PETITIONER: SALES TAX OFFICER, SECTOR IX, KANPUR Vs. RESPONDENT: DEALING DAIRY PRODUCTS AND ANOTHER DATE OF JUDGMENT10/05/1994 BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) ANAND, A.S. (J) CITATION: 1994 AIR 2383 1994 SCC Supl. (2) 639 JT 1994 (3) 648 1994 SCALE (2)856 ACT: HEADNOTE: JUDGMENT:
The Judgment of the Court was delivered by
B.P. JEEVAN REDDY, J.- Heard the counsel for the parties.
This review petition has to be allowed following the ratio
of the decision of this Court in CST v. Agra Belting Work I.
2. The assessment year concerned herein is 1975-76. And
the matter arises under the U.P. Sales Tax Act. The
question pertains to taxability of turnover relating to ice-
cream.
3. The State of U.P. has been issuing, from time to time,
notifications under Section 4 of the Act, exempting milk and
milk products from the levy of sales tax. It has also been
issuing from time to time notifications under Section 3-A
notifying the rates of tax on sale/purchase of different
goods. In this case, we are concerned with one notification
under Section 4 namely the one dated 21-5-1974 and two
notifications under Section 3-A dated 4-11-1974 and 30-5-
1975. The notification under Section 4 dated 21-5-1974
exempted milk and milk products from the levy of tax. Ice-
cream was understood to be a milk product and, therefore,
exempt. However, by notifications issued under Section 3-A
(dated 4-11-1974 and 30-5-1975) a rate of tax was prescribed
expressly for ice-cream among other goods.
4. In CST v. Agra Belting Works1 a Bench of this Court
comprising R.S. Pathak, C.J., Ranganath Misra and B.C. Ray,
JJ. held, by a majority, that Sections 3, 3-A and 4 of the
U.P. Sales Tax Act are parts of the taxing scheme
incorporated in the Act, and therefore, where a notification
is issued under Section 3-A prescribing a rate of tax for
goods, which may have been exempted from tax by an earlier
notification under Section 4, it must be held that the
intention was to withdraw the exemption and make the sale
leviable to tax at the rate prescribed in the notification.
It was held that it is not necessary in such a case that a
specific or separate notification withdrawing or revoking
the exemption is issued. Following the said decision it
must be held that the exemption granted to ice-cream by
notification dated 21-5-1974 was undone by the notification
dated 4-11-1974 as well as by the notification dated 30-5-
1975.
5. For the above reasons the review petition is allowed
and the order of the High Court dated 12-12-1986 (which was
the subject-matter of SLP No. 14648 of 1988) is set aside.
For the same reasons, the order dated 9-1-1989 in the
aforesaid SLP No. 14648 of 1988 is also set aside and the
order of the assessing authority holding the turnover
relating to ice-cream as taxable is restored.
1 (1987) 3 SCC 140: 1987 SCC (Tax) 233
641 Consequently, the SLP (C) No. 14648 of 1988 shall be
deemed to have been granted and the civil appeal registered
on that basis shall be deemed to have been allowed in the
above terms.
6. Mr Raju Ramachandran, learned counsel for the
respondent-dealer submitted that setting aside the order of
the High Court at this distance of time would expose the
respondent-dealer to penalties and other penal consequences
in addition to tax. In our opinion the said apprehension is
unfounded. No such proceeding for levying penalty or for
visiting other penal consequences has been initiated so far.
In any event, the facts of this case particularly the
conflict of opinion in the High Court on this point make it
appear that it may not be a case calling for levy of penalty
or for visiting other penal consequences.
7. There shall be no order as to costs.
644