L.N.Ray, Chairman -
(1.) IN this application under Section 8 of the West Bengal Taxation Tribunal Act, 1987, being, for all purposes, a writ application under Article 226 of the Constitution of India, the main question that is to be decided is whether Horlicks is to be considered as powdered milk in terms of Notification No. 886 -F.T. dated May 1, 1955 issued under Section 25 of the West Bengal Sales Tax Act, 1954 since repealed and substituted by the West Bengal Sales Tax Act, 1994.
(2.) THE case of the applicants is that the product which was first manufactured by James Horlicks in 1883 in the name of "Malted Milk" as a mixture of powdered malt with milk, was later manufactured by a U.K. based company named Horlicks Ltd. In 1931 the product - -"Malted Milk" was renamed as "Horlicks" and since then it has been known as Horlicks being a well -known milk food. In 1958 Hindustan Milk Food Manufacturers Pvt. Ltd. was incorporated in the State of Punjab. Horlicks Ltd. acquired 41 per cent of its shares and the balance being held by Indian citizens. Since then Horlicks has been manufactured and sold in India. Prior to that, Horlicks was being sold in India by importation from U.K. In 1969 Beecham Plc, another U.K. based company, acquired the assets and liabilities of Horlicks Ltd., and finally in 1979 its Indian company known as Beecham India Pvt. Ltd. of Bombay, was merged with Hindustan Milk Food Manufacturers Pvt, Ltd, Later, the merged company was renamed as HMM Ltd. and manufactured Horlicks in India. In 1991, Beecham Group of U.K. merged with Smithkline of U.S.A. and the new name was Smithkline Beecham Consumer Brands Ltd. In 1994, that name was changed to the present name, i.e., Smithkline Beecham Consumer Healthcare Ltd. Applicant No. 2 is a shareholder of applicant No. 1 company and is a citizen of India. Applicant No. 1 is a registered dealer under the West Bengal Sales Tax Act, 1954 (in short, "the 1954 Act") as also under the Central Sales Tax Act, 1956 and the West Bengal Sales Tax Act, 1994 (in short, "the 1994 Act"). According to the applicants, the ingredients of Horlicks remained the same all along. During the disputed period as well as throughout the period of its manufacture, the following inputs went into the making of Horlicks of 1,000 gms. by weight :
Horlicks was exempt from sales tax under the Bengal Finance (Sales Tax) Act, 1941. By Notification No. 886 -F.T. dated May 1, 1955 "issued under Section 25 of the 1954 Act, Horlicks became notified commodity taxable under the 1954 Act. The notification is reproduced below :
"Powdered or condensed milk, whether skimmed or not, or whether mixed with any other substance or not, sold under various trade names and descriptions, such as Milkmaid brand condensed milk, Nestomalt, Nespray, Lactogen, Eledon, Horlicks, Malted Milk, Glaxo, Ostermilk, Cow and Gate Milk, Klim, Milo, Lemine, Anchor, Lifeguard, Molly, Oak, Ovaltine or any other name or description whatsoever, but not including cheese and cream :
Provided that where powdered or condensed milk is mixed with any other substance the percentage by weight of the powdered or condensed milk in the said mixture shall exceed 50 per cent."
By Notification No. 788 -F.T. dated April 2, 1957 issued under Section 25 of 1954 Act, Milo and Ovaltine were omitted from the text of Notification No. 886 -F.T. dated May 1, 1955 quoted above. By Notification No. 790 -F.T. dated April 2, 1957 issued under the same provisions of law, "powders for food drinks" became notified commodity taxable under 1954 Act. That notification reads as under :
"Powders for food drinks having cocoa or chocolate and malt as major ingredients, sold under various trade names and descriptions, such as, Milo, Ovaltine, Bournvita, Tono or any other name or description whatsoever."
The said Notification No. 790 -F.T. was substituted by Notification No. 763 -F.T. dated March 29, 1994 with effect from April 11, 1994 and the new notification reads as follows :
"Powders for food drinks having cocoa or chocolate, malt, soyabean, wheat flour or rice powder or combination of two or more of such substances as major ingredients, sold under various trade names and descriptions, such as, Milo, Ovaltine, Bournvita, Tono, Bonus, Complan, Active, Boost or any other name or description."
