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Commissioner of Sales Tax Vs. Pure Ice Cream Company - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberSales Tax Reference No. 32 of 1969
Judge
Reported in[1975]36STC18(Bom)
ActsBombay Sales Tax Act, 1959; Bombay Sales Tax Act, 1946
AppellantCommissioner of Sales Tax
RespondentPure Ice Cream Company
Appellant AdvocateS.D. Parekh, Adv.
Respondent AdvocateR.V. Patel, Adv.
Excerpt:
.....under entry 14 in respect of sales of ice-cream - ice-cream manufactured by respondents is cooked food - sale of ice-cream took place at 'depots' which is eating house - irrelevant whether articles of food sold were consumed inside or outside eating house in order to qualify for exemption under entry 14 - respondents entitled to exemption. - - before the tribunal evidence was produced to show that high calorie and vitamin contents of ice-cream and to show that it is an excellent source of food energy. fruits like raspberry, strawberry, mango, pine-apple, etc. then dry and stewed fruits like apricot and pista and almond scrapings are sprinkled over the frozen semi-solidified ice-cream and then it is sold. patel, the learned counsel for the respondents, on the other hand, has..........is granted 1 2 3 ---------------------------------------------------------------------- 14. cooked food and non-alcoholic drinks served at one time at a price of not more than one rupee per person, for consumption at or outside any eating house, restaurant, hotel, refreshment room or boarding establishment which is not a shop or establishment conducted primarily for the sale of sweetmeats, confectionery, cakes, biscuits or pastries.' ---------------------------------------------------------------------- 2. the sales tax officer disallowed this claim and held that the ice-cream manufactured and sold by the respondents was not cooked food, but was a sweet and was, therefore, taxable under entry no. 31 of schedule c to the said act. in appeals filed by the respondents to the.....
Judgment:

Madon, J.

1. The respondents are manufacturers of ice-cream known as 'Kwality Ice Cream'. The respondents, inter alia, sell ice-cream at certain places which are described in the orders of the sales tax authorities and the Tribunal as 'depots'. In respect of their assessments for the periods 1st January, 1960, to 31st March, 1960, and 1st April, 1960, to 31st March, 1961, the respondents claimed exemption under entry No. 14 of Schedule A to the Bombay Sales Tax Act, 1959, in respect of sales of ice-cream made by them at their depots at a price not exceeding one rupee per person. The said entry No. 14, as it stood at the relevant time, provided as follows :

---------------------------------------------------------------------- Conditions and exceptions 'Entry No. Description of goods subject to which exemption is granted 1 2 3 ---------------------------------------------------------------------- 14. Cooked food and non-alcoholic drinks served at one time at a price of not more than one rupee per person, for consumption at or outside any eating house, restaurant, hotel, refreshment room or boarding establishment which is not a shop or establishment conducted primarily for the sale of sweetmeats, confectionery, cakes, biscuits or pastries.' ----------------------------------------------------------------------

2. The Sales Tax Officer disallowed this claim and held that the ice-cream manufactured and sold by the respondents was not cooked food, but was a sweet and was, therefore, taxable under entry No. 31 of Schedule C to the said Act. In appeals filed by the respondents to the Assistant Commissioner of Sales Tax, the Assistant Commissioner upheld the orders of the Sales Tax Officer. The respondents thereupon filed second appeals to the Sales Tax Tribunal and the Tribunal allowed the said appeals and held that ice-creams, even though a sweet, was 'cooked food' and the 'depots' where it was sold for consumption were eating houses, and that the respondents were, therefore, entitled to the exemption claimed by them. Out of the aforesaid order and judgment of the Tribunal, this consolidated reference in respect of both the aforesaid assessment periods has been made. In the question referred to us in this assessment periods has been made. In the question referred to us in this consolidated reference, there are some obvious typographical errors, and both Mr. Parekh on behalf of the applicant and Mr. Patel behalf of the respondents are agreed that the question referred to us should read as follows :

'Whether, on a true and proper interpretation of entry No. 14 of Schedule A to the Bombay Sales Tax Act, 1959, the Tribunal was justified in holding that the sales of ice-cream effected by the respondents at their depots were covered by the said entry No. 14 of Schedule A and as such exempt from tax ?'

