Parth Prateem Sahu JUDGMENT
Ajay Kumar Tripathi, C.J.
1. The Appellants had approached the writ court by filing Writ Petition (T) No. 4893 of 2010. In the said writ application, the taxability of a widely known drink "Frooti" manufactured by the Appellant-Company and its inclusion under Entry 14 of Schedule II of the Chhattisgarh Entry Tax Act, 1976 (for short 'the Act, 1976') at the rate of 2% by the Assessing Authority came to be assailed before the learned Single Judge.
2. An argument was made that "Frooti" being a product of fruit will fall in the Residual Entry of Schedule-II of the Act, 1976 and therefore, liable to be taxed at the rate of 1% and not 2%. The learned Single Judge did examine such submission of the Appellants whether 'Frooti' being a fruit juice would be required to be considered under the Residuary Entry or can be read into Entry 14 of Schedule-II Part I of the Act, 1976.
3. Entry 14 reads as under:
"All kinds of non-alcoholic drinks and beverages, ice-cream, kulfi and ice candy ------- 2%.
4. The learned Single Judge, after having examined the above Entry 14 and keeping in mind the various settled propositions and principles of law by the highest Court of land, repelled the argument of the Petitioners that "Frooti" was a fruit drink, therefore, will not come within Entry 14 of Schedule-II of the Act, 1976 and therefore, has to be carried to the Residuary Entry.
5. The learned Single Judge has given the following reasons based on the different judicial precedents. He repelled the argument of the Petitioners, dismissed the writ application and held that "Frooti" can very well be read as an item under Entry 14 of Schedule II of the Act, 1976. The relevant paragraphs of the learned Single Judge has significance therefore, is reproduced as part of the order:
"6. At this stage, it would be appropriate to pause here and to notice the principles of law relating to interpretation of tariff entry. Justice G.P. Singh in his celebrated book "Principles of Statutory Interpretation" (14th Edition) at page 874 has held that the taxing entries have to be construed with clarity and precision so as to maintain this exclusivity.
7. In the matter of M/s. Bharat Forge and Press Industries (P) Ltd. v. Collector of Central Excise, Baroda, Gujarat MANU/SC/0110/1990 : (1990) 1 SCC 532, the Supreme Court has held in no uncertain terms that only such goods which cannot be brought under the various specific entries in the tariff schedule should be attempted to be brought under the residuary entry. In other words, unless the Department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort can be had to the residuary item.
8. Likewise, in the matter of Commissioner of Central Excise, Calcutta v. Sharma Chemical Works MANU/SC/0362/2003 : (2003) 5 SCC 60, the Supreme Court has held authoritatively that it is the primary and paramount responsibility of the State to first convincingly prove and establish that the item under no circumstances can be brought under any of the tariff items under the schedule of the Act. It has been further held that classification of goods and the onus of proof lies on the Revenue. Their Lordships of the Supreme Court succinctly held as under:-
"12. We have heard the parties and considered the submissions made by them. We have also read the opinion of the majority Bench and the minority opinion of the Technical Member. It is a settled law that the onus or burden to show that a product fall within a particular Tariff Item is always on the revenue. Mere fact that a product is sold across the counters and not under a Doctors prescription does not by itself lead to the conclusion that it is not a medicament. We are also in agreement with the submission of Mr. Lakshmikumaran that merely because the percentage of medicament in a product is less does not ipso facto mean that the product is not a medicament. Generally the percentage or dosage of the medicament will be such as can be absorbed by the human body. The medicament would necessarily be covered by fillers/vehicles in order to make the product usable. It could not be denied that all the ingredients used in Banphool Oil are those which are set out in the Ayurveda text Books. Of course the formula may not be as per the text books but a medicament can also be under a patented or proprietary formula. The main criteria for determining classification is normally the use it is put to by the customers who use it. The burden of proving that Banphool Oil is understood by the customers as an hair oil was on the revenue. This burden is not discharged as no such proof is adduced. On the contrary we find that the oil can be used for treatment of headache, eye problem, night blindness reeling head weak memory, hysteria amnesia blood pressure, insomnia etc. The dosages required are also set out on the label. The product is registered with Drug Controller and is being manufactured under a drug licence."
9. Similar proposition has been held in the matter of Puma Ayurvedic Herbal (P) Ltd. v. Commissioner, Central Excise, Nagpur MANU/SC/1303/2006 : (2006) 3 SCC 266 by observing as under:-
"It is settled law that the burden of showing correct classification lies on the revenue."
10. In Mauri Yeast India Private Limited v. State of Uttar Pradesh and another MANU/SC/7514/2008 : (2008) 5 SCC 680 (supra), Their Lordships of the Supreme Court have held in so many words laying down the law relating to interpreting different entries, as under:-
"34. It is now a well-settled principle of law that in interpreting different entries, attempts shall be made to find out as to whether the same answers the description of the contents of the basic entry and only in the event it is not possible to do so, recourse to the residuary entry should be taken by way of last resort."
