# MIS. PARLE A6RO (P) LTD v. COMMISSIONER OF COMMERCIAL TAXES, TR:IVANDRUM

- **Citation:** [2017] 5 S.C.R. 30
- **Court:** Supreme Court of India
- **Decided:** 2017
- **Case number:** Civil Appeal Nos. 6468-69 of 2017
- **Bench:** A. K. Sikri, Ashok Bhushan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mis-parle-a6ro-p-ltd-v-commissioner-of-commercial-taxes-tr-ivandrum-32262
- **Pages:** 46

## Headnote

Kera/a Value Added Tax Act, ¥003:
!
ss.6(l)(a) and 6(l)(d) - Classification of the procJuct 'Appy
C
Fizz'~. Whether u/s.6(1)(a)fas aerated branded soft drink' invoking
tax liability @ 20%) or under Entry 71 Item 5 of Notificption issued
uls.6(l)(d) (as 'fruit juice based drink' invoking tax liability @
12.5% - Held: Assessee has succesSJully proved by relevant
scientific and technical materials that th(! product 'Appy fizz' is a
commodity which is fully covered by Item 5 of Entry 71 as amended
D
by S.R.O. No.119 o/2002 with tax liability@ 12.5% (now@ 14.5%).
Interpretation a/Statutes:
-, 'Rules of interpretation - Common parlance test or commercial
t~st -Applicability of - To interpret scientific and.,teclmica/ words -
E Held: While interpreting scientific and technica/'words, cornmo_n
parlance test/Commercial test is not the only test and technical
evidence needs to be looked into.
·
.
Evidence:
Onus to prove that particular goods fall in particular tariff
F
item is on the Revenue - Tax/Taxation.
Principle:
Principle of 'Noscitur a Sociis' - Applicability of
"
Allowing appeal Nos. 6468-69 of 2017, dismissing appeal
G · No. 6470 of .2017 and disposing of appeal N()s. 6471-72 of 2017,
the Court
·
·
"€ivil Appeal Nos. 6468-69 of 2017:
HELD:l.1 All goods enumerated in Section 6(l)(a) ofKerala ·
· Value Added Tax Act, 2003, by the Legislature itself indicates
H
that higher rate of tax has been fixed for those goods which are
30
M/S. ~ARLE AGRO (P) LTD. v. COMMISSIONER OF
31
COMMERCI'AL TAXES
-
-
harmful for environment and health. Aerated branded soft drinks, A
excluding soda is alSo in the company of the above goods -
described in Section 6(1)(a). Section 6(1)(a) also r:.ef~rs to
Schedule I, Schedule II and Schedule III. ~ax in -S~hedule I is -
exempted and rate in Schedule II is 1 % whereas rate of tax in
Schedule III is 5% in contrast to legislative policy in fastening B
tax liability at very high level on goods under Section 6(l)(a) is
thus clear and categorical. Those goods which are not congenial _
to health and environment are charged with higher tax level, which
is the purpose and object clear from the legislative s'cheme.
[Para 26] [50-))-F.]
-
-
1.2 Section 6(l(d) empowers the ·state to notify a list of
goods which are taxable at the rate of 12.5% (at present at 14.5%)
which does not fall under cfau-se (a) and.(c). The delegated:
legislative power of issuing 'notification to the St~te Government
is thus restricted and can be exercised only when goods do not
c
fall under Section 6(1)(a) or Section 6(l)(c). The State of Kerala - D
exercising its delegated legislative power has issued notification
under Section 6(1)(d). [Para 27] [50-G-~]
'
.
-
1.3 The aerated branded soft drinks, excluding soda were
aiways covered under Sectio-n 6(l)(a) and.prfor to 1" April,.2007
it bears HSN Code 2201.10.10. Entry 11 Item 4 of the Notification
E
also reads as "fruit pulp or fruit juice based drinks with_ HSN
Code 2202.90.20". When fruit juice based drinks were·covered
\under Entry 71, the State Government knew that fruit juice based
drinks were not covered by Section 6(l)(a) .. Applicability of t~e
. power of State to issue notification under Section 6(1)(d) arises.
only when goods were not covered by Section 6(1)(a). Fruit juice
F
based drinks, thus, were never treated as -'aerated branded soft
'
drinks' which wa.s the understanding of State of Kerala while
issuing notification under Section-6(l(d). Had fruit juice based
drinks we,re also to be covered by aerated branded soft drinks,
there was no occasion for subo,rdinate legislative authority, i;e.,
G
the State Government, to ineiude sucll products in notification
. under Section 6(1)(d). [Para 29) _[Sl-F-H, 52-A)
.
-
1.4 A bare perusal of Entry 71 as substitutecl by
S.R.O.No.119 of 2oos; indicates that the Entry covers non-
. alcoholic' bever!lges and their powders, concentrates and tablets H -
\
32
SUPREME COURT REPORTS
[2017] 5 S.C.R.
A in any form including - Item No.2 contains fr

## Text

_Characters 0–39,575 of 97,978. This is a partial read: ask again with offset=39575 for what follows._

A
B
.
[2017] 5 S.C.R. 30
MIS. PARLE A6RO (P) LTD.
v.
COMMISSIONER OF COMMERCIAL TAXES, TR:IVANDRUM
(Civil Appeal Nos. 6468-69 of 2017)
MAY09,2017
(A. K. SIKRI AND ASHOK BHUSHAN, JJ.)
