J.K. Ranka, J.@mdashThese three Sales Tax Revision Petitions by the petitioner-Revenue are directed against common order of the Rajasthan Tax Board (for short, ''Tax Board'') dt. 03/03/2008, are relevant for the Assessment Years 2002-03, 2003-04 and 2004-05.
2. Brief facts noticed are that the respondent-assessee is carrying on the business of manufacturing and sale of Kirana items and spices at their factory at Ahmedabad and are also having office at Jaipur for trading in the aforesaid items. The respondent-assessee is also trading in spices like Chilli Powder (Mirchi), Coriander Powder (Dhaniya), Turmeric Powder (Haldi), Cumin Seed (Jeera), Asafoetida (Hing) etc. It was noticed by the Assessing Officer (for short, ''AO'') that the respondent was paying tax @4% on the spices/Kirana items sold singly and tax @16% on Masalas which were a mixture of two or more spices. However, the AO was of the view that in so far as Asafoetida (Hing) is concerned, the tax of 4% only was being paid but the AO was of the view that it falls in the category of Packed Masala and once it is a Packed Masala, it falls in the entry where levy of tax is @16%. The AO, being not satisfied with the claim of the respondent-assessee, issued a show cause notice, inter-alia, stating that as to why the Asafoetida (Hing) be not taxed as that of Packed Masala and as to why rate of 16% be not applied. The respondent-assessee furnished detailed explanation, inter-alia, contending that they have sold Asafoetida (Hing) and the tax only @4% is applicable on the sale of Asafoetida (Hing) and that it does not fall in the category of Packed Masala. It was further contended that Asafoetida (Hing) is obtained from roots and to reduce the pungent in the Asafoetida (Hing), only gum arabic and wheat flour are added and merely because these two items are used in the process, it does not mean to fall in the category of Packed Masala. It was further contended that it falls purely in the category of Kirana items and not Packed Masala. It was also contended that in many other States namely: Madhya Pradesh, Punjab, Gujarat, Delhi, Jharkhand, Bihar where also Asafoetida (Hing) is treated as Kirana Item and not as Packed Masala. However, the AO, on the basis that on the packet it was mentioned/printed "Ram Deo Super Compunded Asafoetida Ingredients; 1-Edible Gum, Wheat Flour 30% Approx. Best before within 11 months from the date of packaging" and that it includes Edible Gum, Wheat Flour, therefore, it falls within the definition of Packed Masala and accordingly levied tax @16% and also directed for levy of interest as also penalty u/Sec. 65 of the RST/VAT Act.
3. The matter was assailed in appeal before the Deputy Commissioner (Appeals) (for short, ''DC(A)''), who, however upheld the finding of the AO and rejected the appeal.
4. The matter was further carried in appeal by the respondent-assessee before the Tax Board and the Tax Board, after analyzing the facts, allowed the appeal of the assessee by holding that merely because Gum and Wheat Flour are added, it does not bring any other material, rather it remains as Asafoetida (Hing) and further that Wheat Flour and Gum is even not in the category of Masala and accordingly allowed the appeal and set aside the levy of 16% applied by the AO which is assailed herein. It also set aside penalty.
5. Counsel for the petitioner contended that the decision of the AO as well as DC(A) was just and proper as by mixing Gum and Wheat Flour in Asafoetida (Hing), the nature of Asafoetida (Hing) changed and once two items are mixed in the process of preparation of Asafoetida (Hing), then the very nature changes and it falls within the category of Packed Masala. She further contended that even in the packing, admittedly, it was found noted that it contains edible gum and wheat flour 30% approx. Therefore, once two items are added in preparation of Asafoetida (Hing), then the very nature changes. She further contended that under Central Excise (Chapter-13) Asafoetida (Hing) has not been held to be Kirana Item and even the State Government has not prescribed any other separate rate of Kirana Items and once mixing is done, then it is in the nature of Packed Masala and even the assessee has clearly admitted about mixing of two items. She further contended that once the assessee itself claims that two items were mixed and once the mixing takes place, then it no more remains a single item of Asafoetida (Hing). She relied upon the judgments rendered in the case of
6. Per-contra, counsel for the respondent contended that order of the Tax Board is just and proper as it has taken into consideration the plain and simple meaning of Asafoetida (Hing) which clearly falls within the definition of Kirana Items and not Packed Masala. He further contended that since Asafoetida (Hing), as obtained from roots, has severe pungent nature and therefore, only to reduce the pungent, two items are added which does not change nature of Asafoetida (Hing) in particular. He further contended that the nature of Asafoetida (Hing) does not change at the starting point so also the termination point. He further contended that this Court has also taking into consideration the issue about Asafoetida (Hing) in earlier proceedings between the same parties and the revision of the petitioner was dismissed and that order of this Court has attained finality. He relied upon the judgments rendered in the case of
7. I have considered the arguments advanced by counsel for the parties and have perused the impugned order as well as the judgments cited at the bar.