4. Before us Mr. Parekh, the learned counsel for the applicant, has urged the following three points :

(1) that ice-cream is not food;

(2) that assuming ice-cream is 'food', it is not 'cooked food'; and

(3) assuming ice-cream is cooked food, the sales in question did not take place at any eating house, restaurant, hotel, refreshment room or boarding establishment.

5. So far as his first submission that ice-cream is not food is concerned, Mr. Parekh submitted that only that particular type of food which constitutes a substantive dish and is necessary for maintaining life and sustaining growth and for supplying the waste of tissues is food, and that ice-cream does not fall under that category. In support of this submission Mr. Parekh referred us to the definition of 'food' given in the Webster's Third New International Dictionary and the Shorter Oxford English Dictionary. The Webster's Third New International Dictionary, inter alia, defines 'food' as follows :

'1a : Material consisting of carbohydrates, fats, proteins, and supplementary substances (as minerals, vitamins) that is taken or absorbed into the body of an organism in order to sustain growth, repair, and all vital processes and to furnish energy for all activity of the organism ....

2a : Nutriment in solid form - opposed to drink.'

6. The Shorter Oxford English Dictionary, inter alia, defines 'food' as follows :

'1. What one takes into the system to maintain life and growth, and to supply waste; aliment, nourishment, victuals.

b. What one eats, as opp. to 'drink'.'

7. Though it is true the meaning of the term 'food' canvassed by Mr. Parekh receives some support from some of the meanings given to the term 'food' both in the Webster's Third New International Dictionary and in the Shorter Oxford English Dictionary, it will noticed that in both the general meaning is what can be eaten as opposed to what can be drunk. The emphasis on the word 'drink' in the definitions of 'food' reproduced above has been supplied by the lexicographers themselves - in the Webster's Third New International Dictionary by italicising the word 'drink' and in the Shorter Oxford English Dictionary by putting the word 'drink' into single inverted commas. Entry No. 14 of Schedule A also brackets 'food' and 'drink' together because the exemption given by it is to 'cooked food and non-alcoholic drinks', that is, to food of a particular type, namely, food which is cooked, and to drinks of a particular type, namely, drinks which are non-alcoholic. Thus, the entry itself shows that the word 'food' is used in its general sense as something which one can eat as opposed to something which one can drink. It is, therefore, not possible to accept Mr. Parekh's submission that the word 'food' in the said entry No. 14 is confined only to a substantive or a main course in a meal and not to any subsidiary course or a side dish or something that can be taken by way of a snack or refreshment. Even if the position were that the word 'food' in the said entry No. 14 is used with reference to the nutritive value of the article or food in question, we find that ice-cream would fulfil that test. The main ingredient in the ice-cream manufactured by the respondents is milk. Before the Tribunal evidence was produced to show that high calorie and vitamin contents of ice-cream and to show that it is an excellent source of food energy.

8. Turning now to the second point urged before us by Mr. Parekh that even if the word 'food' in the said entry No. 14 is to be taken in its general sense as meaning something which one can eat, ice-cream is not cooked food. Mr. Parekh's submissions on this part of the case were twofold. Mr. Parekh's first submission was that nobody in ordinary parlance would think of cooking ice-cream and that the final resultant product, namely, ice-cream, was the result not of cooking but of freezing; and, secondly, that cooked food in the said entry No. 14 refers to cooked food which can be eaten at regular meal hours or as a part of a regular meal. In the Webster's Third New International Dictionary 'to cook' is, inter alia, defined as 'prepare food for the table; ... to prepare for eating by a heating process (as boiling, roasting or baking)'. In the Shorter Oxford English Dictionary 'to cook' is defined as 'to prepare (food); to make fit for eating by application of heat, as by boiling, baking, roasting, broiling, etc.'