11. Recently, in Commissioner of Commercial Tax, Uttar Pradesh v. A.R. Thermosets Private Limited MANU/SC/0976/2016 : (2016) 16 SCC 122, Their Lordships of the Supreme Court have held that residuary entry is made to cover only those category of goods which clearly fall outside the ambit of the main entry. It has been further held as under:-
"20. ... In State of Maharashtra v. Bradma of India Ltd. MANU/SC/0111/2005 : (2005) 2 SCC 669, the Court had observed that the general principle is that specific entry would override a general entry. Referring to the decision in CCE v. Wood Craft Products Ltd. MANU/SC/0684/1995 : (1995) 3 SCC 454, it has been ruled that resort can be made to a residuary heading only when by liberal construction the specific entry cannot cover the goods in question...."
21. A similar opinion has been expressed in Hindustan Poles Corpn. v. CCE MANU/SC/2168/2006 : (2006) 4 SCC 85 stating that residuary entry is made to cover only those category of goods which clearly fall outside the ambit of the main entry. The opinion proceeds further to state that unless the Revenue can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be made to the residuary entry."
12. It is not in dispute and very well-settled principle of law that when two views are possible, one which favours the assessee should be adopted. (See Bihar SEB v. Usha Martin Industries MANU/SC/0642/1997 : (1997) 5 SCC 289 and Mauri Yeast India Private Limited (supra).)
13. In Mauri Yeast India Private Limited (supra), the Supreme Court has finally concluded that if there is a conflict between two entries, the course adopted to be followed would be as follows:-
"56. We, therefore, are of the opinion that if there is a conflict between two entries one leading to an opinion that it comes within the purview of the tariff entry and another the residuary entry, the former should be preferred."
14. Having noticed the principle of law relating to interpretation of tariff entry and when the residuary entry has to be resorted into, reverting to the dispute brought before the Court, the question involved is, whether the assessing authority and the revisional authority are justified in holding that "frooti" would fall within Entry 14 of Schedule II of the Act of 1976 and would not fall within residuary entry and entry tax liability would at the rate of 2%.
15. Entry 14 of Schedule II of the Act of 1976 reads as under:-
"All kinds of non--alcoholic drinks and beverages, ice-cream, kulfi and ice candy."
16. The question would be whether "frooti" is beverage. The word 'beverage' can be defined as under:-
"Beverage" has been defined in "The Random House Dictionary of the English Language: as:
"A drink of any kind, other than water such as tea, coffee, beer, milk, etc.'"
In "Encyclopedia Britanmica (Mycropedia)", page 1095, it has been described thus:
"Liquid prepared for human consumption including types made by an infusion such as tea and coffee, fruit juices and other juices extracted from plants, such carbonated drinks as ginger ale and root beer, and alcoholic beverages, including wine, made by a fermentation process, and distilled liquor, requiring both fermentation and distillation."
In "Words and Phrases", Vol. 5, "beverage" has been defined:
"Beverage in its common meaning signified liquid designed for drinking by human beings."
The dictionary meaning of the word is very wide. It extends to drink of any kind except water."
17. Vide notification dated 24.9.2003, the Government of India, Ministry of Food Processing Industries has clarified that "Frooti", "Maaza" and "Slice" are "Ready to serve Fruit Beverage" and that company has been allotted a FPO licence No. 11419 and further, the above products do not fall under the classification of either Aerated Waters or Carbonated Waters.
18. Following the principles of law laid down by the Supreme Court in A.R. Thermosets Private Limited's case (supra) noticed hereinabove in which it has been held by Their Lordships that residuary entry is made to cover only those category of goods which clearly fall outside the ambit of the main entry, in the instant case, the determination order as well as two authorities have clearly held that "frooti" is beverage, which is apparent from dictionary meaning of beverage and is clearly covered within Entry 14 of Schedule II of the Act of 1976 being beverage and the authorities are justified in holding so.
19. Learned counsel for the petitioners placing reliance in Parle Agro Private Limited (supra) would submit that "frooti" would be outside of the said entry and would fall within residuary entry of schedule as common parlance meaning would be applied rather technical meaning would apply.
20. In the said judgment (supra) Their Lordships however laid-down the principles in that regard by holding as under:-
"37. The principle of statutory with regard to a word of taxing statutes are well established. This Court in Porritts & Spencer (Asia) Ltd. v. State of Haryana MANU/SC/0340/1978 : (1979) 1 SCC 82 has laid down following in para 6:
"6. ...... Where a word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature."
