State Of Haryana vs M/S Glaxo India Limited And ...

on 17 January, 2013

Punjab-Haryana High Court Punjab-Haryana High Court State Of Haryana vs M/S Glaxo India Limited And ... on 17 January, 2013 VATAP No.77 of 2012 & other connected cases -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: January 17, 2013 1. VATAP No. 77 of 2012 (O&M) State of Haryana ...Appellant Versus M/s Glaxo India Limited and another ...Respondents 2. VATAP No. 78 of 2012 (O&M) State of Haryana ...Appellant Versus M/s Alembic Limited and another ...Respondents 3. VATAP No. 79 of 2012 (O&M) State of Haryana ...Appellant Versus M/s B.D. Jagan and another ...Respondents 4. VATAP No. 80 of 2012 (O&M) State of Haryana ...Appellant Versus M/s Alembic Limited and another ...Respondents 5. VATAP No. 81 of 2012 (O&M) State of Haryana ...Appellant Versus M/s Glaxo India Limited and another ...Respondents CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MS. JUSTICE RITU BAHRI Present: Mr.Nitin Kaushal, AAG, Haryana, for the appellant. Mr. Avneesh Jhingan, Advocate for the respondents. VATAP No.77 of 2012 & other connected cases -2- 1 To be referred to the Reporters or not? 2 Whether the Judgment should be reported in the Digest RITU BAHRI, J. CM No. 11923-CII of 2012 For the reasons recorded in the application, the delay of 152 days in filing the appeal is condoned. Civil Misc. application is allowed.
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State Of Haryana vs M/S Glaxo India Limited And ... on 17 January, 2013

VATAP No.77 of 2012 This order shall dispose of aforementioned five appeals, as the same are directed against a common order dated 27.05.2004 passed by the Haryana Tax Tribunal in STA No.294 in respect of the assessment year 2002-03. However, for facility of reference, the facts are being taken from VATAP No.77 of 2012. The respondents-Company M/s Galxo India Limited was assessed in the year 1996-97 vide order dated 21.01.1998. The Assessing Authority treated the sale of "feed supplements" as "poultry feed" falling in Entry 53 of Schedule B to the Haryana General Sales Tax Act, 1973 (for short '1973 Act') exempted from payment of sales tax. Subsequently, vide order dated 25.06.2002, Deputy Excise & Taxation Commissioner (I) -cumRevisional Authority, Ambala revised the order of Assessing Authority by holding that the sale of one or other constituent of "poultry feed" could not be taken as "poultry feed" falling in entry 53 of Schedule B to the 1973 Act free from the levy of tax and it is "poultry feed" i.e. a mixtures of proteins, salts and minerals, vitamins, antibiotics and cocoidiostats, whether such mixture VATAP No.77 of 2012 & other connected cases -3- contains carbohydrate or not, which alone is tax free and levided the tax of ` 2,35,072. The Tribunal allowed the appeal and restored the order of Assessing Authority treating the sale of feed supplements as "poultry feed" falling in Entry 53 of Schedule B of the 1973 Act and exempted the appellant from payment of tax. The State of Haryana has filed an appeal under Section 36 (8) of the Haryana Value Added Tax Act, 2003. Learned counsel for the State has pressed the following substantial questions of law: "(I) Whether the Hon'ble Tax Tribunal was justified in under reading and ignoring completely the use of the words "mixture of" while interpreting entry No.53 of Schedule-B of the Repealed Act and declaring each of the constituent as mentioned in entry No.53, as "poultry feed"within the meaning of entry No.53 of Schedule "B" of the Repealed Act? (II) Whether in the facts and circumstances of the case, any ingredient of mixture, mentioned under entry No.53, can by itself be held as "poultry feed" within the meaning of entry No.53 of Schedule "B" of the Repealed Act?" In Collector of Central Excise, Bangalore v. Tetragon Chemie P. Ltd. (2002) 128 STC 328, Hon'ble the Supreme Court was examining Entry 2302 of the Central Excise Rules for imposing Nil duty in respect of preparation of a kind used in animals feeding, including dogs and cats food' and Entry 2936 prescribing 15% duty for the vitamins. The Supreme Court held that animal feed supplements were rightly included in the tariff item No.2302 being preparation of a kind used in animal feeting. VATAP No.77 of 2012 & other connected cases -4- The Collector of Central Excise has held that the products would be treated on the products manufactured by the manufacturer being directly used as such for animal feeding. Such claim of the Revenue was rejected by the Tribunal. The Tribunal held that even feed supplements like the products of the manufacture would fall in animal feeding under heading 2302. A Division Bench of Gujarat High Court in Galxo Laboratories (India) Ltd. v. State of Gujrat 43 STC 386 while examining the definition of 'Cattle Feed' and 'Poultry Feed' has held that both the expressions include not only that food which is supplied to domestic animals or birds as an essential ration for the maintenance of life but also that feed which is supplied over and above the maintenance requirements for growth or fattening and for production purposes such as for reproduction, for production of milk, eggs, meat, wool or feathers and in the case of animals, also for efficient output of work. The same view has been followed by Andhra Pradesh High Court in the case of Navodaya Traders v. Commissioner, Commercial taxes 111 STC 125. In Gupta Agencies v. State of Punjab 92 STC 543, this Court held that it is settled principle of law that for any article to be covered by a particular entry, the test is whether the article is exclusively or at least predominately used for the particular purpose envisaged in the legal provision. Hon'ble the Supreme Court in the case of State Level Committee and another v. M/s Morgardshammar India Ltd. (1996) 10 STC 1 (SC) was examining the provision relating to grant of exemption under the U.P. Sales Tax Act. Hon'ble the Supreme VATAP No.77 of 2012 & other connected cases -5- Court while referring to the judgment in the case of Navopan India Ltd., Hyderabad v. Collector of Central Excise and Customs, Hyderabad (1994) Suppl. 3 SCC 606 has observed as under: "We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicals and in Union of India v.
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State Of Haryana vs M/S Glaxo India Limited And ... on 17 January, 2013

Wood Papers referred to therein- represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee-assuming that the said principle is good and sound does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz, each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave Manu/SC/0265/1968 that such a notification has to be interpreted in the light of the words employed by it an not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption." The assessee in the present case has been given the benefit of exemption on the ground that the sale of feed supplements such as proteins, salts and minerals, vitamins, antibiotics and cocoidiostats would also constitute "poultry feed". VATAP No.77 of 2012 & other connected cases -6- The very fact that each of the feed supplements can individually be given to the cattle, shall not exclude such feed from the exemption clause as object of giving exemption to the "poultry feed"under the Act is to promote sale of "poultry feed/supplements". Consequently, we find that no substantial question of law requires consideration by this Court in the present appeals. The same are accordingly dismissed. (HEMANT GUPTA) (RITU BAHRI) JUDGE JUDGE 17.01.2013 Atul/Vimal

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