9. Mr. Patel on behalf of the respondents has not disputed before us that cooking involves the application of heat which may be either by boiling, baking, roasting, broiling, etc., but what Mr. Patel has submitted is that it is not necessary that the final preparation must be the one which is produced by the application of heat. In Mr. Patel's submission, if cooking, in the sense of preparing food by the action of heat, is necessary for any essential part of the preparation of the final article to be consumed, the resultant product is cooked food. There are several articles of food; some may be eaten hot and some may be eaten cold, but in order to make them edible, the process of cooking, that is, to make fit for eating by the application of heat, is necessary. Thus, chicken mayonnaise is eaten cold, but before you can have chicken mayonnaise you must cook the chicken. Mr. Parekh's argument, however, was that in chicken mayonnaise the finished edible article is chicken, and whether thereafter it is put into the refrigerator to cool it in order to make a dish of chicken mayonnaise or cold chicken was irrelevant; while in an ice-cream what is produced by the process of the application of heat is not ice-cream and cannot be described as ice-cream. In order to test these rival contentions it is necessary to note the process by which the respondents manufacture their Kwality Ice Cream. That process is thus described in the record before us :

'... that milk is over boiled for about an hour to reduce the water contents of the milk. Sugar is then added while the milk is boiling to sweeten the milk. After adding sugar the mixture is boiled for about ten to fifteen minutes and custard powder is added. The milk is further boiled for ten minutes. The emulsion is then allowed to cool and then churned; fruits like raspberry, strawberry, mango, pine-apple, etc., or essence and colour are added, and when the whole thing is frozen it is semi-solidified. Then dry and stewed fruits like apricot and pista and almond scrapings are sprinkled over the frozen semi-solidified ice-cream and then it is sold.'

10. It will be thus seen that so far as the ice-cream manufactured by the respondents is concerned, that ice-cream could not be manufactured unless and until there is considerable application of heat extending for a considerable period of time to all the main ingredients of an ice-cream, except to the trimmings and the flavourings, and that it is only after the ice-cream is ready in the shape of mixture that it is semi-solidified and sold. In this connection, it will be useful to refer to the decision of the Calcutta High Court in Santosh Kumar Ghosh v. Commercial Tax Officer [1965] 16 S.T.C. 931. Under item 7 of the Schedule to the Bengal Finance (Sales Tax) Act, 1941, sale of cooked food, subject to certain exceptions, was exempted. The applicant in that case was a wholesale dealer in chhana. The process of preparing chhana, as described in the said decision, was by boiling milk in an oven and thereafter by adding lactic acid thereto. It was urged on behalf of the revenue that by boiling or cooking milk what was prepared was boiled milk and not chhana and that boiled milk did not change the colour, form or the nature of the whole milk and that chhana was prepared only when lactic or citric acids were added to the boiled milk and this process of admixture did not require any further application of heat and that chhana was, therefore, not prepared in the same way as other cooked food is prepared. The Calcutta High Court held that cooking was a process which consisted of the preparation of food by the action of heat, but in the course of the preparation of food, other actions or series of actions may be employed, namely, dressing the stuff after heating. The court found that as the boiling of milk was a part of the process of preparation of chhana, the mere fact that other actions were necessary to extract chhana out of boiled milk did not make the process anything other than cooking. With respect, we are in agreement with the observations made in the said judgment. The fact that the process of freezing is required to be finally applied does not cancel out the process of application of heat at each stage, which was involved in the process of manufacture of the respondents' ice-cream.

