In a significant case the high court of Orissa held that Kinley water is water not aerated or mineral water, hence no sales tax can impose.
The revision petition was filed by the Commissioner of Sales Tax against the order passed by the Odisha Sales Tax Tribunal.
Opposite party-Hindustan Coca- Cola Beverages Pvt. Ltd. claimed exemption in respect of sale of “packaged drinking water” which was sold in the brand name “KINLEY WATER” treating the same as embraced within the meaning of entries in Serial No.39 of Schedule of Goods declared Exempted from levy of sales tax.
But In the assessment for the Year 2004-05 under Section 12(4) of the Odisha Sales Tax Act, 1947 the Assessing Authority rejected such a claim of exemption. Against this order the opposite party approached the First Appellate Authority .But it was rejected and in a second appeal filed by the opposite party before the Sales Tax Tribunal allowed the claim.
Further the State of Odisha-Commissioner of Sales Tax preferred revision invoking provision for further proceeding under Section 24 raising question of law on the ground that the Odisha Sales Tax Tribunal erroneously decided the issue.
Monish Panda, Anup Narayan Mohanty, and Aditya Singh Mohanty Advocates appeared for the opposite party.
Susanta Kumar Pradhan and Sunil Mishra, Additional Standing Counsel appeared for the appellant.
Counsel for the opposite party contented that,
The manufacturing process adopted by the company for preparing “packaged drinking water” potable drinking water is used as base and it was put through the Double Reverse Osmosis process (RO) for treating and purifying water.
Further they contended that “there is three different kinds of water, namely aerated water, mineral water and water are contemplated in Entry 39 of Tax-free List and Entry 4 of Taxable List and the words “in bottles or in sealed containers” used therein obviously means “packaged form”.”
Counsel for the appellant argued that,
The description of KINLEY WATER in the web-portal informs that “the process involves disinfection, sand filtration, activated carbon filtration, 10-micro polishing filtration, reverse osmosis, 5-micro polishing filtration, mineral dosing and ozone filtration” coupled with removal of “trace compounds like carbonates, bicarbonates, chlorides, sulfates, phosphates, nitrates, calcium, magnesium, sodium, potassium, iron and manganese from the water”, it is evident from nutritional information as already mentioned that KINLEY water is mineral water sold in bottles or sealed containers.
After considering the contentions of the both parties, The Coram of Justice Murahari Sri Raman dismiss the revision petition filed by the appellant and observed that,
Dismiss the revision petition filed by the appellant and observed that the competing entries, viz., Entry 39 of the Tax-free List vis-a-vis Entry 4 of Taxable List, do not confine the item to “water” simpliciter for classification. Also even in the filtering process adopted in public distribution systems or at different places, some gasses may be used or interacted with water which does not convert the drinking water as “aerated water”.
The bench further determined that
sale of packaged drinking water in the brand name KINLEY WATER falls within the expression “water but not aerated or mineral water sold in bottles or sealed containers” vide Entry No.39 of Tax-free List.
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