JUDGMENT H.N. Seth, J.
1. At the instance of Messrs. Indodan Milk Products Ltd., a dealer in condensed milk, etc., the Additional Judge (Revisions), Sales Tax, referred the following question in respect of the assessment years 1964-65 and 1965-66 to this court for opinion:
Whether, in the facts and circumstances of the case, condensed milk is taxable under the Central Sales Tax Act in view of Notifications Nos. S.T. 911/X dated 31st March, 1956, and S.T. 776/X-900(16)-64 dated 16th February, 1965, of the U.P. Sales Tax Act and read with Section 8(2A) of the Central Sales Tax Act?
2. While hearing these references, a Division Bench of this Court felt that the case of Nestle's Products India Ltd. v. Commissioner of Sales Tax [1963] 14 S.T.C. 606, in which it has been held that condensed milk is not milk within the meaning of Section 4 (a) of the U.P. Sales Tax Act, requires reconsideration. Accordingly, it referred these cases to a Full Bench and that is how they have come up before us.
3. During the assessment years in question, the dealer sold condensed milk in soldered tins and other cans in the course of inter-State trade. The Sales Tax Officer brought the turnover in respect of such sales to tax under the Central Sales Tax Act. The dealer then filed appeals against the assessment orders and contended that when during the course of inter-State trade it sold condensed milk in soldered tins and other cans, it did not sell the same in sealed containers. Sale of condensed milk, in such circumstances, was totally exempt from payment of sales tax as per notifications issued by the U.P. Government. In the circumstances it was not liable to pay Central sales tax also on such turnover, as provided in Section 8(2A) of the Central Sales Tax Act. The Assistant Commissioner (Judicial), who heard the two appeals, did not go into the question whether in this case the dealer sold milk in sealed containers or not. He held that the turnover of sale of condensed milk was generally not exempt under the various notifications issued by the U.P. Government and as such the same was liable to be taxed under the Central Sales Tax Act. The dealer then filed two revision applications before the Additional Judge (Revisions), which were dismissed and the two assessment orders passed by the Sales Tax Officer as confirmed in appeal were upheld. Subsequently, at the instance of the assessee, the learned Judge (Revisions) referred the aforementioned question for the opinion of this court in both the cases.
4. Section 8 of the Central Sales Tax Act makes provision for payment of sales tax in respect of sales made by a dealer in the course of inter-State trade. Sub-section (2A) runs thus:
Notwithstanding anything contained in Sub-section (1A) of Section 6 or Sub-section (1) or Sub-Section (2) of this section, if under the sales tax law of the appropriate State, the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than 3 per cent (whether called a tax or a fee or by any other name), the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate.
Explanation. -- For the purposes of this sub-section a sale or purchase of goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law it is exempt only in specified circumstances or under specified conditions or in relation to which the tax is levied at specified stages or otherwise than with reference to the turnover of the goods."
5. Section 4(a) of the U.P. Sales Tax Act provides that no tax shall be payable on the sale of water, milk, salt, newspaper and motor spirit. This section further authorises the State Government to issue notifications exempting the turnover of sale of any other goods from sales tax. According to Section 4(b) sales made by All India Spinners' Association or Gandhi Ashram, Meerut, or its branches or such other persons as the State Government may from time to time notify, shall be exempt from payment of sales tax on such conditions and on payment of such fee, if any, not exceeding Rs. 8,000 annually as may be specified in the notification.
6. Acting under Section 4 of the U.P. Sales Tax Act, the State Government issued Notification No. S.T. 911/X dated 31st March, 1956, directing that with effect from 1st April, 1956, the goods mentioned in List II thereunder shall alone be exempt from payment of tax. Item No. 10 of this list mentioned milk and milk products such as chhena, dahi, khoa, butter and cream but excluding (1) products sold in sealed containers, and (2) sweetmeats, as items exempt from payment of sales tax. In the result, turnover of a dealer in respect of milk, milk products other than those sold in sealed containers or sweetmeats is exempt from payment of sales tax under the U.P. Sales Tax Act. Subsequently, by Notification No. S.T. 3506/X dated 10th May, 1956, the State Government amended the notification dated 31st March, 1956, and further excluded ghee, one of the milk products from item No. 10 of that notification as an item, turnover of which is exempt from payment of sales tax. The State Government issued yet another Notification No. S.T. 776/C-900(l6)-64, exercising its power under Section 3-A(1) of the Sales Tax Act, providing for single point taxation in cases of sale of butter and cream. The position that emerges as a result of these notifications and the provisions contained in Section 4 of the U.P. Sales Tax Act is that the sale of milk is completely exempt from payment of sales tax in all circumstances. The turnover in respect of milk products excepting butter, cream and ghee is exempted from sales tax if these products are sold otherwise than in sealed containers. So far as sales tax on the turnover of two of the milk products, i. e., butter and cream, is concerned, it is payable at a single point as mentioned in Notification No. S.T. 776/C-900(16)-64.