11. So far as the second part of his submission on this point was concerned, Mr. Parekh relied upon a decision of the Madhya Pradesh High Court, namely, Commissioner of Sales Tax, M.P., Indore v. Shri Ballabhdas Ishwardas [1968] 21 S.T.C. 309. In that case the question was whether biscuit was cooked food and thus exempted from levy of sales tax under item No. 41 of Schedule II to the C.P. and Berar Sales Tax Act, 1947. The exempting entry in that Act was as follows :

'Cooked food other than -

(a) pastries, or

(b) a meal, the charge for which exceeds one rupee.'

12. The Madhya Pradesh High Court held that when one spoke of 'food' or 'cooked food', what one meant was that which one took into the system to maintain life and growth and to supply aliment or nourishment and that in a wide sense food would no doubt include everything that is eatable, but in common parlance 'cooked food' meant those things which one ate at regular times of the day at breakfast, dinner or supper. The court further held that biscuit was no doubt a kind of food if the term 'food' was understood in a very wide sense and that the process of baking involved in the manufacture of biscuits was no doubt a form of cooking, but it was none the less not cooked food which one took at meal hours because biscuits could be eaten alone or as adjunct to other food, but no one would normally dream of living on biscuits only day in and day out without getting diseases flowing from malnutrition and under-nourishment. The entry which came up for consideration before the Madhya Pradesh Court was couched in a different form that the entry with which we have to deal. Further, with great respect to the learned Judges, who decided that case, it appears to us that in interpreting that entry the learned Judges have equated 'cooked food' with a 'meal'. By that entry the exemption was given to cooked food and what was exempted was a particular class of food, namely, a meal, the charge for which exceeded one rupee. That in an entry of this nature 'cooked food' cannot be equated with a 'meal' has already been held by a Division Bench of our High Court in Commissioner of Sales Tax, Bombay Province v. Vishnu Bhagwant Ashtaputre (Civil Reference No. 5 of 1949 decided on 1st July, 1949 (Bombay High Court)). In that case the assessee was a hotel caterer and supplied to his customers certain eatables, namely, special misal, ordinary misal, burfee, pedhas, bundi ladoos, gulab jamuns, jalebi, batatawada, chakli, chivda, ghavan, anarase, etc. The relevant entry in the Bombay Sales Tax Act, 1946, under which cooked food was exempted was entry No. 10 of Schedule II to the said Act, which provided as follows :

---------------------------------------------------------------------- 'Serial Description of goods Conditions and No. exceptions subject to which exemption has been allowed. 1 2 3 ---------------------------------------------------------------------- 10. Cooked food eaten at a hotel, Except when the cost restaurant, refreshment room, of a single meal exceeds eating house or other place annas eight.' where cooked food is served. ----------------------------------------------------------------------

13. Before the Division Bench there was no dispute that the articles sold by the assessee were cooked food, but the point of controversy was as to whether they constituted a meal and were thus taken out of the exemption. Dixit, J., pointed out that as the said entry was framed in the language in which it occurred, it was apparent that 'cooked food' and 'meal' must be taken to have different meanings, because if the intention was that 'cooked food' and 'meal' meant one and the same thing, it was not necessary to mention 'meal' instead of 'cooked food' in column 2 of the said entry. Weston, J., pointed out the distinction between 'meal' and 'light refreshment'. The Division Bench held that what the assessee was selling was not meal but snacks or light refreshments and he was, therefore, entitled to the exemption claimed.

