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AFR Judgment reserved on 14.07.2017 Judgment delivered on 31.10.2017
Court No. 24 Case : TRADE TAX REVISION No. 220 of 2008 Applicant : M/S Golden Streak Drug & Pharmaceuticals Ltd. Lucknow Through, Managing Director Opposite Party : Commissioner Trade Tax Lucknow Counsel for Applicant : R.K.Shukla Counsel for Opposite Party : C.S.C. Hon'ble Sudhir Agarwal,J. 1. Heard Sri R.K. Shukla, learned counsel for revisionist and learned Standing Counsel for respondent. 2. This revision under Section 11 of U.P. Trade Tax Act, 1948 (hereinafter referred to as “Act 1948”) has come up from judgment and order dated 13.03.2008 passed by Trade Tax Tribunal, BenchIII, Lucknow (hereinafter referred to as “Tribunal”) dismissing revisionist’s Second Appeal No. 560 of 2005 relating to Assessment Year 200203. It was admitted on following questions of law: “(i) Whether the Poultry Feed Supplements as sold by the Revisionist/Assessee under its respective brand names are covered under the Entry ‘Poultry Feed’ and accordingly, are liable for exemption from Trade Tax. (ii) Whether the learned Trade Tax Tribunal, III, has erred in law and facts by holding that most of the Poultry Feed Supplements sold by the Assessee/Appellant act as a kind of medicines and as such imposition of Trade Tax by the subordinate authorities, is justified while rejecting the Second Appeal no. 560 of 2005 (200203). (iii) Whether the learned Trade Tax TribunalIII, is justified in simply taking the view that the judicial decisions referred in support of the submissions made by the learned counsel are on different facts that the matter under consideration. (iv) Whether the judgment and order dated 13.03.2008 passed by learned Trade Tax TribunalIII, suffers from error of law in not applying the common parlance meaning of the word ‘feed supplement’ as well as the decisions given by the Hon’ble High Courts in this regard while assessing the nature and scope of the Poultry Feed Supplements, in question.” 3. Vide notification dated 31.01.1985 issued by State Government under Section 4(a) of Act 1948 read with Section 21 of U.P. General Clauses Act, 1904 (hereinafter referred to as “Act 1904”) certain items were exempted from Trade Tax
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w.e.f. 01.02.1985 and entry 5 there of was “Balanced poultry feed”. Prior thereto classified item for tax relevant for our purpose was “Cattle feed, poultry feed or fish feed”. By notification dated 01.10.1994 published under Section 3A(1)(e) of Act 1948, in supersession of earlier notifications, entry 56 was inserted prescribing 4 percent tax on Manufacturer or Importer of “Balanced cattle feed, poultry feed or fish feed”. The aforesaid notification was amended on 22.05.2001 enhancing rate of tax to 5 percent but the entry was modified as “Balanced cattle feed”. Another notification on the same date was published under Section 4(a) of Act 1948 and it was notified that w.e.f. 25.05.2001 no tax shall be payable on the sale of “poultry feed” or “fish feed”. Therefore entry attracting tax remain only “Balanced cattle feed” and other two items namely “poultry feed” or “fish feed” were exempted from tax w.e.f. 25.05.2001. A clarification was issued by Trade Tax Commissioner vide circular dated 16.08.2005 stating that Animal feed shall also include Animal Feed Supplement and Animal Feed Concentrant. In view of Supreme Court judgment in M/s Sun Export Corporation, Bombay Vs Collector of Customs, Bombay and another, AIR 1997 SC 2658, which has been referred to by this Court in M/s Piya Pharmaceuticals Works Vs Deputy Commissioner (Executive) Sales Tax, Ghaziabad and another, 1998 UPTC 209. 4. Revisionist claimed to be a dealer engaged in the business of manufacture, sale and purchase of Poultry Feed/Feed Supplements, Cattle Feed/Feed Supplements and some veterinary drugs of medicinal use. 5. In view thereof Trade Tax Commissioner clarified that since “Balanced cattle feed” is exempted from tax, therefore, even supplement balance feed will stand exempted from tax as it will be within the terms “Balanced cattle feed”. 6. Revisionist claimed to be a dealer engaged in the business of manufacture, sale and purchase of Poultry Feed/Feed Supplements, Cattle Feed/Feed Supplements and some veterinary drugs of medicinal use. 7. For Assessment Year 200203, Revisionist filed return whereupon a show cause notice dated 30.12.2004 was issued by Assistant Commissioner, Trade Tax stating Revisionist has claimed exemption from tax on the sale of M.N.F., Mico Sol Premix, Calcigold, GTROSE, Goldi Stress, High Profit, W.S., Golden Blend, Poultry Trace Mineral, GINCOX, M COX, DICOX, Ese, Gold Liv Herbal, Gold Liv Plus Powder, Goldi Plex, CTPP, Goldisac, MSGP, Goldisol etc. These items, as per literature appear to be for strengthening of bones and for treatment of other diseases and therefore are 'medicines', hence not exempted from tax but 8 percent tax is chargeable. Ultimately an Assessment order dated 07.02.2005 was passed charging