7. Learned counsel for the dealer contends that both under Section 4 of the U.P. Sales Tax Act and the notifications mentioned above, the turnover in respect of sale of milk is completely and generally exempt from payment of sales tax. Condensed milk is nothing but milk in concentrated form. Turnover of its sales is, therefore, not liable to Central sales tax as provided in Section 8(2A) of the Central Sales Tax Act, Even if it be assumed that condensed milk is a milk product, turnover of its sales otherwise than in sealed containers is generally exempt from sales tax under the above-mentioned notification and as the assessee in this case did not sell condensed milk in sealed containers, its turnover was generally exempt from tax under the U.P. Sales Tax Act and, consequently, it was not liable to pay Central sales tax as provided under Section 8(2A) of the Central Sales Tax Act.
8. Learned standing counsel did not. contest the position that under the U.P. Sales Tax Act, the turnover of milk is generally exempt from sales tax and as such its sale during the course of inter-State sale whether in sealed container or otherwise would not be liable to Central sales tax as provided in Section 8(2A) of the Central Sales Tax Act. He, however, contends that condensed milk is not milk within the meaning of the term as used in Section 4(a) of the U.P. Sales Tax Act and the notification mentioned above. According to him, it is a milk product like khoa, etc., as held by this court in the case of Nestle's Products India Ltd. v. Commissioner of Sales Tax [1963] 14 S.T.C. 606, Notification dated 31st March, 1956, and subsequent notifications do not generally exempt the turnover of condensed milk from tax under the U.P. Sales Tax Act and, therefore, the dealer is liable to pay Central sales tax in respect thereof.
9. The assessee can be held liable to pay Central sales tax in respect of the turnover of its sale of condensed milk in the course of inter-State trade, only if it is held that condensed milk is not milk but it is a milk product and that the turnover of its sale is generally not exempt from tax under the U.P. Sales Tax Act. Since elaborate arguments have been addressed to us on both aspects of the question, I propose to deal with each of them.
10. The expression "milk" as used in Section 4 of the U.P. Sales Tax Act has not been defined in the Act. This word, therefore, has to be given a meaning which is given to it in common parlance and has to be understood in the same sense in which it. is understood by those who deal in this commodity. In common parlance a fluid secreted by the mammary glands of a mamilla which is used by human beings as food is known as milk. In India milk derived from mammary glands of cow and buffalo is widely used as food for human consumption and is understood to be milk. Main question that arises for consideration in this case, therefore, is whether when cow's and buffalo's milk is condensed, it still continues to be milk or gets converted into a milk product within the meaning of Notification No. S.T. 911/X dated 31st March, 1956.
11. It cannot be disputed that in this country the secretion obtained from the mammary glands of cows and buffaloes in its natural form is considered to be milk. It is also clear that even after the milk obtained in natural form has been subjected to some process resulting in some change in its constitution it does not necessarily cease to be milk. With the improvement of dairying in this country, the milk obtained in natural form is subjected to various processes before it is delivered to consumers, e. g., after fresh milk is collected and brought to various dairies, it is subjected to a process known as pasteurisation with a view to remove bacterias from it so that it may be preserved for a longer period. After milk has been subjected to pasteurisation, it cannot be said that the product remains in all respects identical to milk obtained in its natural form. It. is not disputed that the pasteurised milk is sold in the market as milk and would be covered by the expression "milk" as used in Section 4 of the U.P. Sales Tax Act. Similarly, milk which is issued from dairies is very often skimmed and a part of its fat contents taken out. When the milk is skimmed its constitution undergoes a change but the product which remains after skimming continues to be milk, and is sold as such. Quite often various sweetmeat sellers, after obtaining fresh milk, heat it and after adding some thickening agent sell it for drinking purpose. Some time before putting the aforementioned commodity for sale, they take out malai from it. The process of heating results in reduction of milk's water content and the act of removing malai reduces its fat contents. In spite of this change in the constitution of milk obtained in a natural form, what is sold by the sweetmeat sellers is invariably considered to be milk. In the circumstances, it is obvious that the expression milk as used in Section 4(a) of the U.P. Sales Tax Act is not confined only to milk obtained and sold in its natural form. Merely because milk obtained in natural form is subjected to some processing resulting in the reduction either of its water or fat contents, it does not necessarily cease to be milk.