14. The entry with which we are concerned, namely, entry No. 14 of Schedule A to the Bombay Sales Tax Act, 1959, exempts 'cooked food' subject to the conditions contained therein. It makes no mention of a meal. As pointed out above, it uses the word 'food' to distinguish it from 'drink' namely, what one can eat. In our opinion, it would be wholly wrong to cut down the ambit of the exemption granted by the said entry to what can be eaten only at fixed hours of the day or in the course of a regular breakfast, lunch or dinner. Had that been the intention of the legislature, the entry would have been framed differently. By the Amending Act 1 of 1949 the entry which the Division Bench had to construe in Commissioner of Sales Tax, Bombay Province v. Vishnu Bhagwant Ashtaputre (Civil Reference No. 5 of 1949 decided on 1st July, 1949 (Bombay High Court)) was amended, and instead of the exception being made in the case of a single meal exceeding eight annas, the exception was made in the case 'where the cost of such food and drinks consumed at any one time exceed rupee one'. This amendment was a result of the decision of the Sales Tax Tribunal, against which the reference to the High Court, namely, Commissioner of Sales Tax, Bombay Province v. Vishnu Bhagwant Ashtaputre (Civil Reference No. 5 of 1949 decided on 1st July, 1949 (Bombay High Court)) was made. If at that time the intention was to equate 'cooked food' with a 'meal', then the amendment would not have been made in the excepting column by substituting the words 'such food and drinks' for the words 'a single meal'. Instead, what would have been done would have been to substitute the words 'cooked food' for the words 'a meal or a single meal'. On the contrary, we find that by the amending Act, instead of the words 'cooked food' the words 'food and non-alcoholic drinks' have been used. This phraseology continued in the Bombay Sales Tax Act, 1953, and when the Bombay Sales Tax Act, 1959, came to be enacted, once again the adjective 'cooked' was introduced before 'food'. When an Act is passed by a legislature, the legislature is presumed to know the state of the existing law. At that time the expression 'cooked food' in a State Act had been judicially interpreted by this High Court to mean something different from a meal and to include light refreshments and snacks, and the legislature must be taken to have enacted this entry with this meaning being attributed to the expression 'cooked food'.

15. Turning now to the third and the last point urged before us by Mr. Parekh, the learned counsel for the applicant, Mr. Parekh submitted before us that the sale of cooked food, in order to qualify for exemption under the said entry No. 14, must be by an eating house, restaurant, hotel, refreshment room or boarding establishment, which was not a shop or establishment conducted primarily for the sale of sweetmeat, confectionery, cakes, biscuits or pastries. Mr. Parekh frankly conceded before us that, if read in its plain grammatical sense, the entry did not state what, according to him, it meant. He has, however, submitted that unless this meaning were read into the entry by the juxtaposition of different words and phrases, the entry would be meaningless or, at least, would make the latter part of the said entry, namely, that part which contains the words 'which is not a shop or establishment conducted primarily for the sale of sweetmeat, confectionery, cakes, biscuits or pastries' meaningless Mr. Parekh has further contended that giving to the said entry the interpretation which he was seeking to place upon it, the depots where the respondents sold ice-cream manufactured by them were not eating houses. In Mr. Parekh's submission an eating house is a place where there is some arrangement made for consuming articles of food sale. In Commissioner of Sales Tax v. Lala Lajpatrai Hotel [1975] 35 S.T.C. 368 (Sales Tax Reference No. 35 of 1969 decided on 16/17th January, 1975), we have, however, held that, in order to qualify for exemption under the said entry No. 14 of Schedule A, it is irrelevant whether the articles of food sold are consumed inside or outside an eating house.

16. Mr. Patel, the learned counsel for the respondents, on the other hand, has submitted before us that this court cannot supply words or make good the deficiency in the language used by the legislature in order to bring about an effect which has the result of levying a tax on the subject. We really consider it unnecessary to decide between these rival contentions with respect to the construction of the said entry No. 14; for we find that even accepting the interpretation sought to be placed on the said entry by Mr. Parekh, the result is that his contention that the respondents' depots were not eating houses must be negatived. The Tribunal has found, as a matter of fact, that at these depots ice-cream was sold for consumption. It follows, therefore, that according to the facts which were before the Tribunal, ice-cream sold by the respondents could be consumed by the respondents' customers at the respondents' depots. If so, even applying the test canvassed before us by Mr. Parekh, the depots would be eating houses.

17. In the result, we answer the question, as reframed by us above with the consent of the counsel, in the affirmative.

18. The applicant will pay to the respondents the costs of this reference.

19. Reference answered in the affirmative.


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