Kera/a Value Added Tax Act, ¥003:
!
ss.6(l)(a) and 6(l)(d) - Classification of the procJuct 'Appy
C
Fizz'~. Whether u/s.6(1)(a)fas aerated branded soft drink' invoking
tax liability @ 20%) or under Entry 71 Item 5 of Notificption issued
uls.6(l)(d) (as 'fruit juice based drink' invoking tax liability @
12.5% - Held: Assessee has succesSJully proved by relevant
scientific and technical materials that th(! product 'Appy fizz' is a
commodity which is fully covered by Item 5 of Entry 71 as amended
D
by S.R.O. No.119 o/2002 with tax liability@ 12.5% (now@ 14.5%).
Interpretation a/Statutes:
-, 'Rules of interpretation - Common parlance test or commercial
t~st -Applicability of - To interpret scientific and.,teclmica/ words -
E Held: While interpreting scientific and technica/'words, cornmo_n
parlance test/Commercial test is not the only test and technical
evidence needs to be looked into.
·
.
Evidence:
Onus to prove that particular goods fall in particular tariff
F
item is on the Revenue - Tax/Taxation.
Principle:
Principle of 'Noscitur a Sociis' - Applicability of
"
Allowing appeal Nos. 6468-69 of 2017, dismissing appeal
G · No. 6470 of .2017 and disposing of appeal N()s. 6471-72 of 2017,
the Court
·
·
"€ivil Appeal Nos. 6468-69 of 2017:
HELD:l.1 All goods enumerated in Section 6(l)(a) ofKerala ·
· Value Added Tax Act, 2003, by the Legislature itself indicates
H
that higher rate of tax has been fixed for those goods which are
30
M/S. ~ARLE AGRO (P) LTD. v. COMMISSIONER OF
31
COMMERCI'AL TAXES
-
-
harmful for environment and health. Aerated branded soft drinks, A
excluding soda is alSo in the company of the above goods -
described in Section 6(1)(a). Section 6(1)(a) also r:.ef~rs to
Schedule I, Schedule II and Schedule III. ~ax in -S~hedule I is -
exempted and rate in Schedule II is 1 % whereas rate of tax in
Schedule III is 5% in contrast to legislative policy in fastening B
tax liability at very high level on goods under Section 6(l)(a) is
thus clear and categorical. Those goods which are not congenial _
to health and environment are charged with higher tax level, which
is the purpose and object clear from the legislative s'cheme.
[Para 26] [50-))-F.]
-
-
1.2 Section 6(l(d) empowers the ·state to notify a list of
goods which are taxable at the rate of 12.5% (at present at 14.5%)
which does not fall under cfau-se (a) and.(c). The delegated:
legislative power of issuing 'notification to the St~te Government
is thus restricted and can be exercised only when goods do not
c
fall under Section 6(1)(a) or Section 6(l)(c). The State of Kerala - D
exercising its delegated legislative power has issued notification
under Section 6(1)(d). [Para 27] [50-G-~]
'
.
-
1.3 The aerated branded soft drinks, excluding soda were
aiways covered under Sectio-n 6(l)(a) and.prfor to 1" April,.2007
it bears HSN Code 2201.10.10. Entry 11 Item 4 of the Notification
E
also reads as "fruit pulp or fruit juice based drinks with_ HSN
Code 2202.90.20". When fruit juice based drinks were·covered
\under Entry 71, the State Government knew that fruit juice based
drinks were not covered by Section 6(l)(a) .. Applicability of t~e
. power of State to issue notification under Section 6(1)(d) arises.
only when goods were not covered by Section 6(1)(a). Fruit juice
F
based drinks, thus, were never treated as -'aerated branded soft
'
drinks' which wa.s the understanding of State of Kerala while
issuing notification under Section-6(l(d). Had fruit juice based
drinks we,re also to be covered by aerated branded soft drinks,
there was no occasion for subo,rdinate legislative authority, i;e.,
G
the State Government, to ineiude sucll products in notification
. under Section 6(1)(d). [Para 29) _[Sl-F-H, 52-A)
.
-
1.4 A bare perusal of Entry 71 as substitutecl by
S.R.O.No.119 of 2oos; indicates that the Entry covers non-
. alcoholic' bever!lges and their powders, concentrates and tablets H -
\
32
SUPREME COURT REPORTS
[2017] 5 S.C.R.
A in any form including - Item No.2 contains fruit juice, fruit
concentrates, fruit squash, fruit syrup and pulp and fruit cordial.
Soft drinks other than aerated branded soft drinks are included
in Item No.3. He.alth drinks of all varieties are included in Item
No.4 and similar other products not specifically mentioned under
any other entry in this list or in any other Schedules wer:e included
B in Item No.5. The .Entry of fruit juice based drinks got subsumed
in the residuary entry and the amen.dment by S.R.O. No.119 of
2008 did not change or affect the character and content of the
products which were included in Entry 71.[Para. 31] [52-E-F]
2.1 The High Court while interpreting the entries under
C Section 6(l)(a) and Entry 71 of the notification S.R.O.No.119 of
2008 had applied common parlance test. The High Court has
also relied on Rules oflnterpretation as contained in the Appen~ix
to Schedule to Act, 2003." Applying the common parlance test,
the High Court has concluded tha~ product in question is covered
D by 'aerated branded soft drink'. Strictly speaking the Ru.le of
Interpretation which is .given in the Appendix to Act, 2003, are
the Rules .of htterpretation of. Schedules that is Schedule Nos.11
II and III. Thus, for interpretation of any item in the Scheduie,
Rules of Interpretation as gi.ven 1in, the Appendix are applicable.
E
[Paras 32, 33] [52-G; 53-D]
2.2 In the present c11se Item No.6(1)(a) as well as Entry 71
of S.R.O. No.119 of 2008 issued in exercise of power under
Section 6(l)(d), are the entries which are not men*iOJled in the
Schedule. The explanation .to Section 6(l)(a) appfles the Rules
of Interpretation of the Schedules· to the interpretation of the
F
HSN codes mentioned in Section 6(l)(a) but Expfo11ation does
not say anything about the· items where HSN code (s not there.
