COMMERCIAL TAXES OFFICERversusM/S. JALANI ENTERPRISES

                     [2011) 3 S.C.R. 951


             COMMERCIAL TAXES OFFICER                              A
                               v.
               M/S. JALANI ENTERPRISES
              (Civil Appeal No. 2558 of 2011)
                      MARCH 17, 2011
                                                                   B
[DR. M.UKUNDAKAM SHARMA AND
                         .
                            ANIL R. DAVE,
                                    .
                                          JJ.]

    Rajasthan Sa/es Tax Act, 1954: Notification dated
29.03.2001, Entry No. 184:
                                                                   c
     Jaljira - Sa/es tax - Levy of - Held: From the manner
and method of preparation of the product Jaljira, it is found
that Jaljira is a mixture of different spices after grinding and
mixing - Sa/es tax is levied on sale of commercial
commodities, and individual spices could be termed as              o
different commercial commodities - Therefore, Jaljira is a
Masa/a packed into packets of different nature/quantity and
sold to the consumers - It would come within the Entry No.
184 and taxable at the rate of 16%.

    Aachar Masala, Jaljeera powder, Anar Masala, Methi E
Chatani, Pudina, Lehsoon Chatni, Chat Masa/a, Kitchen
Masa/a, Mangodi Masa/a, Sambhar Masa/a, Dal Masa/a,
Kasuri Methi, Heena Powder, Shikkai Powder, Lahsoon
powder - Sa/es tax - Levy of- Held: These would be Masa/a
packed falling underEntry No. 184 of the notification dated F
29.03.2001 - Thus, taxable at the rate of 16%.

    ldli Mix and Dosa Mix - Sa/es Tax - Levy of - Held:
Cannot be said to be Masala - Thus, would be excluded from
being assessed for the purpose of sales tax assessment as G
'masa/a'.

    The question which arose for consideration in these
appeals are whether Jaljira and similar other products as
also ldli Mix and Dosa Mix are not Masala and therefore,
                           951                            H
    952      SUPREME COURT REPORTS              [2011] 3 S.C.R.

A they are liable to be assessed to sales tax at the rate of
  10% and not 16%.
          Allowing the appeals, the Court

         HELD: 1.1 Each one of the contents of the product
B   Jaljira, namely Salt, Kala Namak, Nimbu Ka Sat (Citric
    Acid), Sonth, Kalimirch, Pudina, Hing, Jira and Lalmirch,
    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.
C   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
D   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
E   separate commercial commodity altogether which could
    be taxed separately. [Para 17] [960-G-H; 961-A-C]
       1.2 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
F 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 from the manner and method
G of preparation of the product Jaljira, It Is found 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
H
   COMMERCIAL TAXES OFFICER v. MIS. JALANI               953
               ENTERPRISES
within the Entry No.184 and it cannot be said that it would      A
come under the residuary entry as held by the High Court.
[Para 17] [961-C-E]

      1.3 The clarificatory letter dated 12.11.2001 which was
 issued by the Deputy Secretary, Finance Department, Tax         8
 Division, Government of Rajasthan specifically states that
 "Packed Masala" used in entry number 184 means, a
 Masala where two or more ingredients are mixed and
 sold in packed conditions. The said letter is in the nature
 of clarification of entry number 184. Although the said         C
 letter is an inter-departmental communication, the
 revenue authorities, namely, the appellant is governed
 and bound by the said letter though the said letter may
 not have been circulated to the respondent but it cannot
 be said that clarification given by the Department cannot
 be made use of for interpreting· the entry in the               D
 notification. Even otherwise, the entries in the notification
·by themselves are quite clear to include the said product
 within the ambit and parameters of the expression
 packed masala and therefore, the assessing officer was
 justified in demanding sales tax from the respondent at         E
 the rate of 16% holding that the product manufactured
 by the respondent falls within the category of items
 included in Entry No. 184. The -Judgment and order
 passed by the High Court is set aside. The order dated
 15.03.2004 passed by the Tax Assessment Officer is              F
 restored. [Paras 18, 19 and 20) (961-F-H; 962-A-D]
      2. With regard to SLP (C) Nos. 4304 of 2009,
  concerning financial years of 1999-2000 and 2001-2002,
  the aforesaid findings and the conclusions arrived at          G
  would also be applicable so far as the products of the
  respondent-assessee such as Aachar Masala, Jaljeera
  powder, Anar Masala, Meth! Chatani, Pudina, Lehsoon
  Chatni, Chat Masala, Kitchen Masala, Mangodi Masala,
. Sambhar Masala, Dal Masala, Kasuri Methi, Heena
                                                                 H
    954      SUPREME COURT REPORTS                 [2011] 3 S.C.R.


