Even for Mileage Drinking Powder merely because at one place the advertisement says so, cannot be relied upon by the assessee as once there is a specific entry, it has to be taken to the logical end

6 (6 of 10) and thus contended that the questions are required to be answered in favour of the Revenue and against the assessee. 11. Per contra, learned counsel for the assessees jointly contended that it is a concurrent finding made by the Appellate Authorities. Learned counsel also contended that these products cannot be said to be falling in entry 184 or 186, as the case may be, and both the Appellate Authorities have, after elaborate discussion, held in favour of the assessees. Learned counsel further contended that the Revenue Board as early as in the years 1965 and 1969 in the case of M/s Empire Store Agencies v. State of Rajasthan [1972] RRD 93 had considered Bournvita to be falling in the then entry 49 of the notification dt with the rate of 10%, and such entry continued and it is now the Revenue is interfering with the finding already well settled long back till atleast all the past assessment years except the one under consideration. Learned counsel also relied on judgments in State of Gujarat v. Gokaldas Trading Co (82) STC 248 (Guj), CCE v. Amar Bitumen & Allied Products P. Ltd. & Others [2007] 9 RC 40, The State of Tamilnadu v. Jayesh Brothers (2012) 50 VST 122 (Mad), Varun Beverages Ltd. v. Commissioner of Value Added Tax 2014 (305) E.L.T. 433 (Del). 12. I have considered the arguments advanced by the learned counsel for the parties and have perused the material on record. It would be appropriate to quote the entries, as they stand :-

7 (7 of 10) 184 All kinds of eatables & non-alcoholic potable liquids such as fruit syrups, destilled juices, jams (chatani, 16% murabbas), fruit juices, drink concentrates of all types and forms, essences, concentrates, corn flakes and wheat flakes, custard powder, baking powder, ice-cream poder and packed masala. 186 All kind of eatables & non-alcoholic potable liquids such fruit syrups, distilled juices, jams (chatani, 16% Murabbas) fruit, juices, drink concentrates of all types and forms essences, concentrates, corn flakes and wheat flakes, custard powder, baking powder, ice cream powder and packed masala. 13. In my view, the products as they stand, namely Coco, Drinking Chocolate and Bournvita or Mileage Drinking Powder cannot be straight away eaten or used directly but have to be mixed with milk or other drink. Eatable in normal parlance or common parlance is an item which can directly be taken through mouth. 14. As has been observed earlier, these products are not substitute for food though these products can be taken every day like adding flavour to the milk or otherwise but these are not taken as a food but only as nutritive supplant/element. By eating these products, hunger of a person does not come to an end and, therefore, to say that it is an eatable product, as claimed by the Revenue, is not well reasoned. These products as they stand,

8 (8 of 10) cannot be taken alone, but mostly mixed with milk or other drinks. By adding these products to milk, the taste of milk which normally the children do not like, enhances the taste and deliciousness of the milk and merely because these products supplies some nourishment or sustenance, it cannot be said to be an eatable product. It is true that these products are not used by common people and by & large taken by people other than common people. 15. It would also be appropriate to observe that in the case of M/s Empire Store Agencies (supra), the Revenue Board as early as in the years 1965 and 1969, while taking into consideration the notification no.f5(16)fd/ct/69-2 dt where entry 49 was there, the Revenue Board did not treat the same product Bournvita to be falling in entry 49. The entry 49 is being quoted hereunder :- 49 All kinds of eatables and non-alcoholic potable liquids such as biscuits confectionery, fruits syrups acrated 10% waters, destilled juices ( ark ), jams (chatani, murabbas), fruit juices, essences, gulkand etc., packed in tins or bottles or plastic containers or scaled packing of any kind. 16. On perusal of the same, in my view, there is hardly any change insofar as the entries being considered, namely 184 and 186 to that of 49 (supra) and it is admitted that the judgment of M/s Empire Store Agencies (supra) attained finality and this judgment held the field for last over 40 years. A claim having

9 (9 of 10) been allowed over the years and settled since long cannot be abruptly or suddenly changed to suit the claim of Revenue. 17. The Apex court in the case of Bharat Sanchar Nigam Ltd. & Anr v. UOI & Ors (2006) 3 SCC 1, has held that once a claim has been allowed repeatedly, it should not be reversed unless compelling circumstances are brought on record and distinguishing features are brought on record. It would be appropriate to quote the relevant paras of the said judgment, which reads ad infra :- 20. The decisions cited have uniformly held that res judicata does not apply in matters pertaining to tax for different assessment years because res judicata applies to debar Courts from entertaining issues on the same cause of action whereas the cause of action for each assessment year is distinct. The Courts will generally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. The reason why Courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the earlier decision is per incuriam. However, these are fetters only on a coordinate bench which, failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter to a bench of superior strength or in some cases to a bench of superior jurisdiction. 21. In our opinion, the preliminary objection raised by the State of U.P. therefore, rests on a faulty premise. The contention of the appellant/petitioners in these matters is not that the decision in State of U.P. v. Union of India (2003) 3 SCC 239 for that assessment year should be set aside, but that it should be overruled as an authority or

10 (10 of 10) precedent. Therefore, the decisions in Devilal Modi v. Sales Tax Officer (1965 ) 1 SCR 686 and in Hurra v. Hurra (2002) 4 SCC 388, are not germane. 22. A decision can be set aside in the same lis on a prayer for review or an application for recall or Under Article 32 in the peculiar circumstances mentioned in Hurra v. Hurra (supra). As we have said overruling of a decision takes place in a subsequent lis where the precedential value of the decision is called in question. No one can dispute that in our judicial system it is open to a Court of superior jurisdiction or strength before which a decision of a Bench of lower strength is cited as an authority, to overrule it. This overruling would not operate to upset the binding nature of the decision on the parties to an earlier lis in that lis, for whom the principle of res judicata would continue to operate. But in tax cases relating to a subsequent year involving the same issue as an earlier year, the court can differ from the view expressed if the case is distinguishable or per incuriam. The decision in State of U.P. v. Union of India (supra) related to the year Admittedly, the present dispute relates to a subsequent period. Here a coordinate Bench has referred the matter to a Larger Bench. This Bench being of superior strength, we can, if we so find, declare that the earlier decision does not represent the law. None of the decisions cited by the State of U.P. are authorities for the proposition that we cannot, in the circumstances of this case, do so. This preliminary objection of the State of U.P. is therefore rejected. 18. In view of the above facts & circumstances, in my view, the claim of assessees that the above products do not fall in entry 184/186, is well reasoned and the finding reached by the Tax Board is also well reasoned and appropriate and the questions of law are answered against the Revenue and in favour of the assessees with no order as to costs. (JAINENDRA KUMAR RANKA)J. db 44-49