The Rules of Interpretation of the Schedul~s, thq~, directly are
not attracted with regard to the 'interpretatioii of the entry which
does not mention .with HSN code in Section 6(1)(a) 11Ithough
G principle contained in such Rules. of Interpretation may apply. •
[Paras 33, 34] (53-E~l\]
·
· ·
"
2.3 Thus,, commoQ· partance test or commercial test which
are to be applied on the commodities in the Schedules which 1Jre
not given with HSN code i~ directly not applicable ilnder Item
H 6(1)(a), hence, applicability of other Rules of Interpretation which
•
MJS. PARLE AGRO (P) LTD. v. COMMISSIONER OF
33
.
COMMERCIA~ TAXES
were required to be 11pplied ls not ruled out. Hence, in the· A
11ppropriate case apart from conimon parlance test or commercial
·test any other test ~an be applied for interpretation of the
commodities included ~n Section 6(1)(a) apart from those which
are given .HSN code. [Para 34) [54-A-C)
Porritts & Spencer (Asia) Ltd. v. State of Haryana
B
1979(1) SCC 82 : [1979) 1 SCR 545; Collector of
Akbar Badruddin Jiwani vs. Collector of Customs 1990
(47) ELT 161 - relied on.
2.4 In the present case, the Entry 2 under Section 6(1)(a)
uses the word 'aerated'. This is scientific term and; has been C
repeatedly used in different statutes including the C_entral Excise
Tariff and different HSN. codes also uses the term 'aerated'. The
word 'aerated' is scientific and technical w.ord used under different
statutes and the scientific and technical ~eaning of the word
'a.erated' can be. looked into ror· finding out the real import of the
. Entry. [Pua 38) [58-B]
.
J
.
D
2.5 Therefore, 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(l)(a)
and the entries which contain scientific and technical word were
also to be looked into in technical and scientific meaning. Both E
the High Court and the Committee of Joint Commissioners
I discarded the evidence of technical and scientific mea'ning of word.
The appeilant has rightly relied on the technical evidence brought
on the reco.rd which indicate that use of carbon dioxide to· the
~xtent of o.6 per cent was only for the purpose of preservative in
F
. packaging the commodities and the product was thermally
processl)d and carbon dioxide was added·to as the preservative.
[Para 39) [58-C-E)
~·
3. Applying the principle of construction of 'noscitur a sociis'
on Entry 71, it is clear that clause 5 of Entry 71 has to take colour G
and meaning from the other items included in Entry 71. Item 5 of
Entry 71 uses the words "similar other products not specifically
mentioned under any other entry in this list or any other
schedule". Thus, the products Wbich .are to be covered under
Item No. 5 are similar other products •. When Item· No.2 of the ·
H
34
SUPREME COURT REPORTS
(2017] 5 S.C.R.
A Entry 71 that is fruit juice; fruit concentrates, fruit squash, fruit
'syrup, and pulp, and fruit cordial and item No.4 that is health drinks
of all v.arieties, are kept in mind the fruit juice based drink shall
fall in Item No.5 .. Both High Court and Committee of
Commissioners overlooked this principle while interpreting item
B
No.5 of Entry 71. [Para 42) [59-H; 60-A-B]
Pardeep Aggarbatti v. State of Punjab 11997 (96) E.L. T.
219 (S.C.) - relied on.
·
'Principles of Statutory Interpretation' 14'h Edition, by
Justice GP. Singh - referred to.
C
4. Proceeding under Section 94 of Act, 2003 .i~ a sepan1te
and specific proceeding. In the present case when the appellant
has filed application under Section 94, the judgment of Division
Bench in Mis. Trade Lines case was already rendered. The order
· passed by the Division Bench in Mis. Trade Lines case was a case
D of assessment of another assessee which decision was based on ·
the materials brought on the record by the said assessee and
could not have precluded the appellant from filing the application
under Section 94. Thus, the judgment of the Division Bench of
Kerala High Court in. Mis .. Trade Lines case did not conclude the
issue and the Committee of.'Commissioners was not absolved
E
from its duty of deciding the same .in accordance with the materials
brought on the record by the appellant and although the
Committee 11oticed all the pleadings and contentions but mainly
relying on the ruling of Mis. Trade Lines case disptissed the
clarification application which cannot be sustained. [Paras 43, 44)
F
[60-E; 61-B~D]
5. Appellant had relied on the order of CESTAT dated
18.03.2008, which was dismissed by this Court on &'h July, 2009.