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8 percent tax on the aforesaid items which were claimed by Assessee to be “Poultry Feed Supplement” and not medicine/drug. 8. Revisionist preferred First Appeal no. 243 of 2005 before Joint Commissioner (Appeal)6, Trade Tax but the same was dismissed by order dated 06.07.2005 and thereafter second appeal has also been dismissed by Tribunal vide judgment in question. The only reason given by authorities below is that aforesaid items were medicine to cure disease therefore, cannot be treated to be “Balanced cattle feed, Poultry Feed or Fish Feed”. Tribunal has referred certain items and details of their user as per literature which is reproduced hereunder: “GTROSE: Water soluble Essential Electrolytes Problotles Vitamin C and Rapid Energy Base: USAGE: 1. Prior to and after transportion 2. In summer to avoid dehydration and heat stroke. 3. For energy and as supportive therapy in diarrhoes and dysentery diseases like Ecoil, Coccldiosis, Nephritis, Perosis, Salmonellosis, etc. 4. To maintain correct Osmotic pressure and precise acidbase equilibrium. GOLDLIV+PLUS500gms. INDICATIONS: CIRRHOSIS (Liver damage) conditions brought due to Mycotoxicosis, excess usage of drugs, disease condition, insufficient dietary proteins, deposition of excess fat (Fatty Liver SyndromeFLS) etc. MSGP1Kg. MEGA SPECTRUM GROWTH PROMOTER COMPOSITION: A proprietary blend of mycosal and MOSMannano Oligo Saccharide USAGE IN FEED: FOR Growth PromotionPerformance Promotion By keeping in check all poultry, cattle (other ruminants) and aqua related bacteria and mycobacteria (like ECOLI, SALMONELLA, FOWL, CHOLERA, CORYZA, CRD, CLOSTRIDIA, BANTHRACIS etc.) and simultaneously stimulating both humoral and cellular immunity with one single feed premix that is MSGP with highest economy. GTPP1kg BROAD SPECTRUM TOXIN MANAGER INDICATIONS: For Broad Spectrum Toxin prevention and Control. To prevent further production of toxins not only in ingredients & finished feeds but also in the….of animal. To remove the toxin from GI Tract and blood completely without any loss of feed nutrients. To bring fastest the damaged liver and digestive system to the normalcy. To stimulate lowered immunity. To reduce waste disposal problem with low dose of 1 kg. LACTUP500gms. INDICATIONS: IN KETOSIS TO:
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increase the blood sugar decrease Ketone bodies in the blood/milk/urine/breath. increase feed intake decrease fat content of the milk (SNF) to the desired level make up loss in weight 9. In my view the mere fact that certain items may cure disease or strengthen bones, liver etc., for that reason alone they may not be held medicine and not Balanced Cattle Feed or Poultry Feed. This reason assigned by Revenue authorities is nothing but an attempt to wriggle out for something which is otherwise within the term “Balanced Cattle Feed”, “Poultry Feed” or “Fish Feed”. 10. A Division Bench of Gujarat High Court in Glaxo Laborotories (India) Ltd. Vs The State of Gujarat, 1979 (43) STC 386 has observed that supplements like protein, minerals, vitamins etc. would truly constitute “cattle feed” or “poultry feed”. The relevant observations are reproduced as under: “From what has been stated above, it becomes clear that even in its popular sense, that is to say, the sense in which people conversant with livestock farming and poultry raising and those dealing in cattlefeed or poultry feed would attribute to those words, ration for production, such as feed additives or supplements like proteins, minerals, vitamins etc., would truly constitute “cattle feed” or “poultry feed”, as the case may be…” 11. Similar view was expressed by another Division Bench (judgment rendered by Hon'ble G.T. Nanavati,J.; as his Lordship then was in State of Gujarat Vs Pfizer Ltd. 1991 (82) STC 374 and therein Court said as under: “Thus, it can safely be said that the concept of poultryfeed has changed considerably and it does not mean food for the poultry in conventional sense. In consists not only of concentrates but even additives, like vitamins, minerals and antibiotics have now become a part of it…..” 12. A Division Bench of this Court in Friends Medicon (P) Ltd. Vs State of U.P. and others, 1997 U.P.T.C. 427, also considered true meaning and import of word “Poultry Feed”. It observed that word ‘Feed’ means, food given to an animal fodder, pasture, meal etc.’ Poultry feed’ has acquired a definite connotation in livestock farming and there are certain ingredients used as ‘concentrates’ in such feeds for the health and strengthening of poultry livestock. Feed simplicitor is essential for the maintenance of poultry feed but the concentrates like vitamins etc. in the food stuff enable the poultry to maintain energy, to perform the vital process of life and