12. It is quite possible that when milk is processed a commodity which is entirely different from milk and which cannot be identified as such may be obtained. The commodity so obtained can be described as "milk product". Its composition and use will be basically different from that of milk obtained in natural form. Common examples of such products are ghee, chhena, cream, butter and khoa, etc. All these products are all obtained by subjecting natural milk to a process but then in quality, constitution and nature of their use they are basically different from milk.
13. In one sense, whenever a commodity is subjected to a process and some change is brought about in its constitution, it can be said that the resultant commodity is the product of the original commodity. For example, when groundnut oil is refined it may be said that refined groundnut oil is the product of the raw oil subjected to the process of refining. But, in such a case, even though groundnut oil has been subjected to process, its essential qualities and use continue to be the same and it still continues to be groundnut oil in refined form. In my opinion, the expression "milk product" as used in Notification No. 911/X dated 31st March, 1956, has not been used in this sense. If the commodity obtained as a result of processing of milk continues to retain the essential quality of milk as commonly understood, its sale will be exempt from payment of sales tax under Section 4(a) of the U.P. Sales Tax Act and it cannot be made taxable under a notification issued for purposes of exempting the turnover of certain sales from tax. In my opinion, the expression "milk product" in the aforesaid notification has been used in the sense of a product obtained from milk which is essentially different from it and is not used as milk.
14. Encyclopaedia Britannica, while commenting upon "evaporated milk and condensed milk", states as follows:
Of the concentrated milks on the market, the most important in volume is evaporated milk. This is whole milk that has been concentrated in a ratio of approximately 2.1 to 1.0 sealed in cans, and sterilized by heating at 240°F for 15 to 20 minutes. It may contain added vitamin D and a fraction of a per cent of stabilizing salts. It has a cooked flavour and a brownish colour. The evaporated milk produced in the United States is marketed at retail mostly in cans....
15. Similarly under the heading Dairy Products it is stated:
Removal of water by evaporation under controlled procedures is the basis for the preparation of sweetened condensed milk, evaporated milk, dried milk and sterile concentrated milk. If water equal in volume to that removed is added to these latter products, milk with essentially the same food value as the original product is obtained.
16. This, in my opinion, shows that condensed milk is nothing but milk in concentrated form which is obtained by evaporating water from milk in a fluid state, and thereafter some sugar or preservative is added to it. The article obtained as a result of evaporation of water from fluid milk remains milk and after adding back corrresponding quantity of water, it acquires the shape of milk obtained in natural form and is used for the same purpose for which milk is used. Generally milk is condensed or is concentrated so as to preserve it for a longer period and for facilitating its marketability. At no stage the condensed milk loses the essential characteristics of milk. The very name "condensed milk" suggests that it is milk in condensed form.
17. Learned counsel for the State urged that while exempting the turnover of the sale of milk, salt, newspaper, etc., from sales tax, the State Government intended to grant exemption in respect of such articles which are commonly used by an average man. It did not intend to grant exemption in respect of such sophisticated articles like condensed milk which is beyond the reach of common man and is used by persons belonging to the higher stratum of society. I am unable to accept this submission. It is true that the State Legislature exempted the turnover of milk, etc., from the levy of sales tax as they are articles of common use, but it cannot be said that the Legislature did not want to grant that exemption in respect of the same article if it was to be used by persons belonging to higher stratum of society or if it was so adapted by changing its form that it may be preserved for a longer period and its marketing facilitated. If, therefore, the fluid milk, after it is concentrated and converted into condensed milk, remains milk, it will be no argument to say that the Legislature did not intend exemption in respect of such sophisticated articles.
18. Learned standing counsel then contended that generally condensed milk is considered to be a milk product, different from milk from which it is obtained. Turnover of its sale, therefore, is not exempt under Section 4(a) of the U.P. Sales Tax Act. In support of this argument he relied upon the following passage appearing in Encyclopaedia Britannica:
'Cows' milk and its products have become important articles of commerce. Most of the research on chemistry, bacteriology and technology of milk is being carried out in relation to it. Of the principal milk products butter, cheese and ice-cream are discussed elsewhere, evaporated condensed and dried milks are discussed in this article.