The High Court without giving cogent reason has refused to rely
on the said adjudication. Though the adjudication by the CESTAT
G was with regard to the HSN Code which found place in Central
H
· Excise TariffAct. The competent entry under which CESTAT
authorities were to adjudicate regarding the product has already
been extracted "Fruit pulp or Fruit juice based drink" on whii;lt
CES.TAT had ruled that product is not included in aerated water
·and was included in entry ~s fruit juice based drink. The product
MIS. PARLE AGRO (P) LTD. v. COMMISSIONER OF
35
COMMERCIAL TAXES
was not held to be aerated water was a reJevant fact.to be. A
considered even though in the entries under the Act, 2003, now
there are no HSN Codes mentioned. Even though the order of
CESTAT did not conclude the controversy. in favour of the
appellant.but fact.that the CESTAT did not hold the producfto be
under the "aerated water" was a.factor which necessitated a more
deeper consideration by the High Court to find out as to whether· B
· the product is 'aerated branded soft drink' or not. [Paras 45, 48
and 49] [6~-E; 63-B-E]
6.1 The appellant had been granted the licence to
manufacture the product under Fruit 'Products Order 1?55.' The ,
appeliant .has been labelling the product as 'Fruit Drink' under C
the Food Safety and Standards (Food Safety & Standards and Food
Additives). Regulations, 2011. The statutory regulations require
that beverages must contain minimum of 10% fruit juice to be·
called a Fruit Drink. [Para 51) (63-G-H]
·6.2.It is on the record· that .the contents of food product of D
'Appy Fizz' are more than 10%. In Section 94 proceedings the
appellant has filed letter of the Government of India dated
28.03.2005 containing the "Subject : Opinion for the product as
'Appy Fizz"'. According to the Government oflndia, Ministry of
Food Processing Industries the product containing 10% of fruit
E
juice are commonly known as fruit drinks. The appellant has also
filed the order of 19'h August, 2015 issued by the Food Safety· and
Standards Authority oflndia, Ministry of'Health & Family Welfare
where permission was granted to Manufacture,. Store and Sale
the product 'Appy Fizz' in pet bottles under the category 2.3.10
i.e. Thermally Processed Fruit Beverages/Fruit Drink/Ready to
serve Fruit Beverages of Food Safety and Standards (Food
Product Standards & Food Additives) Regulations, 201J with name
of the food i~em as Fruit Pulp or Fruit Juice based Drinks for
which you are already holding a license." [Paras 52, 53) [64-F;
65-C-E]
6.3 The Committee of the Joint Commissioners while
deciding the application under Sect~on 94 has noted the aforesaid
onJers pass_ed by .the Food Safety Authorities whic)J were relied
by the appellant but it discai:ded the above said orders
1and opinhm .
F
G
H
36
SUPREME COURT REPORTS
[2017] 5 S.C.R.
A · relying on the order passed by the Kerala High Court in the case
of Mfs·. Trade: Line.s decided on 17.11.2014. and held that the
pr()duct.is taxable at the rate .()f 20% as· per SI. No. 2 of Section
6(l)(a). [Para S4] [6S-F-GJ
· ·
·.
6.4 What'is the process for manufacture in accordance with
B . · the Food Safety and Standards Act, 2011 and the Regulations
framed therein and what is the nature and characteristic of the
. product which has been licensed to be manufactured to the
appellant cannot be said to be an irrelevant factor. while examining
the nature and contents of the product. Whether the product is
an aerated branded soft drink or can be covered by residuary of
C clause (S) of Entry 71 is a question on which the m.anufacture
Ucence, orders issued by Fooci Safety and .Standards Authority of
India were relevant facts. [Para SS) [6S-G-H; 66-A-B] · ·
6.S The appellant has ·also, before the Committee of Joint
Commissioners, produced the technical certificates. The
' D appeilant has filed a certificate dated 11:06.201S from the Institute
of Chemical Technology. The technical opinion clearly mentioned
that carbon dioxide is used for pres~rvation purpose only. Before
·the Committee of Commissioners the entire process of
manufacture of the product was explained along with all relevant
E orders and certificates of Food Safety Authorities. It was stated
· that the Experts in their opinions and certifications have mentioned
that product is commercially and technically distinct from products
whkh have classified as 'aerated branded soft drinks'. In the
application which was filed for clarification, elaborate process of
manufacture was meniioned. The materials which were filed by
F
the appellant before the Clarification Authority were relevant
materials for understanding the manufacture process and the ·
nature and contents of ultimate product. The expett authority
and its opinion which were relied by the appellant were required
to be adverted to both by the Clarification Autjtority as well as by
a the High Court and expert opinion and materials have been
erroneously discarded. [Paras S6-60] [66-D-E; 68-G-H; 69-AC; 71-B-C]
6.6 It is further relevant to note that Revenue has not filed
any material on the record either before the Clarification Authority
H or before the High Court in support of its view that product is
MIS. PARLE AGRO (P) LTD. v. COMMISSIONER OF
37
COMMERCIAL TAXES
.covered under Section 6(l)(a) that is 'aerated branded soft dri.nk'; A
Onus to prove t\lat particular goods fall in particular tariff item is
on the Revenue. (Para 61) [71-C-D].
·
Hindustan Ferodo ltd. v. Colle~tor of Central Excise, ·
Bombay 1997(89) ELT 16 (SC) -
r~lied on.
7. The appellant has successfully. proved by relevant B
scientific and technical materials that the product in question that
is 'Appy·Fizz' is a commodity which is fully covered by Item No.5
of Entry 71 as amended by S.R.O. No.119 of 2008. The High
Court discarded scientific and expert opinion with regard to
manufacturing process and contents of the product. The orders c
of Food Safety Authority were also discarded which were relevant
for considering the nature and contents of product. The
adjudication by CESTAT was relevant at least on the aspec~ .that
the 'Appy Fizz.' is not aerated which was also discarded by the
High Court as well .as by t.he Committee of the Commissioners ..
Thus, the. appellant has successfully proved ~rom the materials D ·
brought .on the record thatthe product 'Appy Fizz' was required
to be classified ·under Item No.5 of the .Entry 71 as amended,
with tax liability at 12.5% after amendment by S.R.O. No.119 of
2008 (now at the rate of 14.5%).[Para 63)'[72-F-H; 73-A]
Civil Appeal No. 6470 of 2017:
E
8. The Civil Appeal No.6470 of 2017. has been filed by the
Revenue challenging the judgment of Single Judge and Division
Bench of High Court by which direction was issued to the
Committee of the Commissioners to decide the application filed ·
by the appellant under Section 94 of Act, 2003. The Division
F
Bench did not commit any e.rror in dismissing'the appeal ·and
observing that no revisional order of that Court in an earlier
proceedings could conclude the issues which could be. considered
in an application for clarification by the competent authority under
Section 94 of Act, 2003. Thus, there is no error in the judgment G
of the Single Judge as well as of Division Bench and this appeal
deserves to be dismissed. [Paras 64, 65) (73-B; 74-A-B]
Civil Appeal Nos. 6471-72 of 2017:
9. Civil Appeal Nos. 6471-72 of 2017 have been filed by
the assessee against an order of Single Judge of High Court by H
, .