8. In my view, the order of the Tax Board is just and proper and is not required to be interfered with. It would be appropriate to quote the relevant Entries which are under dispute for the purpose of deciding the issue raised in the instant petitions which provide as under:-"
Entry No. 82-
Dry fruits, supari, kirana items, masala (other than packed masala) like mirchi, dhaniya, sonf, methi, ajwain, suwa, haldi, kathodi, amchoor and asalia, jerra (cumin seeds) 4%
Entry No. 184-
All kinds of eatables and non-alcoholic potables liquids such as fruits syrups, distilled juices, jams (chatani, murabbas), fruit juices, drink concentrates of all types and forms, essences, concentrates, corn flakes and wheat flakes, custard powder, baking powder, ice cream powder and packed masala 16%".
9. In my view, when Entry No. 82 is seen, the word used ''like'' after masala and the legislature intended ''like'' means mirchi, dhania, sonf, methi, ajwain, suwa, haldi, kathodi, amchoor and asalia jeera (cumin seeds), which, in my view, are illustrative and not exhaustive and therefore, all like items would also fall within the category of Entry No. 82. The Entry No. 184 prescribes Packed Masala where two or more ingredients are mixed and sold in packed conditions which was clarified by a notification issued by the Dy. Secretary, Finance Department (Tax Division), Government of Rajasthan vide notification dt. 12/11/2001 to mean Packed Masala as being:-
"I am to state that ''Packed Masala'' used in entry No. 184 means, a masala where two or more ingredients are mixed and sold in packed conditions. Spices sold singly will continue to be taxed as per entry No. 82."
10. Asafoetida (Hing) as the nature of it remains is that it is obtained from the roots of the ferual plants and is not fit for human consumption due to its strong pungence and has to be mixed with additives like Gum Arabic and Wheat Flour. The process of preparing compounded Asafoetida has elaborately been explained by the CEGAT, West Zonal Bench, Mumbai in the case of Lalji Godhu & Co. Vs. Commissioner, Central Excise, Mumbai: , 2001 (132) ELT 287 and the same is as under:-
"The gum Arabic and wheat flour are blended in the sigma mixers. Filtered water mixed asafoetida is then poured slowly into the mixer over the gum and wheat flour. This gets the product ready. Further, the resultant product given a heat treatment by suction in pipes through which a heater is attached and the moisture is sucked out. The powder is then passed through a hammer mill where it is crushed thoroughly. This powder is then passed through a sieve, which contains magnet balls absorbing any fine iron particles. The compounded asafoetida is powder form is then packed in different grammage bottles. In case of lump form, the gum and wheat flour along with filtered water mixed with Asafoetida is poured into the sigma mixer. This process takes about 40 minutes. After this the mixture, which has by now made into lumps, is extracted and put into the aluminium trays and dried for a day before it is packed in cartons."
