The Supreme Court issued notice to the excise commissioner in a Special Leave Petition (SLP) which arose out of the impugned final judgment and order passed by the High Court Of Himachal Pradesh wherein the challenged the Taxability of Milk Cream Being a Milk Product.
Gujarat Co-Operative Milk Marketing Federation Limited, the assessee filed a revision under Section 48(1) of the Himachal Pradesh Value Added Tax Act, 2005 (“Act”) challenging the order passed by the Himachal Pradesh Tax Tribunal (“Tribunal”) in Revision Petition where the order date. 27.11.2012 of the Additional Excise & Taxation Commissioner-cum-Revisional Authority (South Zone), Shimla, Himachal Pradesh passed under Section 46(1) of the said Act, was upheld.
The assessee is a registered dealer under the said statute and is engaged in the trading of milk products, milk, edible oils etc. One of the products, the assessee is dealing with is “milk cream”. The Assessing Authority of the Excise Department completed the assessment relating to the assessee qua VAT for the Assessment Years 2005-06 to 2008-09.
The Excise and Taxation Commissioner held that the assessee was liable to pay VAT on its sales of milk cream, but is not being assessed for the previous five years. The suo-motu Revision proceedings were initiated by respondent no.1, after calling for the orders passed by the Assessing Authority (2nd respondent) and noticing that the assessee had not deposited the tax on fresh milk cream for the said period.
The assessee contended that though it is selling fresh milk cream, it is nothing but fresh milk, wherein through a separator, the cream contents up to 25% (low-fat cream) is retained, as a result of which, low-fat milk cream is the outcome; and the said article is being sold under the name fresh cream by the assessee which is mainly used for garnishing and in preparation of tea, coffee etc.
It was also contended that the dealer had not charged any VAT on its sale; and that the milk cream is a tax-free item given Entries 16 and 23 in Schedule-B of the Act.
It was alleged that merely because milk obtained in natural form is subjected to certain processing resulting in the redaction either of its water or fat content, it would not cease to be milk. Moreover, when the assessee had not added anything like vitamin, flavour or essence, sugar or any other material the nature of fresh milk at no point in time is altered and no new product would come into being.
The Tribunal rejected the contentions of the assessee and held that milk cream or low-fat cream is entirely different from milk in composition; and gave illustrations of milk and milk products – Cottage Cheese, Desi ghee Khoya etc., which are obtained by subjecting natural milk to a process making them as milk products.
Considering the judgement and facts the two-judge bench of Justice B V Nagarathna and Justice Ujjal Bhuyan issued notice to the respondent(s) on the prayer for interim relief as well as on the Special Leave Petition.
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