38
SUPREME COURT REPORTS .
[2017) 5 S.C.R.
A which order the Single Judge disposed of the writ petition noting.
tbe pendency of Civil Appeal Nos;6468-69 of 2017 in this Court
where classification of the product was under challe~ge. Further
. B.
. proceedings in case of the assessee has to be, thus, concluded in
accordance with the decision in Civil Appeal Nos. 6468-69 of 2017.
Any amount deposited in pursuance of the interim order of the
High Court dated 14'h July, 2016 shall abide by the consequential
orders to be passed in the proceedings against the assessee.
The Civil App~als .are disposed of with direction that in
-proceedings against the assessee consequential orders shall be
passed ineluding an adjustment of·the amount deposited, if
C necessary, as per the judgment in Civil Appeal Nos. 6468-69 of
2017. [Paras 66, 67] [74-C, E-H)
Case· Law Reference
0(1979) lSCR 545
D
relied on
Para 35 ·
E
F
. 1990(47) ELT 161
997 (96) E.L.T. 219 (SC)
1997 (89) ELT 16 (SC)
relied on
relied on
relied on
Para 35
Para 41
~ Para 61
CIVIL APPELLATE JURISDiCTION: Civil Appeal Nos. 64686469 of 2017.
·
From the Judgment and Order dated 05.02.2016·in OT Appeal
No. 07 of2015 andimpugnedrevieworderdated23.03.2016 in RP No.
172 ofi016 in OTAppeal.No. 07tif2015 of the High Court ofKeraia at
Emakulam
'WITH
C. A. Nos. 64'71-6472 and 6470 o,f 2017.
.
· K. K. Venugopal, Arvind P. Datar, Jaideep Gupta, Sr. Advs., Ms.
G
L. Chamya, Aditya Bhattacharya, Premjit Nagendran, Ms. Ashwati
Balraj, Dharmadhikari, Victor Das, Ms. Lalita Phadke,M. P. Devanath,
Ramesh Babu M. R., G: Prakash, J~shn'U M. L., Ms. Priyanka Prakash,
Ms. Beena Prakash, Manu Srinath, Ms: Anindita M., Rajesh Kumar,
Advs. for the ·appearing parties.
· ·
H
. '
MIS. PARLE AGRO (P) LTD. v. COMMISSIONER OF
39
COMMERCIAL TAXES
The Judgment of the Court was de.livered by
A
ASHOK BHUSHAN, J. 1. Leave granted.
2. The issues raised in these appeals being Inter-related h1ve been
:heard.together and the appeals are being disposed ofl;>y this common
judgment.
B
3. Civil Appeals arising out ofSLP(C) Nos. 14697-98 of2016 are
beirtg treated as leading case, the. facts· of which case shall be noted in.
· detail for deciding these cases.
4. Civil Appeals arising out ofSLP(C) Nos. 14697-98 of2016 and.
'
(
r
· SLP(C) 'No.9467 of 2016 are between the same parties whereas Civil c
Appeals arising out ofSLP(C) Nos.24460-61 of2016 have been filed by
different appellants.
Civil A1meals arisini:; out 2f SLP{C} ~os. 14697-98 of 2016
5. The appellant-Mis. Parle Agro (P) Ltd. is a dealer engaged in
fruit juice based drink known as 'Appy Fizz' which has obt(\ined certificate
D
of registration under Kerala Value Added Tax Act, 2003 (hereinafter
referred to as "Act, 2003"). The appellanrwas classifying the product
as fruit juice based drink under Entry, 71 of the notification issued under
Section 6(l)(d)'of Act, 2003 till 2007 and was paying@ 12.5% VAT.
One Mis. Trade Lines (a distributor ofappellant Company) was assessed
E
· by the authorities under the Act, 2003 holding that Mis. Trade Lines is
liable to pay tax @ 20% on the product. M/s. Trade Lines filed OT
Revision No.114/2013 in the High Court, of Kerala against the order
passed by Kerala Value Added AppellateTribunal dismissing the appeal.
. The High Court vide its judgment and order dated 17th November, 2014
dismissed the revision upholding the order passed by. the Assessment F
Officer and the First AppeI!ate Authority. Special Leave Petition was
filed by .M/s. Trade Lines again~t ·the judgment of Kerala High Court .
which was, howevei, permitted to be withdrawn by order dated l 9'h .
January, 2015 of this Court: On 41h August, 2015 t]fe assessment notices
were issued to the appellant for Assessment Year 2009-15 proposing
G
classification of 'Appy Fizz' under Section 6(1)(a)of the Act, 2003 as
"aerated branded soft drink" and tax liability@ 20% . After receipt of
the notices appellant filed an application dated 241h August, 2014 under
Section 94 of the Act, 2003 seeking clarification of product 'Appy Fizz'.
In the clarification application the appellant claimed that product' Appy
H
40
SUPREME COURT REPORTS
[2017] 5 S.C.R.