11. Therefore, taking into consideration the nature of Asafoetida (Hing), as described herein before, in my view, the nature of Asafoetida (Hing) does not change and only to reduce the pungence in the Asafoetida (Hing), two items are required to be mixed otherwise it is not suitable for use or day to day cooking. In my view, Packed Masala would mean a Masala where two or more ingredients are sold in packed condition, however spices are sold at the lower rate as prescribed for spices/Kirana items under Entry No. 82 of the notification dt. 29/03/2001. While counsel for the petitioner has relied upon judgment of the Hon''ble Apex Court in the case of Commercial Taxes Officer Vs. Jalani Enterprises (supra) but even the counsel for the respondent has also relied upon the said judgment to contend that it supports the case of the assessee. It would be relevant to quote Para No. 17 which observes as under:-
17. Each one of the contents of the product referred to above and relied upon by the High Court would indicate that most of the items used in the manufacture of Jaljira are nothing else but spices. They are grinded and mixed. When spices are grinded and mixed, it gives rise to a new product, which is a mixed masala. Different ingredients are used in preparation of Masala after grinding and mixing several ingredients and when they are so grinded they lose their own identity and character and a new product separately known to the commercial world comes into existence. Sales tax is levied on sale of commercial commodities, therefore, individual spices could be termed as different commercial commodities. When they are grinded and mixed they give rise to a separate commercial commodity altogether which could be taxed separately. It is settled law that when one particular item is covered by one specified entry, then the Revenue is not permitted to travel to the residuary entry. If from the records it is established that the product in question could be brought under a specific entry then there is no reason to take resort to the residuary entry. There is no doubt that Jaljira is a drink. The contents of Jaljira is put into water and taken as digestive drink but when we look into the manner and method of preparation of the product Jaljira, we find that it is a mixture of different spices after grinding and mixing. Therefore, it is nothing but a Masala packed into packets of different nature/quantity and sold to the consumers. It would, therefore, for all practical purposes would come within the Entry No. 184 and it cannot be said that it would come under the residuary entry as held by the High Court."
12. On perusal of the above findings of the Hon''ble Apex Court, it clearly shows that Jaljira is made with grinding and mixing of different spices so that a new commercial commodity known by a different name comes up whereas in the case of preparing Asafoetida (Hing), spices are not mixed and only Gum Arabic and Wheat Flours are added which in my view are not spices. When spices are not mixed, it remains Asafoetida (Hing) only and no new product emerges. Therefore, the judgment does not support the contention of counsel for the petitioner.
13. The Hon''ble Apex Court in the case of Commissioner of Central Excise, Mumbai Vs. Laljee Godhoo and company (supra) had an occasion to consider the issue about Asafoetida (Hing) though under the Central Excise and observed as under:-
"The short question which arises for determination in this civil appeal filed by the Department is whether the process to which the raw asafoetida (hing) is subjected to, resulting in the formation of "compunded asafoetida", constitues "manufacture" under the Central Excise Act, 1944. We have gone through the process. As rightly held by the Tribunal there is no chemical change brought about by the aforestated process. The product at the starting point of the process and the product at the terminal point of the process remains the same. In the circumstances the Tribunal was right in holding that the essential character is the product remains constant and, therefore, there is no manufacture. The twin tests applicable for making the goods excisable is manufacture and marketability. The first test in the present case is not satisfied. There is no "manufacture" involved in the process. Therefore, the Tribunal was right in holding that the compounded asafoetida were not exigible to excise duty. For the aforestated reason there is no merit in these appeals. The civil appeals stand dismissed with no order as to costs."
14. On perusal of the above, the Hon''ble Apex Court was of the opinion that the product Asafoetida (Hing) at the starting point of the process and the product at the termination point of the process remains the same. Therefore, even after addition of Gum Arabic and Wheat Flour, there is no change in the said commodity.