19. He urged that this shows that even the author of Encyclopaedia realised that condensed milk is a milk product, different from the milk from which it is obtained. Similarly in the Prevention of Food Adulteration Act as it stands today, while prescribing the standard for various foodstuffs, the standard for condensed milk has been provided for under a heading different from that in which the standard for fresh milk has been provided for. This, according to the learned counsel, clearly indicates that generally condensed milk is considered to be a milk product different from milk.
20. In this connection, learned, standing counsel also relied upon Notification No. S.T. 922/X-900(21)-69 dated 81st March, 1970 (published in U.P. Gazette, Extraordinary, elated 1st April, 1970), wherein the State Government, in exercise of its powers under Section 3-A of the U.P. Sales Tax Act, 1948, provided for single point taxation on the turnover of the sale of condensed milk sold in sealed or tinned containers. He urged that this notification clearly indicates that till 31st March, 1970, it was considered that condensed milk was taxable at multiple point on the footing that it was not milk, but a milk product different from milk and that the Legislature did not intend that condensed milk should be understood as covered by the expression "milk" as used in Section 4 of the Sales Tax Act.
21. After giving my anxious consideration to these arguments, I find myself unable to accept them. In my opinion, the Encyclopaedia Britannica describes condensed milk as a milk product in the sense in which skimmed or toned milk can be said to be product of milk obtained as a result of processing of milk obtained in its natural form. A reading of the passage appearing in the Encyclopaedia Britannica as a whole indicates that in the opinion of the author, condensed milk is merely concentrated form of milk which is essentially not different from natural milk. Similarly, when the Prevention of Food Adulteration Act classifies condensed milk under the heading "milk product" instead of the heading "milk", it does not have the effect of changing the essentials of condensed milk and to convert it into a milk product in the sense in which the expression has been used in Section 4(a) of the U.P. Sales Tax Act. So far as the Government Notification No. 922/X-900(21)-69 dated 31st March, 1970, relied upon by the learned standing counsel is concerned, it cannot have the effect of changing the scope of the expression "milk" as used in Section 4(a) of the U.P. Sales Tax Act. That is a notification issued by the State Government. It cannot be used for determining the scope of the expression "milk" as used by the Legislature in Section 4(a) of the U.P. Sales Tax Act. All that this notification shows is that after the decision of this court in the case of Nestle's Products India Ltd. v. Commissioner of Sales Tax [1963] 14 S.T.C. 606, the Government thought that condensed milk was a milk product different from milk and as such, it made provision for its sale being taxed at a single point. The opinion of the Government cannot be equated with the opinion of the State Legislature.
22. In this connection, the decision of the Supreme Court in the case of Tungabhadra Industries Ltd., Kurnool v. Commercial Tax Officer, Kurnool [1960] 11 S.T.C. 827(S.C.), may be cited with advantage. In that case, the Supreme Court had to interpret Rule 18(2) of the Madras General Sales Tax (Turnover and Assessment) Rules, which ran thus:
Every such registered manufacturer of groundnut oil will be entitled to a deduction under clause (k) of Sub-rule (1) of Rule 5, equal to the value of the groundnut and/or kernel, purchased by him and converted into oil and cake if he has paid the tax to the State on such purchases....
23. Tungabhadra Industries Ltd. purchased groundnut and kernels within the State and manufactured groundnut oil, refined oil as well as hydrogenated oil. The question that arose for consideration by the Supreme Court was whether the petitioner Tungabhadra Industries was entitled to deduct the value of the groundnut used by it in the manufacture of refined and hydrogenated oil. It was urged before the Supreme Court that the deduction under Rule 18(2) could be granted only in respect of sale of groundnut oil, i. e., the groundnut oil in the form in which it had been extracted from out of kernels.
24. So far as the claim of deduction in respect of refined oil was concerned, the Supreme Court observed as follows:
When raw groundnut oil is converted into refined oil, there is no doubt processing, but this consists merely in removing from raw groundnut oil that constituent part of the raw oil which is not really oil. The elements removed in the refining process consist of free fatty acids, phospho-tides and unsaponifiable matter. After the removal of this non-oleic matter therefore the oil continues to be groundnut oil and nothing more. The matter removed from the raw groundnut oil not being oil cannot be used, after separation, as oil or for any purpose for which oil could be used. In other words, the processing consists in the non-oily content of the raw oil being separated and removed, rendering the oily content of the oil 100 per cent. For this reason refined oil continues to be groundnut oil within the meaning of rules 5(1)(k) and 18(2) notwithstanding that such oil does not possess the characteristic colour, or taste, odour, etc., of the raw groundnut oil.