Their Lordships further held that entries which contain scientific and technical word are also to be looked into in technical and scientific meaning. It was observed as under:-
"40. In the present case, Entry 2 under Section 6(1) (a) uses the word "aerated". This is scientific term and has been repeatedly used in different statues including the Central Excise Tariff and different HSN Codes also uses the term "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 real import of the Entry.
41. In view of the above, we are of the opinion that common parlance and commercial parlance test was not the only test which could have been applied for interpreting the entries in items mentioned in Section 6(1)(a) and the entries which contain scientific and technical word were also to be looked into in technical and scientific meaning. Both the High Court and the Committee of Joint Commissioners discarded the evidence of technical and scientific meaning of word. The appellant has rightly relied on the technical evidence brought on the record which indicate that use of carbon dioxide to the extent of 0.6 per cent was only for the purpose of preservative in packaging the commodities and the product was thermally processed and carbon dioxide was added to it as the preservative."
21. Same is not the case here. In the present case, "frooti" is beverage within Entry 14 of Schedule II of the Act of 1976 in the name being non-alcoholic drink and beverage, ice-cream and candy is of vide import and common parlance test would apply and the product "frooti" will be covered under Entry 14 of Schedule II of the Act of 1976 and would be charged at the rate of 2%.
22. The petitioners cannot be allowed to make separate entry when "frooti" is covered within the specific entry and residuary entry cannot be resorted into. In the considered opinion of this Court, both the authorities are absolutely justified in holding that "frooti" is a product covered by Entry 14 of Schedule II of the Act of 1976. I do not find any merit in the submission made on behalf of the petitioners in this writ petition."
6. Aggrieved by the impugned judgment dated 11.09.2018, the present appeal has been preferred where again learned Senior Counsel representing the Appellants harped on the same line of arguments that since "Frooti" was a fruit product, therefore, it has to be read in the Residuary Entry because Entry 14 cannot encompass a product which has a different identity or origin.
7. The Senior Counsel made submission that there is a separate law dealing with fruit which is known as the Fruit Products Order, 1955. The said Order having been notified under the powers conferred upon the Central Government under Section 3 of the Essential Commodities Act, 1955 deals with all fruit products and how such products are required to be manufactured, marketed and presented before it can be brought into commercial use for human consumption.
8. Besides having dwelt in detail about the Fruit Products Order, 1955, argument was also made by way of a compilation as to how various entries in the pre-existing legislations stood. Some of them being Chhattisgarh General Sales Tax Act, 1958, Chhattisgarh Commercial Taxes Act, 1995, as amended from time to time, Chhattisgarh Commercial Taxes Act, 1994 as also as to things stand now in Goods and Service Tax Act, 2017. Extracts of the relevant entries under the above noted legislations was tendered to the Court to show that all these entries alongwith non-alcoholic drink and beverages also included fruit juices, squashes, syrups etc. by specific reference thereto or they were also shown as a separate entry.
9. The reason for reliance on such legislation is to draw from the pages of history that the Legislatures too have treated fruit juices and its products as a separate identity, if not an Entry.
10. The Court is not moved or impressed by looking into those entries under those legislations because interpretation is required to be given in relation to the legislation which is subject matter of adjudication and/or interpretation before the Court.
11. Merely because the Legislature did not show fruit juices as a separate Entry or have not mentioned the word 'including fruit juices' in Entry 14 of Schedule-II of the Act, 1976, it does not mean that "Frooti" ceases to be a non-alcoholic drink or a beverage.
12. The Entry existing in the Act, 1976 as it stands today, in our opinion will also encompass fruit juices like "Frooti" under Entry 14 and it has to be taxed at the rate indicated in the said Entry.
13. The learned Single Judge has rightly taken note of judicial precedents as well as the principle of such interpretation and has rightly come to a conclusion that only items or goods which cannot be fitted into the broad entries into the schedule of the taxing statute or definition, is required to be taken to the residuary entry or else it is the duty of the Court as also should be to endeavor to read such goods into the broad entries which has been provided by the Legislatures in the taxing Schedule.
14. We are in full agreement with the reasons provided by the learned Single Judge and we hold that Entry 14 of Schedule-II of the Act, 1976 as it stands today will also include drinks like "Frooti" and it is not required to be taken to the Residuary Entry on the argument that it is a fruit product.
15. The Court further records that any reliance placed on the Fruit Products Order, 1955 would be required to be understood within the ambit and object of such legislation. Since the interpretation is in relation to a taxing statute vis-à-vis an Entry therein, even though other legislations or similar legislations could have shown fruit juices by name in a particular entry, non mention of the same will in no manner can compel this Court to accept the line of argument of the Appellants that "Frooti" by virtue of being a fruit product is not required to be treated as a non-alcoholic drink or beverage.
16. The appeal therefore has no merit. No interference is warranted with the impugned order of the learned Single Judge as we do not find any infirmity as to the reason or the interpretation given therein.
17. The appeal is dismissed.
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