A Powder, Shikkai Powder, Lahsoon powder which would
  be held to be Masala packed falling under Entry No. 184
  of the notification dated 29.03.2001. ldli Mix and Dosa Mix
  cannot be said to be Masala and therefore, the same
  would be excluded from being assessed for the purpose
B of sales tax assessment as 'masala'. The judgment and
  order passed by the High Court is set aside. The order
  passed by the Tax Assessment Officer is restored. [Paras
  21, 22, 23 and 24} (962-D-H; 963-A-BJ

C       CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    2558 of 2011.

        From the Judgment & Order dated 30.8.2007 of the High
    Court of Rajasthan at Jodhpur in SBCST Revision No. 63 of
    2007.
D
                                 WITH
    C.A. Nos. 2559, 2561, 2562 and 2563 of 2011.
          Abhishek Gupta, Milind Kumar and Jatinder Kumar Bhatia
    for the Appellant.
E
         Puneet Jain, Trishna Moha, Sushil Kumar Jain and H.K.
    Puri for the Respondent.
          The Judgment of the Court was delivered by
F         DR. MUKUNDAKAM SHARMA, J. 1. Leave granted.
        2. Since the issues involved in these appeals are identical,
    we propose to dispose of all these appeals by this common
    Judgment and Order.
       3. In appeals arising out of SLP (C) Nos. 11358 of 2008
G and 15883 of 2008 the issue which falls for our consideration
  is as to whether Jaljira which is a product manufactured by the
  respondent herein is only an appetizer and is not a masala and
  therefore liable to sales tax at the rate of 10% and not 16%. In
  appeals arising out of SLP (C) Nos. 27432 of 2008 and 27433
H of 2008 a similar question arises for consideration that as to
  COMMERCIAL TAXES OFFICER v. MIS. JALANI                     955
 ENTERPRISES [DR. MUKUNDAKAM SHARMA, J.]

whether Jaljira and simHar other products are not Masala and         A
therefore they are liable to be assessed to sales tax at the rate
of 10% and not 16%.

     4. In order to decide the aforesaid issues some factual
aspects are required to be mentioned. The respondent firm is
                                                                 8
a manufacturer and seller of Jaljira and some other products
but in the present appeals we are concerned only with the
product called Jaljira. The respondent deposited sales tax at
the rate of 10% assuming that Jaljira is not a Masala and hence
taxable at the general rate of 10% as residuary entry 199, which C
reads as under:

   "199. General rate, that is all goods that are not covered by
     S. No. 1 - 198.                                       10%"
      5. The counsel appearing for the appellant submitted that D
the respondent is liable to pay sales tax at the rate of 16% on
the product manufactured by it and the assessing officer was
justified in treating the respondent liable to pay sales tax at the
rate of 16%.

     6. On examining the entire matter it appears that a             E
Notification being notification dated 26.03.1999 was issued by
the State Government, which was to the following effect:

Sr. No.               Detail of Goods                        Tax
                                                             Rate    F

xxxxxx                     xxxxxx                           Xxxxxx
 119      All kinds of eatables & non alcoholic potable       12%
          liquids such as fruit syrups, distilled juices,            G
          jams [chatni, murabbas], fruit juice, dry milk
          power, drink concentrates of all types and
          forms, essence, concentrates, corn flaks and
          wheat flakes, custard powder, baking powder,
          ice-cream powder and packed masala.                        H
    956            SUPREME COURT REPORTS                [2011) 3 S.C.R.