A
Fizz' had rightly been clarified as 'fruit juice based drink' and which has
tax liability of 12.5%. Along with the clarification application appellant
has filed certificates and expert opinions. Writ Petition No.26279/2015
was filed by the appellant before Kerala High Court seeking direction to
the Commissioner of Commercial Taxes to consider and pass order on
the application for clarification within a specified timeand the proceedings
initiated by the Commissioner of Commercial Taxes by different notices
be kept in abeyance. Learned Single Judge by its judgment and order
dated 31" August", 2015 disposec\ of the writ petition directing the ·
Commissioner ofCoriunercial Taxes to consider and pass orders on the
clarification application within a period of one month from the date of
C
receipt of the judgment and liberty was given to the appellant to produce
all material on which it intends to place reliance to substantiate its
clarification with regard to the classification of the product, further
proceedings in various notices were kept in abeyance. The Assistant
Commissioner and Commissioner of Commercial Taxes filed a writ
D
appeal against the judgment of the learned Single Judge before Division
Bench of the Kerala High Court. The Division Bench of Kerala High
Court vide its judgment dated s•h October, 20i 5 dismissed the writ appeal
by affirming the decision of the learned Single Judge.
E
F
H
6. After the above judgment of the Division Bench dated S'h
October, 2015, the Committee of Joint Commissioner passed the
clarification order dated 61h November, 2015 classifying the product as
'aerated branded soft drinks', at the rate of 20%. Against the order
passed under Section 94 of Act, 2003, the appellant filed O.T. Appeal
No.7 of 2015 in the Kerala High Court. The Division Bench by its
judgment and order dated S'h February, 2016 dismissed the appeal filed
by the appellant upholding the order dated 61h November, 2015. A review
application was also filed by the appellant to review the judgment dated
S•h February, 2016 which has been dismissed on 23'ct March, 2016.
7; CivilApp~als ari~i~g outofSLP(C)No.14697-98 of20l6 have .
· been filed against the aforesaid order dated S'h February, 2016 and the
review order dated 23'ct March, 2016 by the appellant.
Civil Appeal arising out of SLP(C)No.9467 of 2016
8. The Assistant Commissioner (Assessment) and the
Commissioner of Commercial Taxes have filed this appeal challenging
the judgment dated 5th October, 2015 by which writ appeal filed by the
MIS. PARLE AGRO (P) LTD. v. COMMISSIONER OF
41
COMMERCIALTAXES [ASHOK BHUSHAN, J.] .
Assistant Commissioner( Assessment) and another against the direction
A
of the learned Single Judge dated 31" August, 2015 has been dismissed.
Civil Appeals arising out of SLP(C)Nos.24460-61 of 2016
9. Mis. We Six Traders Etc.Etc. is a dealer in fruit juices and
other drinks manufactured by M/s. Parle Agro (P) Ltd. Assessment
Commissioner has issued notices forassessment years 2010-11 to 2013- · B
· 14 and April to June 2015 proposing to classify the product' Appy Fizz'
as 'aerated branded soft drink'@20%. VAT. After the judgment of the
·. High Court dated 5'h February, 2016 in the case of Mis. Parle Agro (P)
Ltd. order of assessment was issued against which the assessee filed .
appeal before Kerala Value Added Tribunal in which appeal the Tribunal c
directed the assessee to deposit 30% as pre-condition to hear the matter
on merits. The assessee filed writ petition in the High Court challenging
the aforesaid order passed by the Tribunal on the stay petition. The
assessee submitted before the High Court that against the judgment of
the High court dated 5•h February, 2016 in the case ofM/s. Parle Agro
(P) Ltd. SLP has already been filed, hence, the assessee should not
D
have been called to remit the entire amount. The High Court vide its
judgment and order dated .14'h July, 2016 disposed of the writ petiHon
directing the demand made in the above cases shall remain stayed till
disposal of the appeals on condition ofassessee depositing 50% of the
amount involved. Civil Appeals arising out ofSLP(C)Nos. 24460~61 of E
2016 have been filed against the aforesaid judgment and order of the
Kerala High Court dated l 41h July, 2016.
10. We have heard Shri K.K. Venugopal, learned senior counsel
for the assessee. Shri J aideep Gupta, learned senior counsel has appeared
for the Revenue.
F
11. Shri K.K. Venugopal, learned senior counsel, submits that both
High Court and Committee of Commissioners erred in not classifying
the product of 'Appy Fizz' under Entry 71 of S.R.O.No.119 of 2008.
Classification of the product as 'aerated branded soft drinks, excluding
soda' under Section 6(l)(a) is not the correct classification. It is submitted
G
that the Revenue itself till 2007 has classified the product under Entry 71
with tax liability of 12.5%. He submits that judgment of Division Bench
ofKerala High Court in Mis. Trade Lines cannot be binding precedent
since the said judgment was rendered in the revision proceedings in
which appellant was not a party and the revision proceedings were
H
42
SUPREME COURT REPORTS
(2017] 5 S.C.R.
A
confined to the assessment order on the basis of facts on the record of .
that case. Prior to 2007 the product was covered under Entry 71,. When
in 2008 Entry 71 was amended, there was no amendment to the schedule
ul}der Section 6(1 )(a). He submits that had the intention of the legislation ·
was to pick up the certain products earlier covered under Entry 71 and
B
place them in Schedule under Section 6, then entry 'aerated branded
soft drinks, excluding soda' which earlier did not cover the said product,
would also have been amended at the same time. He submits that if
prior to 2007, 'AppyHzz' could not be considered as an 'aerated branded
soft drink' then there is no identifiable logic that the product would be so
covered after 2007. Especially, there was no indication that the said
C
prodm;t had been removed/ejected from Entry 71 after the amendment
in2007.
12. Further, he submits that common parlance test which has been
applied by the High Court is not the correct test to determine the
classification to include the product, as entries under the VAT Act are
D
technicalor scientific in nature. Soft drinks under Kerala VAT would be
those drinks that are synthetic whether or not aerated. The product in
· question is not a synthetic product. It contains more than 10% fruit juice ..
