himachal pradesh high court

Himachal Pradesh High Court: In a case wherein, the Gujarat Co-Operative Milk Marketing Federation Ltd, the petitioner filed a revision petition under Section 48-(1) of the Himachal Pradesh Value Added Tax Act, 2005 (‘the Act’) to challenge the order passed by the Himachal Pradesh Tribunal (‘the Tribunal’), the Division Bench of M.S. Ramchandra Rao and Ajay Mohan Goel, JJ., opined that the popular meaning of milk cream should be taken note of, wherein milk cream was a product different from milk and accordingly dismissed the petition.


In the instant case, the assessee was a registered dealer under the Himachal Pradesh Value Added Tax Act, 2005 (‘the Act’) and one of the products, the assessee was dealing with was milk cream.

The Assessing Authority of the Excise Department, Respondent 2, completed the assessment related to the assessee qua Value Added Tax (‘VAT’) for the assessment years 2005-06 to 2008-09. Thereafter, the Excise and Taxation Commissioner wrote a letter to Respondent 1, that the assessee was liable to pay VAT on its sales of milk cream but was not assessed for the previous five years.

Subsequently, the Suo moto revision was entertained by Respondent 1, and issued a show cause notice to the assessee under section 46-(1) of the Act.

The assessee contended that though it was selling fresh milk cream, it was fresh milk, wherein through a separator, the cream contents up to 25% was retained, and was being sold under the name fresh cream by the assessee. It was further contended that the dealer had not charged any VAT on its sale and pointed out that Entry 16 of the Act mentioned “curd, lassi, butter milk and separated milk”, while Entry 23 mentioned “fresh milk and pasteurized milk” and as long as milk was available in its natural form and nothing was done on it to make it commercially a different article, it would remain tax free as per Entries 16 and 23 in Schedule B of the Act.

However, the Department refuted the contentions and stated that milk cream was neither fresh milk, nor pasteurized milk, nor separated milk and as such, was taxable at the rate of 12.5% or 13.75%.

Thereafter, aggrieved by the same, the assessee filed a revision petition under Section 46-(3) of the Act before the Tribunal, wherein it was held that the intention of the legislature was to exempt only milk and not milk products, so milk cream ought not to enjoy benefit of tax exemption.

Thus, to challenge the order passed by the Tribunal, the present Revision Petition was filed under Section 48-(1) of the Act.

Analysis, Law, and Decision

The Court opined that as per Section 46-(1) of the Act, the Respondent 1 might of his own motion, call for the record of any proceedings which were pending before, or had been disposed of by, any authority subordinate to him, and on finding the proceedings or the orders prejudicial to the interest of revenue, might pass such order as he might think fit.

The Court noted that the similar provision was contained in the Punjab General Sales Tax Act, 1948 and thereafter referred to Hotel Oberoi Mountview v. Assessing Authority, UT, Chandigarh, 1996 SCC OnLine P&H 78 and Board of Revenue, Madras v. Raj Brothers Agencies, (1973) 4 SCC 216 and opined that the information to exercise Suo moto revisional power could come from any source and could even come from the assessee or from the Department itself.

The Court further referred to Commissioner of Central Excise, New Delhi v. Connaught Plaza Restaurant Pvt. Ltd., (2012) 13 SCC 639 wherein, it was stated that in the absence of a statutory definition in precise terms, words, entries and items in taxing statute, must be construed in terms of their commercial or trade understanding, or according to their popular meaning.

Thus, the Court opined that scientific or technical meaning of the term ‘milk cream’, as was sought to be projected by the assessee, should not be adopted and the popular meaning of ‘milk cream’ as was commonly understood, should be taken note of, that milk cream was a product which was different from milk. The Court further stated that this was because a person who wished to buy milk cream would not go to the market and ask for milk and would only ask for milk cream because it is a separate product.

Accordingly, the Court dismissed the petition.

[Gujarat Co-Operative Milk Marketing Federation Ltd. v. Additional Excise and Taxation Commissioner, 2023 SCC OnLine HP 1018, order dated 8-8-2023]

Advocates who appeared in this case:

For the Petitioner: Arjun Lall, Advocate;

For the Respondents: Navlesh Verma and Rakesh Dhaulta, Additional Advocate Generals; with Gautam Sood, Arsh Rattan and Sidharth Jalta, Deputy Advocate Generals; along with Rakesh Sharma, Standing Counsel.

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