A          Subsequently another notification being notification dated
           29.03.2001 was issued by the State Government to the
           following effect:

    Sr. No.                    Detail of Goods                  Tax Rate
B   )()()()()()(                    )()()()()()(                 Xxxxxx

     82            Dry Fruits, Supari, Kirana items, Masala        4%
                   (different from packed masala) such as
                   Mirch, Dhanai, Saunf, Methi, Ajwa!n, Sua,
c                  Halsdi, Kathodi, Amchur, Elaichi, Jeera
                   (cumin seed)

      184          All kinds of eatables & non alcoholic          16%
                   potable liquids such as fruit syrups,
D                  distilled juices, jams [chatni, murabbas],
                   fruit juice, dry milk power, drink
                   concentrate of all types and forms,
                   essence, concentrates, corn flaks and
                   wheat flakes, custard powder, baking
E                  powder, ice-cream powder and packed
                   masala.

           Subsequent thereto also a notification was issued by the
           appellant herein on 22.03.2002 making the same effective
           from the date of its issuance, wherein Entry 80 includes
F          the following:

    Sr. No.                    Detail of Goods                  Tax Rate

G   80             Dry Fruits, Supari, Kirana items, Masala       4%
                   ([when sold in unmixed form, whether
                   lose or in polyethylene packs]) like
                   Mirchi, Dhaniya, sonf, methi, ajwain,
                   suwa, haldi, kathodi, amchoor and asalia,
H                  jeera (cumin seed)
   COMMERCIAL TAXES OFFICER v. MIS. JALANI                       957
  ENTERPRISES [DR. MUKUNDAKAM SHARMA, J.]

Whereas. Entry 186 includes the following:                              A·

Sr. No.                Detail of Goods                    . Tax Rate


 186      All kinds of eatables & non-alcoholic               16%   .
                                                                        B
          potable liquids such as fruit syrups,
          distilled juices, jams [chatni, murabbas],
          fruit juices, drink concentrates of all types
          and fonns, essences, concentrates, corn
          flaks and' wheat flakes, custard powder,
          baking powder, ice-cream powder and                           c
          [multi-ingredient packed masala] .
                                  .


    A letter dated 12.11.2001 was issued by the Deputy
    Secretary, Finance Department, Tax Division, Government
    of Rajasthan to the Commissioner, Commercial Taxes                  D
    Deptt, Rajasthan, Jaipur, which reads as follows:

     " ........ I am to state that "Packed Masala" used in entry
     number 184 means, a Masala where two or more
     ingredients are mixed and sold in packed conditions.               E
     Spices sold singly will continue to be taxed as per entry
     number 82 ..... ."

      7. In the backdrop of the aforesaid facts, an assessment
order was passed by the assessing officer so far as respondent
is concerned. In the said assessment order it is sated that the         F
respondent has shown its product Jaljira, which is
manufactured by it, as liable to sales tax at the general rate of
10%. The officer, however, referred to the contents of the
notification dated 29.03.2001 holding that jaljira is a masala
and th1:: same falls in the category of packed masala and               G
therefore lic.:'Jle to be taxed at the rate of 16% as mentioned
under Entry Nu. l 84 of rate notification.

     8. On examining the entire matter the assessing officer
held that Jaljira manufactured by the assessee is spice, which          H
    958      SUPREME COURT REPORTS                    [2011] 3 S.C.R.


A   is sold in different types of packing due to which it would come
    within the category of packed masala for which tax rate is 16%.

       9. The respondent itself has described Jaljira as spice on
  the packed containers of Jaljira marketed by it. The officer also
B referred to the application dated 07.07.1984 filed by the
  proprietor of the Respondent firm for registration under
  Rajasthan Sales Tax Act as well as under the Central Sales Tax
  Act. In both the applications it is sated as fpllows:
                                                  ~
          "Manufacturing of food products, mix MASALA,
c         AURVEDIC MEDICINES, all types of MEDICINES,
          MEDICATED - NON MEDICATED food for sale."