15. It would also be appropriate to observe that in between the same parties, same controversy was raised for the Assessment Years 2000-01 and 2001-02 when the AO had levied tax on Hing treating Dhaniya, Mirchi, Haldi, Jira, Hing as Packed Masalas and it levied the same rate of tax at the rate of 16%. The matter was carried by the respondent-assessee before the Tax Board in Appeal No. 604, 606/2004/Jaipur and the Division Bench of the Tax Board vide order dt. 03/02/2006 set aside the additional levy of tax relying on the clarification dt. 12/11/2001 and 26/11/2001 issued by the State Government and the Commissioner, Commercial Taxes Officer, Rajasthan. The Revenue assailed the same by filing two petitions before this Court and this Court in SB Sales Tax Revision Petition No. 187/2008 and 216/2008 vide judgment dt. 21/02/2008 dismissed the revision petitions filed by the department (Revenue) and it is admitted fact that the judgment has attained finality. Once the similar issue has come up before this Court and this Court has already expressed its opinion on an issue on the similar identical facts, in my view, no contrary view can be expressed unless there is change in circumstances or facts and in the instant case, admittedly the facts remains the same and once the Revenue accepted the judgment of this Court in between the same parties and on the identical issue, it has to be followed. The Hon''ble Apex Court in the case of Municipal Corporation of City of Thane Vs. Vidyut Metallics Ltd. (supra) has held as under:-
"In the present case, in earlier litigation, the court considered the evidence of Mr. Deb, quality control manager, who was described as "Expert" on the point and accepting his evidence, the court held that the goods imported by the company were ferrous in nature and not non-ferrous and the company was right in paying octroi under item No. 71. It was thus a "fundamental factor" and the nature of the goods imported by the company was directly and substantially in issue, on the basis of which the decision was taken. It would indeed be very difficult to hold that such a decision would not continue to operate in subsequent years unless it is shown that there are changed circumstances or the goods imported by the company in subsequent years were different than the ones which were imported earlier and in respect of which decision had been arrived at by the court. No such contention has been raised by the Corporation nor has any material been placed on record. We are, therefore, of the view that the revisional court as well as the High Court were right in giving benefit of the decision in the earlier litigation to the respondent-company.
There is an additional factor also as to why the trial court was wrong and the revisional court and the High Court were right in setting aside the order passed by the trial court in the present proceedings. The revisional court in the present proceedings also considered the evidence of two witnesses - Mr. R.K. Deb, quality control manager, and Mr. Arora - a public servant. The revisional court observed that they had ''scientific knowledge and on the basis of their evidence, it held that the goods imported by the company was covered by item No. 71. In the light of that finding also, we are of the view that the revisional court was justified in holding that the company was right in paying 0.5 per cent octroi. The impugned orders, hence, deserve no interference and the appeals must be dismissed.".
16. Hon''ble Apex Court, in the case of Southern Sea Foods Limited Vs. Joint Commissioner of Income Tax, Chennai (supra) has held that even if in another case similar question arose and has not been raised or assailed before higher forums, then too the revenue is precluded and held thus:-
"It is evident from the impugned order that while answering the question in favour of the assessee, the High Court has relied upon its earlier decision in K.R.M. Marine Exports Ltd. v. CIT. In that decision it was held that freezing and processing charges would definitely form part of one of the components of business profits, as the said activity would have a direct and immediate nexus to the activity of export. The said decision also pertained to Assessment Year 1994-1995. Mr. Gaurav Agrawal, learned counsel for the Revenue very fairly states that the said decision of the High Court has not been challenged by the Revenue and has thus, attained finality. In view of the above, we decline to entertain the petition on the said question."
17. This Court in the case of Assistant Commissioner, Anti-Evasion, Rajasthan-3, Jaipur Vs. Honda Siel Power Products Ltd. (supra), after placing reliance on the aforesaid judgments, has held that even if the other appeal on identical matter between the same assessee was dismissed, albeit in default, then too this Court cannot take a contrary view in respect of a similar transaction/item in another year.
18. Even if we take common and commercial parlance meaning of the term "Masala", in my view, spices/Kirana items being sold singly would not come within the meaning of the term "Packed Masala" and in common and commercial parlance, Masala is always treated to be mixing of two and more spices and since Asafoetida (Hing) is not mixture of two and more spices, therefore, it cannot be termed as a Masala. It is also worth mentioning that the claim of counsel for the respondent that in most of the States Asafoetida (Hing) finds place in the list of Kirana goods, also supports contention of the Tax Board and the arguments raised by counsel for the respondents and not disputed by the counsel for the Revenue.
19. Accordingly, in my view, the Tax Board has correctly analyzed the Entry No. 82 and no contrary view can be taken in the facts and circumstances of the instant petitions. When the very levy of rate of tax @ 4% has been found to be properly levied then the question of penalty does not arise.
20. Consequently, the revision petitions, being devoid of merit, are hereby dismissed.