25. It may be noticed that in the instant case also, condensed milk is obtained by reducing or taking out the water contents of the milk obtained in its natural form. The matter removed from the milk in the natural form (water) is not milk and cannot be used after separation as milk or for any purpose for which milk can be used. The processing consists in the water contents of the milk being reduced resulting in milk in concentrated form.
26. The learned Judges of the Supreme Court not only held that refined groundnut oil was groundnut oil, but they went further and held that hydrogenated oil also was groundnut oil and as such deduction with regard to it claimed under Rule 18(2) was admissible, notwithstanding the fact that while processing refined oil and converting it into hydrogenated oil the form and quality of the oil changed and it underwent a chemical change. The end product (hydrogenated oil) continues to be groundnut oil. In this connection, the learned Judge observed as follows:
To be groundnut oil, two conditions have to be satisfied. The oil in question must be from groundnut and secondly the commodity must be 'oil'. That the hydrogenated oil sold by the appellants was out of groundnut not being in dispute, the only point is whether it continues to be oil even after hydrogenation. Oil is a chemical compound of glycerine with fatty acids, or rather a glyceride of a mixture of fatty acids -- principally oleic, linoleic, stearic and palmitic -- the proportion of the particular fat varying in the case of the oil from different oil-seeds and it remains a glyceride of fatty acids even after the hardening process, though the relative proportion of the different types of fatty acids undergoes a slight change. In its essential nature therefore no change has occurred and it remains an oil -- a glyceride of fatty acids -- that it was when it issued out of the press.
27. This judgment of the Supreme Court, therefore, clearly shows that merely because as a result of processing some change takes place in the form of commodity and its non-essential constituents are reduced or removed, it does not follow that the commodity so obtained is different from the commodity which was subjected to processing. By no stretch of imagination can it be said that water is an essential constituent of milk and if its proportion is reduced, milk ceases to be milk.
28. The view that a mere change in the form of a commodity does not necessarily convert it into a different commodity finds support from another Supreme Court decision in the case of State of Madhya Bharat v. Hiralal [1966J 17 S.T.C. 313 (S.C.), wherein the dealer purchased scrap iron and iron plates from outside and after converting them into bars, flats and plates in his mills sold them in the market. The Supreme Court held that according to item No. 39 of notification dated 24th October, 1953, no tax was payable on the sale of goods which could be described as iron and steel. According to it, the dealer was entitled to exemption under that notification, as scrap iron purchased by him was processed for convenience of sale. The raw materials were only re-rolled to give them attractive and acceptable form. They did not, in processing, lose their character as iron and steel. Bars, flats and plates sold by him were iron and steel exempted under the notification.
29. In the case of State of Gujarat v. Sakarwala Brothers [1967J 19 S.T.C. 24,the Bombay Sales Tax Act, 1959, entry No. 47 in Schedule A, exempted the sale of sugar as defined in item No. 8 of the First Schedule to the Central Excises and Salt Act, 1944, from payment of sales tax. According to the First Schedule of the Central Excises and Salt Act, 1944, sugar means any form of sugar containing more than 90 per cent of sucrose. The question that arose for consideration before the Supreme Court was whether patasa, harda and alchidana fell within the definition of "sugar" in entry 47 of Schedule A to the Bombay Sales Tax Act, 1959, and whether their sales were exempt from payment of sales tax. Their Lordships came to the conclusion that patasa, harda and alchidana were various forms of sugar and that they were exempt from payment of sales tax. It cannot be denied that patasa, harda and alchidana are prepared from sugar. In preparing these articles the form of sugar undergoes a change but not in its essential characteristic and the ultimate product so obtained continues to be sugar. Similarly, in the case before us, by evaporating water from milk its essential characteristic and constituent remains the same and what is obtained is milk in condensed or concentrated form.