       10. There are ether materials also which are referred to
  by the officer on record indicating that the assessee it~e1f
D described the product Jaljira as Masala. That is how the
  product is described in the bill books of sale, even for the
  assessment year 2001-2002.

        11. Placing reliance on all those facts the assessing officer
  held that the product manufactured by the assessee known and
E called as jaljira is a Masala falling under Entry 184. It is also
  undisputed fact .in the present case that except for the
  assessment year 2001-2002 with which we are concerned, the
  respondent assessee is paying sales tax for subl)equent
  assessment years for jaljira at the rate of 16% in view of the
F notification dated 22.03.2002 wherein it categorically sated that
  multi-ingredient packed masala would carry taxable rate of 16%
  in view of entry No. 186. The assessing officer has specifically
  stated that jaljira is multi-ingredient packed masala and
  therefore respondent is liable to pay sales tax on the
G manufactured Jaljira at the rate of 16%. But the suQmission of
  the Respondent is that for the assessment year in question, the
  said notification dated 22.03.2002 being not applicable and the
  earlier notification being applicable, rate of sales tax at the rate
  of 10% for the same is only payable.
H
  COMMERCIAL TAXES OFFICER v. MIS. JALANI                     959
 ENTERPRISES [DR. MUKUNDAKAM SHARMA, J;]

     12. Being aggrieved by the aforesaid order passed by the         A
assessing officer, the respondent preferred an appeai before
the Deputy Commissioner(Appeals) Commercial Taxes, Ajmer
challenging the order passed by the Commercial Tax Officer,
Special Circle-II, Jodhpur. The Deputy Commissioner (Appeals)
by his order dated 01.08.2005 held that Jaljira is not a Masala       B
and therefore tax levied at general rate of 10% was justified
and he set aside the demand raised by the Assessing
Authority.                                                  ·

    13. Appellant filed two appeals before the Rajasthan Tax          C
Board, Ajmer challenging the aforesaid order of Deputy
Commissioner (Appeals), Ajmer. The Rajasthan Tax Board,
Ajmer by its common order dated 11.12.2002 set aside the
order dated 01.08.2005 passed by the Deputy Commissioner
(Appeals) and restored the orders passed by the Assessing             D
Authority.

      14. Being aggrieved by the said order the respondent
herein filed a Revision Petition before the Rajasthan High Court
which came to be allowed by the High Court under the
impugned judgment and order. Feeling aggrieved the appellant          E
filed the present appeals on which we heard learned counsel
appearing for the parties and also perused the records.

     15. In the impugned judgment and order passed by the
High Court it was held that Jaljira cannot be termed as a             F
Masala in itself, but it is a mixture of masalas and other
materials, which can be used for digestion. The High Court
therefore held that Jaljira is nothing but edible preparation ready
for use either directly or after dissolving in water for human
cons~:rnption and as it is not used as additional constituent in      G
any foo<.i substance, therefore, it cannot be termed as packed
masala. The "'foresaid findings were arrived at by the High
Court after referring to the contents of Jaljira shown to be as
follows:

                                                                      H
     960       SUPREME COURT REPORTS                 [2011] 3 S.C.R.


 A    Sr. No. Name of Item                            Percentage

      1.        Salt                                     40%      .
     2.         Kala Namak                               1%
 B
     3.         Nimbu Ka Sat (Citric Acid)               8%

     4.         Sonth                                    10%

 c   5.         Kalimirch                                10%

     6.         Pudina                                   10%

     7.         Hing                                     1%
 D
     8.         Jira                                     18%

     9.         Lalmirch                                 2%

           According to the High Court Jaljira would therefore fall in
 E
           the residuary clause and therefore tax should be levied at
           the rate of 10% and not 16%.