Horlicks, however, continued to be retained in Notification No. 886 -F.T. dated May 1, 1955 under "powdered or condensed milk".
(3.) THE present grievance relates to two orders passed by respondent No. 2, Assistant Commissioner, Commercial Taxes, Assessment Wing, Group -L, dated June 3, 1997 under Section 9(2) and 9(5) of 1954 Act for the period of 12 months ending March 31, 1995 and the consolidated order dated February 25, 1998 passed by respondent No. 1, Deputy Commissioner, Commercial Taxes, Corporate Division under Section 12 of the 1954 Act which was the appellate order from the orders passed by respondent No. 2 dated June 3, 1997. The appellate order was confirmed by the West Bengal Commercial Taxes Appellate and Revisional Board by an order dated October 13, 1998. By the said order of assessment dated June 3, 1997 respondent No. 2 for the first time held that Horlicks was a food drink and hence, he charged sales of Horlicks to sales tax at 15 per cent and hence, he also made a demand of interest amounting to Rs. 83,25,198. In the appeals, respondent No. 1 furnished all facts relating to manufacture of Horlicks including particulars of ingredients thereof. Both the appellate authority and the Board maintained the orders of assessment and demand of interest. Some change in the ingredients of Horlicks was introduced with effect from August 1, 1998. From that date Horlicks has been named as "New Smart Horlicks" or "New Smart Nutrients Horlicks". Before that date there was no change in the manufacture or ingredients of Horlicks. Nor allegedly was anybody's case either before the assessing authority or before the appellate authority or before the Board that there was any change at any time in the composition of Horlicks during the relevant period. No evidence was produced by the Revenue regarding ingredients of Horlicks. In spite of that, the Board observed in its impugned order that there was no doubt about the fact that there had been sufficient change in the composition of Horlicks. The Board also observed that sugar, chocolate and cocoa are added in course of manufacture of Horlicks which is found in various advertisements on television or in newspapers. Accordingly, the Board proceeded to hold that Horlicks was used as a food drink. The contention of the applicants is that there was no change in the ingredients of manufacturing Horlicks. Moreover, their contention is that Horlicks was treated in Notification No. 886 -F.T. dated May 1, 1955 as powdered or condensed milk, and the proviso to the notification had no application thereto, particularly because no other substance was mixed with Horlicks. There was, according to the applicants, no material to support that the percentage of powdered milk by weight in the product did not exceed 50 per cent and as such, the proviso had no application on that ground as well. The expression "milk" is to be understood in its natural, ordinary and popular sense and not in the sense in which the Board wanted to indicate. Since Horlicks was mentioned by name in Notification No. 886 -F.T. dated May 1, 1955, it cannot but be considered as powdered or condensed milk and the proviso to the Notification No. 886 -F.T. would not apply thereto. In the separate Notification No. 790 -F.T. dated April 2, 1957 concerning powder for food drinks Horlicks was not included, while products like Milo and Ovaltine had been included. Hence, the applicants contend that Horlicks is to be treated as powdered or condensed milk under Notification No. 886 -F.T. dated May 1, 1955 during the relevant period, namely, the period of 12 months ending March 31, 1995. Another contention of applicants is that Horlicks is known in the common parlance as a powdered or condensed milk like Glaxo, Lactogen, Ostermilk, etc. It is also contended that in order to bring a product under the rate chart meant for powders for food drinks, the major ingredients must be cocoa, chocolate or malt or soyabean, wheat flour, rice powder or combination of two or more of such ingredients. Applicants are relying on a judgment of the Madras High Court Reported as H.M.M. Limited v. Deputy Commercial Tax Officer  79 STC 421. wherein it was held that Horlicks per 1,000 grams contained milk 69 per cent by weight which is the major ingredient. One of the grounds of challenge is that the impugned assessment order was made taking a view different from all other orders of assessment made since 1955 up to the period ending March 31, 1994.;