30. Learned standing counsel contended that in Section 4(a) expression used is milk and not milk in any form. In the circumstances, the observations made by the Supreme Court in Gujarat v. Sakarwala Brothers [1967] 19 S.T.C. 24 (S.C.) cannot support the dealer. I am unable to accept this submission. As stated earlier, there is no justification limiting the meaning of the expression "milk" as used in Section 4(a) of the U.P. Sales Tax Act to milk obtained in its natural form only. In my opinion, the expression "milk" in Section 4(a) means milk in any form just as the expression "sugar" in entry 47 of Schedule A to the Central Excises and Salt Act, 1944, means sugar in any form. I am, accordingly, of opinion that the aforementioned Supreme Court cases support the view that condensed milk is milk within the meaning of Section 4(a) of the U.P. Sales Tax Act.
31. Learned standing counsel placed reliance upon the following cases: (1) State of Travancore-Cochin v. Shanmugha Vilas Cashew-nut Factory A.I.R. 1953 S.C. 333, wherein it was held that raw cashew-nut becomes commercially different commodity when as a result of processing they are converted into edible kernels, (2) A.H. Abdul S. and Co. v. State of Madras A.I.R. 194 S.C 1729, wherein it was held at page 1733 that raw hides and skins and tanned hides and skins are commercially different commodities as by applying preservative a change is brought in raw hides and skins and a different commercial commodity as a result of processing emerges, (3) Devi Dass Gopal Krishnan v. State of Punjab (19671 20 S.T.C. 430 (S.C.), wherein it was held that by processing, scrap iron loses its identity and becomes rolled steel section and a new marketable commodity is obtained, and (4) Goel Industries (P.) Limited v. Commissioner, Sales Tax, U.P., Lucknow 1971 U.P.T.C. 697, wherein it was held that water and ice were different commodities although chemically composition of both remains the same.
32. It may be that milk in its natural form may be a commercial commodity different from milk in condensed form but, as stated earlier, there is no justification for holding that Section 4(a) grants exemption for the sale of milk only when it is sold in the same condition in which it is obtained from the mammary glands of cow and buffalo. The exemption under Section 4(a)has been granted on sale of milk in any form and, therefore, even if various forms of milk are different commercial commodities, the exemption given in Section 4 equally applies to all those commodities. I am accordingly of the opinion that the cases relied upon by the learned standing counsel do not go to show that condensed milk is not milk within the meaning of Section 4(a) of the U.P. Sales Tax Act.
33. In this view of the matter, I am of opinion thai: the turnover of the sale of condensed milk is completely exempt under Section 4(a) of the U.P. Sales Tax Act from payment of sales tax and as such the dealer is not liable to pay Central sales tax with regard to it as provided under Section 8 of the Central Sales Tax Act.
34. I now proceed to consider whether in case it is held that condensed milk is not covered by the expression milk as used in Section 4(a) of the U.P. Sales Tax Act and that it is a milk product as contemplated by sales tax Notification No. 911/X dated 31st March, 1956, can it be said that for purposes of Section 8(2A) of the Central Sales Tax Act, its sale is exempt from tax generally under the U.P. Sales Tax Act. Relevant portion of Notification No. S.T. 911/X dated 31st March, 1956, reads as follows:
In exercise of the powers conferred by Section 4 of the U.P. Sales Tax Act, 1948, as amended from time to time, and in supersession of all previous notifications granting any exemption under the said section relating to any persons or class of persons, or goods, or class of goods, not being goods specified in List I below, the Governor of Uttar Pradesh is pleased to direct that with effect from April 1, 1956, the goods specified in List II hereunder shall alone be exempt from payment of tax.
* * * LIST II * * *
10. Milk and milk products such as chhena, dahi, khoa, butter and cream but excluding (1) products sold in sealed containers; and (2) sweetmeats.
35. According to this notification, the turnover of milk products is exempt from payment of sales tax, only when the products are sold otherwise than in sealed containers, i. e., if they are sold in sealed containers their sale would not be exempt from sales tax. Explanation added to Section 8(2A) runs thus:
For the purposes of this sub-section a sale or purchase of goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law it is exempt only in specified circumstances or under specified conditions or in relation to which the tax is levied at specified stages or otherwise than with reference to the turnover of the goods.