         16. The aforesaid findings of the High Court are challenged
    before us by the appellant. The counsel appearing for the
, F appellant had taken us through all the documents on record. He
    submitted that respondent has itself shown the product
    manufactured by it Jaljira as Packed Masala and therefore the
    assessing officer was justified in treating the respondent liable
    to pay sales tax at the rate of 16%.
 G
        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
 H grinded and mixed, it gives rise to a new product, which is a
  COMMERCIAL TAXES OFFICER v. MIS. JALANI                  961
 ENTERPRISES [DR. MUKUNDAKAM SHARMA, J.]

mixed masala. Different ingredients are used in preparation of A:.r,
Masala after grinding and mixing several ingredients and when
they are S(ll 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, ther~fore, individual spices could be termed as B
different commercial, commodities. When they are. grinded and
mixed the.; .:;;ve rise to a separate commercial commodity
altogetner 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 c
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 D
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. ft would, therefore,
for all practical purposes would come within the Entry No. 184 E
and it cannot be said that it would come under the residuary
entry as held by the High Court.

     18. The clarificatory letter dated 12.11.2001 which was
issued by the Deputy Secretary, Finance Department, Tax
Division, Government of Rajasthan is also placed on record         F
which specifically states that "Packed Masala;' used in entry
number 184 means, a Masala where two or more ingredients
are mixed and sold in packed conditions. The said letter is in
the nature of clarification of entry number 184 with which we
are concerned. Although the said letter is an inter departmental   G
communication, the revenue authorities, namely, the appellant
is governed and bound by the aforesaid letter although the said
letter may not have been circulated to the respondent but it
cannot be said that clarification given by the Department cannot
                                                                   H
      962     SUPREME COURT REPORTS                [2011) 3 S.C.R.


 A be made use of for interpreting the entry in the notification.
        19. Even otherwise, in our considered opinion the entries
   in the notification by themselves are quite clear to include the
   product in question within the ambit and parameters of the
 8 expression   packed masala and therefore the assessing officer
   was justified in demanding sales tax from the respondent at the
   rate of 16% holding that the product manufactured by the
   respondent falls within the category of items included in Entry
   No. 184.

 C         20. Therefore, appeals arising out of SLP (C} Nos. 11358
      of 2008, 15883 of 2008, 27432 of 2008 and 27433 of 2008
      are allowed and the judgment and order passed by the High
      Court is set aside. The order dated 15.03.2004 passed by the
      Tax Assessment Officer is restored.                         ·
 D
        21. Having held thus, we may now examine the facts of the
        1

   appeal arising out of SLP (C} Nos. 4304 of 2009. In this appeal,
   we are concerned with the two financial years, namely, financial
   years of 1999-2000 and 2001-2002. The aforesaid discussion
 E and the findings and the conclusions arrived at would also be
   applicable so far the products of the respondent herein are
   concerned but except for product like ldli Mix and Dosa Mix.
        22. Other products of the assessee such as Aachar
   Masala, Jaljeera powder, Anar Masala, Methi Chatani, Pudina,
 F Lehsoon Chatni, Chat Masala, Kitchen Masala, Mangodi
   Masala, Sambhar Masala, Dal Masala, Kasuri Methi, Heena
   Powder, Shikkai Powder, Lahsoon powder, must be held to be
   Masala packed falling under Entry No. 184 of the notification
   dated 29.03.2001.
 G
        23. So far as Masala and other products are concerned
   the same principle would apply but at the same time ldli Mix
   and Dosa Mix cannot be said to be Masala and therefore the
   same would be excluded from being assessed for the purpose
J:I
   COMMERCIAL TAXES OFFICER v. MIS. JALANI  963
  ENTERPRISES [DR. MUKUNDAKAM SHARMA, J.] .

of sales tax assessment as 'masala'.                               A

     24. In view of the above, appeal arising out of SLP (C) No.
4304 of 2009 is also allowed and the judgment and order
passed by the High Court is set aside. The order passed by
the Tax Assessment Officer is restored.
                                                                   B
N.J.                                         Appeals allowed.