It is.fruit juice based drink and not covered by Section 6(1 )(a). A fruit
juice based drink is more akin to fruit juice than soft drink. Sub-clause
E , (5) of Entry 71 covers similar other products not specifically mentioned
under any other entry in this list or any other schedule. The product is
fully covered under alone entry. He further submits that Food Safety
Authorities have recognized the product as a 'fruit drink'.
13. Shri Venugopal has placed reliance on the order dated
F
18.03.2008 of the Customs, Excise and Service Tax Appellate Tribunal
where classification of the product was upheld as 'fruit based driIJk' and
the Revenue's appeal was dismissed by this Court' on 18'h July, 2009.
Shri Vanugopal further submits that neither the Committee of
Commissioned nor the High Court has adverted to the technical evidence
and certificate filed by the appellant along with proceedings under Section
G
94 of Act, 2003. The scientific evidence fully proved that products do
not undergo aeration or carbonation; the product is·therffially processed
with C02 which help in preserving the Apple Juice concentrate.which is
otherwise perishable in na~e. The certifications ft.illy proved the product
as 'Thermally processed fruit juice based drink'.
H
MIS. PARLE AGRO (P) LTD. v. COMMISSIONER OF
43
COMMERCIAL TAXES [ASHOK BHUSHAN, J.]
14. Learned counsel further submitted that products which are
A
covered under Section 6( 1 )(a) are all those products which are dangerous
to health. They have deliberately been included on higher tax slab of
20% and lower tax slab on the products under Entry 71 was with object
to promote the products under Entry 71.
15. Shri J aideep Gupta, learned senior counsel, appearing for the
B
State ofKerala refuting the submissions ofShri K.K. Venugopal contends
that High Court has rightly held that product is an 'aerated branded soft
drink' within the meaning of Section 6( I )(a). He submits that after deletion
of Entry 71(4) by S.R.O.No.119 of2008 which provided "Fruit pulp or
fruit based drink", it was clear indication of the legislation that the 'fruit
C
based drinks' are out of Entry 7-l and have to be covered into 'aerated
branded soft drinks' under Section 6(l)(a). He submits that it is not
disputed that 'Appy Fizz' is a branded drink and further it is aerated by
C02, hence, it is aerated drink. He submits that amendment of Entry 71
by S.R.O.No.119 of2008 made the legislative intent clear and the High
Court has rightly relying on the said amendment has held that product is
D
not covered under Entry 71 and is liable to tax@ 20% under Section
6(l)(a). Learned counsel for the respondent, further, submits that
CESTAT ruling has no relevance with regard to the classification under
Act, 2003, since, the CESTAT ruling considered the different headings
under Central Excise Tariff Act, 1975 which is not relevant. Learned
E
counsel submitted that under the Rules of interpretation as contained in
the Act, 2003, the product being not covered with any of HSN number
common parlance or commercial parlance test has rightly been applied
by the High Court. Under the common parlance even if the product
contained more than 10% fruit concentrate it is a soft drink as commonly
known and tax liability@20% has rightly been imposed.
F
16. Learned counsel for the parties have placed reliance on various
cases which shall be referred to while considering the submissi-0ns in
detail.
17. We have considered the submissions made by the learned
G
counsel for the parties and perused the records.
18. From the submissions oflearned counsel for the parties and
the pleadings of the.parties following are the main issues which ~rise for
consideration in these appeals:
H
'44
SUPREME COURT REPORTS
[2017] 5 S.C.R.
A
(I) What is inter-relation between Section 6(J)(a) and Section
B
c
D
E
F
G
H
6(J)(d) of Act, 2003?
(2) What is scope and ambit of Item 5 of Entry 71 as amended ?
(3) Whether common parlance test is the only test to be applied
for understanding the different entries under Section
6(J)(a) and Section 6(1)(d)?
(4) Principle of Noscitur a Sociis.
(5) Whether the Division Bench of Kera/a High Court in Mis.
Trade Lines can preclude the Committee of Joint
Commissioners to examine the materials filed by the
appellant along with Clarification Application under
Section 94.
(6)
Whether CESTAT decision dated 18.03.2008 has any
relevance with regard to theclassification of product in
question?
(7) Whether decision and opinion of Food Safety Authorities
on the product in question were relevant?
(8) Whether the Committee of Joint Commissioners as well as
the High Court has rightly discarded technical and expert
opinion relied by the appellant?
(9) Conclusions.
19. Before we proceed to consider the submissions of the learned
counsel for the parties, it is necessary to look into the statutory scheme
and the relevant entries prior to amendment by S.R.O.No.119 of2008.
Section 6 of the Kerala Value Added Tax Act, 2003 provides for levy of
tax on sale or purchase of goods. Section 6(l)(a) which is relevant for
the present case as existed before 1 ''April, 2007, was as follows:
"6(1)(a) in the case of goods specified in the [Second, and
Third Schedules] at the rates specified therein and at all points
of sale of such goods within the State (and in the case of
goods specified below at the rate of twenty percent, at all
points of sale of such goods within the State, namely:-
MIS. PARLE AGRO (P) LTD. v. COMMISSIONER OF
45
COMMERCIAL TAXES [ASHOK BHUSHAN, J.]
SI.
Description of goods
HSN
A
No.
Code
(1)
(2)
(3)
l.
Aerated Drinks
2201.10.10
B
(1) Mineral Water
***
(2) Packaged drinking water
2202.10
(3) Branded soft drinks,
8415
c
Excluding soda
2.
Air conditioners
3.
