In M/S Gujarat Coop. Milk Marketing Federation Ltd. v. State of UP, the Allahabad High Court held that “flavoured milk” sold in open form or in sealed containers is basically a milk that stands exempted under Section 4 of the UP Trade Tax Act read with notification dated 31.01.1985.
The petitioner is selling “flavoured milk” in the name of “Amul Elaichi Shake” and “Amul Coco Shake” in tetra brick packaging. The said “flavoured milk” is a type of processed milk in which some permitted flavours, colour and sugar are added before they are packed as aforesaid for sale. The Department applied 12% tax on the said product by finding that “flavoured milk” is taxable as “soft beverages.”
The petitioners approached the High Court by contending that “flavoured milk” in the name of “Amul Elaichi Shake” and “Amul Coco Shake” sold in tetra brick packaging by the petitioner is ‘milk’ and is exempted from tax under Section 4 of the Act.
After analyzing the provision, the bench observed that “the State Legislature intended not to tax certain basic items of need such as water, milk, salt, news papers or the sale and purchase of any goods by the All India Spinners Association or Gandhi Ashram, Meerut. It exempts “milk” from the taxability but excludes condensed milk, powder or baby-milk from the ambit of the ‘milk’. In other words, ‘milk’ is not taxable whereas certain forms of the ‘milk’ such as condensed milk, milk powder or baby milk are taxable.”
In exercise of its power under Section 3-A of the Act the State Government notified tax @ of 6% w.e.f. 07.09.1981 upon milk powder, condensed milk, baby milk, baby foods and all other food stuffs or products, whether used as such or after mixing them with any other food stuff or beverage, when sold in sealed tinned containers.
The bench further analyzed Notification dated 31.01.1985 wherein milk other than condensed milk, milk powder and baby milk stand exempted by the State Government from payment of tax under the Act with the exception of certain forms of milk, milk products and products sold in sealed containers. It observed that “‘Milk’ and “milk products” excluding products sold in sealed containers. The word ‘products’ in the phrase “ products sold in sealed containers” is of great importance. It has special significance. So the “products sold in sealed containers” refers to “milk products” only and not to the ‘milk’ even though a conjunction is used in between milk and milk products.”
“It is generally seen that even raw milk these days is sold in sealed packs or sealed bottles. The intention of the aforesaid notification is not to tax such raw milk as it would violate the very purpose of exemption of tax granted to milk under Section 4 of the Act. In other words milk other than some of its forms like condensed milk, milk powder or baby milk stand exempted from payment of tax under the Act if sold in open form or even in sealed containers.”
“In common understanding “flavoured milk” is a form of milk and is not a derivative of a milk or a milk product. It is like hot or cold milk which remains a milk even if sugar is added to it. It does not looses its basic characteristic of the milk by heating or cooling or on addition of sugar or any permitted colour, essence or flavour. The addition of permitted colour or flavour does not transform the milk into any other thing.”
Relying on section 4 of the Act in the light of relevant notifications, the bench held that milk is exempted from payment of tax though some other forms of milk such as condensed milk, milk powder and baby milk and specified milk products have not been exempted. Further, there is no notification which provides to levy tax on “flavoured milk” or that it stand excluded from the exemption granted vide Section 4 of the Act read with notification dated 31.01.1985 or that it stands ousted from the ambit of ‘milk’ as contained in Section 4 of the Act.
Read the full text of the Judgment below.
