State of Haryana vs Glaxo India Limited and Another

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 Miscellaneous application is allowed.

VATAP No. 77 of 2012

This order shall dispose of aforementioned five appeals, as the same are directed against a common order dated May 27, 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. Glaxo India Limited, was assessed in the year 1996-97 vide order dated January 21, 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 June 25, 2002, the Deputy Excise and Taxation Commissioner (I)-cum-Revisional Authority, Ambala, revised the order of the 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 coccidiostats, whether such mixture contains carbohydrate or not, which alone is tax-free and levied the tax of Rs. 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 u/s 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 honourable 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and ignoring completely the use of the words "mixture of" while interpreting entry No. 53 of Schedule B of the Repealed Act and declaring each of the constituent as mentioned in entry No. 53, as ''poultry feed'' within the meaning of entry No. 53 of Schedule B of the Repealed Act?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under entry No. 53, can by itself be held as ''poultry feed'' within the meaning of entry No. 53 of Schedule B of the Repealed Act?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 2001 (77) ECC 659 (SC) the honourable 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 per cent 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 feeding. 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 the Gujarat High Court in Glaxo Laboratories (India) Ltd. Vs. The State of Gujarat, (Guj) while examining the definitions 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 the Andhra Pradesh High Court in the case of Navodaya Traders Vs. Commissioner, Commercial Taxes, Andhra Pradesh,

In Gupta Agencies Vs. State of Punjab, 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.

The honourable Supreme Court in the case of State Level Committee and another Vs. M/s. Morgardshammar India Ltd., was examining the provision relating to grant of exemption under the U. P. Sales Tax Act. The honourable Supreme Court while referring to the judgment in the case of Novopan India Ltd., Hyderabad Vs. Collector of Central Excise and Customs, Hyderabad, has observed as under:--

We are, however, of the opinion that, on principle, the decision of this court in Mangalore Chemicals and Fertilisers Ltd. Vs. Deputy Commissioner of Commercial Taxes and others, -and in Union of India and others Vs. M/s. Wood Papers Ltd. and another, 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 Fertilisers Ltd. Vs. Deputy Commissioner of Commercial Taxes and others, 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 Vs. H.H. Dave, Assistant Collector of Central Excise and Customs, Surat and Others, that such a notification has to be interpreted in the light of the words employed by it and 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 coccidiostats would also constitute "poultry feed". 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.