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2011 NTN (Vol. 47)-260
[IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL]
Hon’ble Barin Ghosh, C. J. and Hon’ble U.C. Dhyani, J.
Commercial Tax Revision No. 68-84 of 2011
Gujarat Co-operative Milk Marketing Federation Limited
vs.
The Commissioner, Commercial Taxes, Uttarakand
Date of Decision
For the Petitioner
For the Respondent
: 2nd November, 2011
: Mr. Bharatji Agrawal, Sr. Advocate
assisted by Mr. Piyush Agrawal and
Mr. S.K. Posti, Advocates
: Mr. K.P. Upadhyay, Addl. Chief Standing Counsel
Entries in Schedule - Classification of goods - Amul Masti Spiced Butterm
- Schedule-I of the Uttrakhand Vat Act,2005-Entry at serial no.25 of
Schedule-I of the Uttrakhand Vat Act,2005- Fresh milk, pasteurized milk,
buttermilk, separated milk, curd and Lussi - Amul Masti Spiced
Buttermilksold in three different packets- TheAssessing Officer held that
the product Amul Masti Spiced Buttermilk sold in three different packets
sold by the revisionist is notone of the items mentioned in Serial No. 25
of Schedule I to the Act. High Court on Revision by the dealer held that
the product as manufactured by the revisionist and sold in the name
‘Amul Masti Spiced Buttermilk’ is nothing but butter milk with masala
added thereto - Revision allowed - Judgments of the Tribunal and of the
appellate authority, setaside. Theassessment orders and the demands
quashed.
Cases referred:
M.V. Krishnan Nambissan vs. State of Kerala AIR 1966 (SC)
1676…………………………………………………………………….………………3
JUDGMENT
(Hon’ble Ghosh, C.J. (Oral))
1.
The disputes in these revision applications are similar on facts and law,
and accordingly by consent of the parties, we have heard all these revision
applications together and propose to dispose of the same by the following
common judgment:
2.
Serial No. 25 of Schedule I of the Uttarakhand VAT Act, 2005 exempts
tax in respect of items mentioned therein, namely ‘fresh milk, pasteurized milk,
buttermilk, separated milk, curd and Lussi’. There is no dispute that the items
‘butter milk’ and ‘curd’ have not been mentioned in any other Schedules to the
said Act entailing a liability to pay tax in relation thereto. Therefore, in terms of
the provisions of the said Act, if the product dealt with is either buttermilk or
curd, the same is exempted from payment of tax. The revisionist deals with
‘Amul Masti Spiced Buttermilk’ sold in three different packets of 200 ml., 500
ml. and one liter. The Assessing Officer held that the product thus sold by the
revisionist is not one of the items mentioned in Serial No. 25 of Schedule I to
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the Act. Accordingly the Assessing Officer levied tax on the revisionist.
Aggrieved thereby, revisionist went before the appellate authority. The
appellate authority held that the product sold by the revisionist is cultured
buttermilk. Despite holding that the product is cultured buttermilk, the
appellate authority held that the product sold by the revisionist is not
buttermilk, which is one of the items mentioned in Serial No. 25 of Schedule I
to the Act. The revisionist, in the circumstances, approached the Tribunal.
Before the Tribunal one of the contentions of the revisionist was that if the
product sold by it is cultured buttermilk, and since the Statute has not made
any distinction in between natural buttermilk and water buttermilk, there was
no reason for the appellate authority to affirm imposition of tax on the product
sold by the revisionist. In addition to that it was contended by the revisionist
that the product sold by it is nothing but buttermilk. The revisionist furnished
the steps taken by it to prepare the product. Those are as follows:
Standardized Pasteurized Toned milk (Fat 3.1% & MSNF 8.7%)
Pasteurization of milk 72 degree celcious for 15
Preheat it to 42 degree Celcious –incubation temperature
Inoculate DVS culture
Mix the culture thoroughly and incubate till pH 4.0 to 4.1 is reached
Break the curd and add the required Potable water
Mix thoroughly
Make a solution of MCG 0019 in plain water using triblender and then
add to chhash and after 30 min. add masala separately. Before adding
masala, add remaining quantity of water.