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provide material to replace essential tissues, breakdown of which occurs in the body continuously. 13. Even in the present case it could not be disputed that it composed of water, and organic and mineral matters. Organic matter is composed of proteins, ats, crude fibre and soluble carbohydrates. There are certain substances known as vitamins, medicines to remove toxins for strength and development of poultry. This Court in Friends Medicon (supra) said in para 4 as under: “The ration of an animal may be divided for convenience into two parts; (1) maintenance ration, viz the portion of the diet which just enable the animal at rest to carry on the essential processes of life, such a breathing and circulation of blood, without either gain or loss of weight, and (2) feed supplied over and above the maintenance requirement for augmenting the production for growth or fattening, for production of milk or in the case of poultry for augmenting egg laying capacity.” 14. It is matter of common knowledge that feed meant for cattle, poultry etc. does not consist of mere food items as are normally known but carry certain minerals, vitamins and other essential items which are for better development of cattle, poultry etc. which is purpose of having a good yield from such activities. Poultry these days is not kept in a farm as a non productivity to make poultry financially viable, it is necessary to supply a balanced poultry feed to increase productions of eggs or fat as well as growth particularly when poultry is kept for consumption of its meat, obtaining eggs for commercial purpose. 15. Interpreting the meaing of word ‘feed’ recently Supreme Court in Commissioner of Customs (Import), Mumbai Vs Dilip Kumar, 2015 (325) ELT 815 (SC) has followed Sun Export Corporation, Bombay Vs Collector of Customs, Bombay and another (supra) and has observed that the products added in animal feed or poultry feed to strengthen nutritional quality of animal feeds like Bournvita or Complan, they are added nutrition to milk nothing but supplement of such feed. Such nourishment cannot be considered common parlance as a medicine or a drug and these are known in the trade as animal feed supplements and they are sold by the suppliers of animal feed. Court also referred to and relied on another three Judges Bench judgment in Collector of Central Excise, Bangalore v. Tetragon Chemie (P) Ltd., (2002) 10 SCC 331 wherein a question arise ‘whether vitamins mixed with animal feed can be considered to be animal feed’. Court held that animal feed supplements would rightly include such preparations. 16. Now it is well settled that as also need of common parlance that an animal feed supplement or cattle feed supplement or poultry feed supplement or balanced cattle
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feed or poultry feed is actually used as energy nutrients as well as nutrients rich with substance needs for strengthening the body and its development so that a person engaged in such farming may have good yield of cattles and poultry as the case may be. 17. Hon’ble R.K. Agarwal,J (as his lordship then was) also considered judgment of Friends Medicon (P) Ltd. (supra) in The Commissioner, Trade Tax vs. Ankit Traders, 2008 (18) VST 149 (All), and observed that to make to make poultry feed, a balanced poultry feed, it is essential to include the vitamins or concentrates. The ingredients of poultry feed or cattle feed is a ration for maintenance cannot be a balanced poultry feed which expression includes a feed full of vitamins and all other ingredients, which augment the production of eggs in the case of poultry. Short of vitamins or the concentrates, the poultry feed cannot be said to be a balanced poultry feed. Court observed ‘for a balanced feed, it is essential that there should be vitamins and concentrates which augment the production. Therefore, if in, feeds there are such concentrates which augment the production, it will be a balanced cattle feed even though, there are no vitamin. It may be mentioned here that the presence of vitamins by name is not essential. It may be possible that vitamins are available in the constituent of the product. The nature of the constituent can only be worked out by chemical analysis. 18. We find that Revenue Authorities have gone into the literature of items reading here and there something to show that items in which the revisionists dealt with takes care of health problems of poultry though there is no that these items are sold and traded in common parlance as medicine and drugs and that as balanced poultry feed. It is well established in order to consider the import of entries of Taxing Institutes, the Doctrine of common parlance is normally applied which means to find out as to how the concerned item is understood by the people but commonly trade therein. Stimulation in humoral and cellular immunity, increase in blood sugar, increase in feed intake, maintaining Osmotic pressure and precise acidbase equilibrium etc. are the only items in which revisionist is dealing that increase the health and strengthening of the poultry and by itself cannot be constituted as a medicine or drug. 19. In the entirety of facts and circumstances and in view of the above discussion, I have no hesitation in holding that Tribunal has erred in law in holding the items traded by revisionists by treating the same as medicines or drug and not as poultry feed supplements. The items in view of the circular of Trade Tax Commissioner have to be considered as balanced poultry feed and would have dealt with accordingly.
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20. The questions are answered accordingly in favour of Assessee. Revision is allowed. The impugned judgment and order dated 13.3.2008 passed by Tribunal is set aside. The respondent authorities now shall proceed in the light of the observations. 21. There shall be no order as to costs. Order Date : 31.10.2017 Pravin