36. According to this explanation, if sale of goods is under the sales tax law of the appropriate State, exempt from payment of tax in specified circumstances or under specified conditions, it would not be deemed to be exempt from tax generally within the meaning of Sub-section (2A) of Section 8. In this case I find that sale of milk products is exempt from payment of sales tax only when it is sold otherwise than in sealed containers. The exemption granted in respect of sale of milk product under the U.P. Sales Tax Act is, therefore, conditioned by the circumstance that it is sold otherwise than in sealed containers. It follows that Notification No. 911/X dated 31st March, 1956, specifies the circumstances or the conditions (sold otherwise than in sealed containers, i. e., loose) in which alone the sale of milk products will be exempt from sales tax. Accordingly, I am of the opinion that in view of the explanation added to Section 8(2A) of the Central Sales Tax Act, it cannot be said that the notification dated 31st March, 1956, generally exempts the sale turnover of milk products from tax within the meaning of that section.
37. Learned counsel for the dealer contended that so far as sale of milk products otherwise than in sealed containers is concerned, it invariably is exempt from payment of sales tax. According to him, Notification No. 911/X dated 31st March, 1956, does not, in any circumstances or conditions, permit the sale of milk product when sold otherwise than in sealed containers to be taxed. The turnover of such sale, therefore, should be considered to be generally exempt from tax within the meaning of Section 8(2A) of the Central Sales Tax Act. I am unable to accept this submission. According to Section 8(2A) what has to be seen is whether the sale of a particular commodity as such is generally exempt from sales tax. If the argument advanced by the dealer's counsel is accepted it will mean that whenever under the sales tax law of the State, turnover of a commodity has been exempted from tax on certain conditions, it can always be said that the commodity sold in that condition is generally exempt from sales tax. That is precisely what was being avoided by the explanation added to Section 8(2A) of the Act. As stated earlier, under the notification dated 31st March, 1956, milk product is exempt from payment of sales tax only when it is sold otherwise than in sealed containers. The condition that for claiming exemption it should be sold otherwise than in sealed containers is a specific condition, which has been mentioned in the notification issued under the U.P. Sales Tax Act.
38. In support of his contention, learned counsel for the dealer relied upon a decision of the Madhya Pradesh High Court in the case of Commissioner of Sales Tax v. Kapoor Dori Niwar and Co. [1968] 22 S.T.C. 152. In that case, the State Government issued a notification and exempted sales of niwar by a dealer registered under the 1958 Act from payment of sales tax for a period of one year. Learned Judges of the Madhya Pradesh High Court observed that the expression "exempt only in specified circumstances or under specified conditions" occurring in the explanation to Sub-section (2A) means such circumstances or conditions, the non-existence or non-performance of which precludes the grant of exemption; so that if those circumstances do not exist or those conditions are not performed, then the sales of goods cannot be exempted from tax even if they are effected by a class of dealers to whom exemption is granted. Even if it be taken that these observations correctly state the law on the subject, they do not support the submission made by the learned counsel for the dealer. In that case, for payment of tax, niwar dealers had been classified into two classes, i. e., (1) dealer regis-tered under the 1958 Act, and (2) those who were not so registered. So far as the dealers who belonged to the first of the two classes were concerned, their turnover was under no circumstances and in no condition was liable to tax and, therefore, it was held that sale by them was generally exempt from tax within the meaning of Section 8(2A) of the Central Sales Tax Act. In the instant case, however, I find that if the same dealer sells the milk product in a sealed container, he will have to pay sales tax in respect of such turnover but if he sells the same milk products otherwise than in a sealed container, his turnover would be exempt from tax. In the circumstances, the right to claim the exemption depends upon existence or non-existence of a condition or non-performance of an act, which may preclude the grant of exemption to the dealer before us. Facts of the Madhya Pradesh High Court case, therefore, are clearly distinguishable from the facts of the present case.
39. In view of the aforesaid discussion, I am of opinion that if it is held that condensed milk is not milk, but it is a milk product, it would not be possible to hold that its sale is generally exempt from payment of sales tax under the provisions of the U.P. Sales Tax Act. Since, however, I have come to the conclusion that condensed milk is, in fact, milk and not a milk product, as contemplated by Notification No. S.T. 911/X dated 31st March, 1956, the turnover of its sale is generally exempt from payment of sales tax under Section 4 (a) of the U.P. Sales Tax Act. Such a turnover is, therefore, also not liable to Central sales tax as provided in Section 8(2) of the Central Sales Tax Act.
40. In the result, I answer the question referred to this court in the negative and in favour of the dealer who will be entitled to receive one set of costs of these references which is assessed at Rs. 300.
R.L. Gulati, J.
I agree.
C.S.P. Singh, J.
I agree.