Mix thoroughly and chill below 10 deg. C
UHT processing : at 96-98 degree Celcious/ 4 sec. 110/50 Bar pressure
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Down-stream
Store at RT till Dispatch after laboratory Clearance
It was indicated that at the stage of “inoculate DVS culture” appropriate
bacteria is mixed for the purpose of converting pasteurized toned milk
processed upto that stage into curd. The process of manufacturing the product
in question, as was submitted, did not indicate that at any stage butter or fat
is removed from curd either by churning or otherwise. The Tribunal noted the
judgment of the hon’ble Supreme Court rendered in the case of M.V. Krishnan
Nambissan vs. State of Kerala AIR 1966 (SC) 1676, wherein in relation to
buttermilk, the hon’ble Supreme Court observed that the product is obtained
after removal of butter from curd by churning or otherwise. The Tribunal held
that since no step is taken in the manufacturing process to remove buttermilk
or fat from curd, the product manufactured by the revisionist, is an artificial
cultured product which is something in between milk and curd and its taste
and appearance is tart creamy liquid which is much thicker than the
traditional buttermilk. While, however coming to the said conclusion, the
Tribunal did not dispute the manufacturing process, as was presented by the
revisionist before the Tribunal, and in particular the steps taken in the
manufacturing process including the step of “inoculate DVS culture” i.e.
mixing of bacteria with milk for the purpose of converting the same into curd.
The Tribunal also did not dispute that step of the manufacturing process, as
was presented by the revisionist before the Tribunal, where curd is broken and
required potable water is added. Therefore, the conclusion that the product is
in between milk and curd, in any event, is not acceptable. Furthermore, in the
steps of production, as was furnished, which remained undisputed, at the
initial stage, material used had been shown as pasteurized toned milk. If
pasteurized toned milk has not been converted into curd and accordingly it is
still in between pasteurized toned milk and curd, the same will be either
pasteurized toned milk or curd. As aforesaid pasteurized milk as well as curd
are two of the items mentioned in Serial No. 25 of Schedule I to the Act. 10
3.
There cannot be any dispute that buttermilk will come into existence
when there is no butter / fat in curd or the quantum of butter / fat is
absolutely negligible. At the same time butter / fat less curd will remain curd
and will not become buttermilk. Viscosity of such curd is required to be
reduced, which is done by adding water. In the traditional method of
manufacturing buttermilk recourse is taken to churn curd to remove butter /
fat therefrom because that is the easiest process. In course thereof water is
also added to reduce the viscosity thereof. Milk contains butter or fat. In order
to make the same bereft of butter / fat, the process requires adoption of
complicated technology, involving huge expenses. Therefore, the traditional
method of producing buttermilk is to convert milk containing fat and butter
into curd and thereafter to remove butter / fat from curd by churning the
same. There is no known method of removal of fat / butter from curd except by
churning, but despite that the hon’ble Supreme Court observed in the
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judgment referred to above, churning or otherwise. The object is not to remove
butter / fat from the curd, but to remove or reduce the quantity thereof from
the original product i.e. milk. The steps of manufacturing, as has been
furnished, clearly indicates that the milk which is used as the initial input for
the production activity is pasteurized toned milk having a very low fat / butter
content. The curd made of such milk, even after churning, may not remove
therefrom any further butter / fat, since the quantity of fat or butter is so less
in the curd made from milk containing such low quantity of butter / fat.
Therefore, despite no butter / fat being removed from curd made out of the
pasteurized toned milk, but by adding potable water to the curd which is also a
sine qua non for obtaining the product known as buttermilk, a person gets
nothing but buttermilk; i.e., milk without butter / fat. We are, therefore, of the
view that the product as manufactured by the revisionist and sold in the name
‘Amul Masti Spiced Buttermilk’ is nothing but buttermilk with masala added
thereto.
4.
The Tribunal has purported to compare buttermilk with UHT milk.
However, the Statute has not made any distinction between UHT buttermilk
and ordinary buttermilk, whereas it has made specific distinction between UHT
milk and fresh milk / pasteurized milk.
5.
We accordingly allow the revision applications, and set aside the
judgments of the Tribunal and of the appellate authority, and quash the
assessment orders and the demands.
----------------------------
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