Building Materials
20. The State by various notifications under Section 6(l)(d) has
D
notified list of goods taxable at the rate of 12.5%. Entry 71 which is
. relevant for the present case as notified by the State as existing prior to
amendment by the S.R.O.No.119 of2008 is as follows:
"71. Non-alcoholic beverages and their powders,
concentrates and tablets including (I) aerated water, soda
water, mineral water, water sold in sealed containers or
pouches (ii) fruit juice, fruit concentrate, fruit squash, fruit
syrup and fruit cordial [x x x] (v) other non-alcoholic
beverages; not failing under any other entry in this List or in
any of the Schedule.
(1) Water not containing added {Ugar or other sweetening
matter; [xx x]
(b) Aerated water
E
F
(2) Water containing added sugar or other sweetening-matter.
2201.10.20
G
(3) Fruit juices and vegetables juices, unfermented and not
containing added spirit, whether or not containing added sugar
of other sweetening matter
2009 H
46
SUPREME COURT REPORTS
[2017] 5 S.C.R.
A
(4) Fruit pulp or fruit juice based drinks
B
c
D
E
F
G
H
(5) Soft drink concentrates
(a) Sharbat 2106.90.11; (b) other
( 6) Beverages containing milk
2202.90.30
2106.90.19
2202.90.30
20. The words "(iii) soft drinks ofall varieties" omitted by S.R.0.
No. 543/2007 dated 20-6-07 published in Kerala Extraordinary
No.1167 dt. 21.6.07
21. Omitted by S.R.0. No. 543/2007 dt, 20-6-07 published in
Kerala Gazette Extraordinary No. 1167 dt.21-6-2007. Prior
to the omission it read as under:
"(a) Mineral water 2201.10.10""
21. Now, we come to Section 6(l)(a) and (d) which exists as on
date as:
"6. Levy of tax on sale or purchase of goods
(1) Every dealer whose total turnover for a year is not
less than ten lakhs rupees and every importer or casual trader
or agent of a non-resident dealer, or dealer in jewellery of
gold, silver and platinum group metals or silver articles or
contractor or any State Government, Central Government or
Government of any Union Territory or any department thereof
or any local authority or any autonomous body or any multilevel marketing entity, their distributor and/or agent engaged
in mu/ti-level marketing, whatever be his total turnover for
the year, shall be liable to pay tax on his sales or purchases
of goods as provided in this Act. The liability to pay tax shall
be on the taxable turnover,-
(a) in the case of goods specified in the Second and Third
Schedules at the rates specified therein and at all points
of sale of such goods within the State and in the case of
goods specified below, mentioned in column (4), at all
points of sale of such goods within the States namely;
MIS. PARLE AGRO (P) LTD. v. COMMISSIONER OF
47
COMMERCIAL TAXES [ASHOK BHUSHAN, J.]
S.No.
Description of Goods
HSN
Rates of
A
Code
Tax in
percentage
(1)
(2)
(3)
(4)
{30}
B
1.
Cigars, Cheroots, cigarillos
2402
and cigarattes, of tobacco or pf
tobacco substitutes
2.
Aerated branded soft drinks,
***
20
c
excluding soda
3.
{Carry bags made ofp/astic
***
20
including polypropylene, which
have a vest type self carrying
feature to carry commodities}
D
{3A.
Disposable plates, cups and
***
20}
leaves, made ofplastic
1 {including Styrofoam and
Styrofoam sheets]
E
[3B.
Printed banners, hoardings
***
20}
and leaflets of Poly Vinyl
Chloride/Polyethylene and
other plastic sheets]
F
4.
Pan Masala
2106. 90.20
22.5
G
5.
Churnajor pan
2106.90. 70
22.5
6.
Pan chutney
•••
22.5
H
48
A
7.
B
SUPREME COURT REPORTS
[2017] 5~.C.R.
.
Other manufactured tobacco
2403
22.5
and manufactured tobacco
substitutes homogenized or
reconstituted tobacco; tobacco
-·
extracts and essences
Explanation: The 'Rules of Interpretation of the Schedules'
appended to the Schedules of this Act shall apply to the
interpretation of the HSN codes mentioned in this clause.
xxx
xxx
xxx
xxx
(d)
in the case of goods not falling under clause (a) or (c) at
the rate of 14.5% at all points of sale of such goods
within the State, Government may notifY a list of goods
taxable at the rate of 14.5%;"
D
22. A legislative history of Section 6( 1 )(a) clearly indicates that
Section 6( 1 )(a) always covered 'aerated branded soft drinks' excluding
soda' with tax liability of20%.
23. By S.R.O.No.119 of2008 Entry 71 has been substituted by
another Entry. Entry 71 after amendment by S.R.O.No.119 of2008 w.e.f.
E
l '' April, 2007 is as follows:
F
"NON-ALCOHOLIC BEVERAGES AND THEIR POWDERS,
CONCENTRATES AND TABLETS IN ANY FORM
INCLUDING;
(1) Aerated water, soda water, Mineral water, water sold in
sealed containers or pouches.
(2) Fruit juice, fruit concentrates, fruit squash, fruit syrup
and pulp, and fruit cordial.
(3) Soft drinks other that aerated branded soft drinks.
G
(4) Health drinks of all varieties.
(5) 'Similar other products not specifical~v mentioned under
any other entry in this list or any other schedule'."
24. As noted above the application was filed by the appellant under
Section 94 of Act, 2003 on 24'h August, 2014 which has been decided by
H
MIS. PARLE AGRO (P) LTD. v. COMMISSIONER OF
49
COMMERCIAL TAXES [ASHOK BHUSHAN, J.]
the Committee of Joint Commissioner by order dated 61h November,
A
2015. Section 94 of the Act, 2003 is as follows:
"Section 94.