- (1.) THE following question has been referred to us: - "whether cornflakes are a form of maize in terms of the notification No. F. 5 (15) FD (CT)/65/iv Dated 2-11-65 and earlier one of 2-3 63 and if so taxable at the rate of 1% as prescribed in the said notification. "
(2.) THE facts arc that in the assessment for the period 1-4-65 to 31-3-66 in the case of Messrs Indus Trading Agencies, Ajmer, under Sec. 10 of the Rajasthan Sales Tax Act, the Commercial Taxes Officer, Ajmer by his order dated 9-5-67 charged tax on 'cornflakes' at 10%. THE assessee himself, as stated in the assessment order, had collected and paid tax at 2%. During the hearing for the assessment, it was pleaded on behalf of the assessee that the commodity was a form of cereal. THE assessing authority disagreed and held that this is an item of 'food provisions' and, as it is sold in sealed plastic containers, it was taxable during the relevant period at 10% the rate applicable to 'eatables' sold in such packing. On appeal, the Deputy Commissioner also took the same view. An additional argument was advanced before him that even if 'cornflakes' are deemed to be eatables they would not be taxable at 10%, as only those eatables which are listed in the relevant entry in the notification regarding rates, would be covered by the entry and not others. This argument did not find favour with the Deputy Commissioner as he said that the list in the entry was only illustrative. THE assessee then came up in revision. In an earlier case of the same assessee for the period 1-4-64 to 31-3-65, a Division Bench of the Board had held that cornflakes are 'eatables' at 10% with the following observations: - "now it is quite clear that cornflakes cannot be regarded as maize. It is definitely eatable and is a common food for break-fast. Thus it is taxable at 10% as falling under item 81 of the same notification. The specimen shown to us was in itself wrapped in a plastic container. " The Division Bench, which heard the case leading to the present reference, however, thought that cornflakes could not but be classified as a form of corn. As a difference of opinion with an earlier Division Bench was involved, the case was referred for decision to this bench. The entries in the notification dated 2-11-65 which are relevant to the consi-deration of the matter are reproduced below : - "4. Cereals and pulses in all forms (including Atta, Maida, Suji and Bran.) (a) Bajra, Jowar and Maize 1% (b) Others including Gawar. ' 2% "81. All kinds of eatables and non-alholic potable liquids, such as biscuits. syrups, aerated waters, distilled juices (Ark), Jams (Chatni Murabbas) Fruit juices, essences, Gulkand etc. packed in tins or bottles or plastic containers or sealed packings of any kind. 10% "89. All goods not covered by S. No. 1 to 88. 6% We have heard the learned counsel for the assessee and the learned Advocate General. So far as entry No. 81 is concerned, we do not think it will cover 'cornflakes'. They are not 'eatables' by themselves. Specific illustrations given in the entry are of things which can be eaten by themselves or, in the case of drinks, are drunk as such or diluted with water. Applying the ejusdem generis rule, eatables in this context will certainly not include 'cornflakes'. Entry No. 88 is residuary and would come into play only if we hold that 'cornflakes' are covered in the class of goods referred to as 'cereals and pulses in all forms (including Atta, Maida, Suji and Bran)" in entry No. 4. If we hold that they are so covered, the rate of tax as for that entry would apply. Cereal, 1. a plant (as a grass) yielding farinaceous seeds suitable for food (as wheat, maize, rice); also the seeds or grain so produced either in their original state or commercially prepared, 2. a prepared food stuff of grain (as oatmeal or cornflakes) and especially as a breakfast food. Corn.- the seeds of any of the cereal grasses used for food; especially the seeds of the important cereal crop (as wheat, oats or Indian corn) of a particular region. Cornflakes - a breakfast cereal made from the course meal of hulled corn by moistening, heating and rolling it into flakes that are subsequently dried and toasted. Cornflakes are thus according to the dictionary meaning of 'cereal' covered by that term. If the entry in the notification were simply 'cereals', there could have been some doubt in regard to the inclusion of cornflakes in that term on the argument that cereals only in their original form were intended and not in any other, or a prepared, form. The entry, however, in so many words refers to 'cereals and pulses in all forms (including Atta, Maida, Suji and Bran)'. Manifestly, therefore not only the original forms but all other forms were intended to be covered. That 'atta', 'maida', 'suji' and 'bran' are specially mentioned indicates that the term 'form' was intended to be interpreted in a comparatively broad sense. It was argued before the Division Bench, which had made this reference, that 'cornflakes' are not mere 'forms'of cereals but a new commodity. The Supreme Court judgment in Devidas Gopal Krishnan vs. The State of Punjab (1967 XX STC 43g, page number 231 mentioned in the reference; being an error), was cited in this connection before the Division Bench. We do not think, however, that it applies to the present case. There, as stated in the quotation given in the reference, the cases pertained to the production of oil and oil cakes from oil seeds, yarn from cotton and rolled steel sections from steel scrap and steel ingots. The processes were held to be manufacture. The goods produced were not mere 'forms' of the basic goods even in a broad sense, A phrase similar to 'cereals and pulses in all forms' came up for judicial interpretation in the Assam High Court in Kapildeoram Baijnath Prasad vs. J. K. Dass (1954 V STC 365 ). The term there was 'all cereals and pulses including all forms of rice. " The question was whether 'chira' was covered by this as a form of rice. The discussion in that case on this point proceeded by and large on the lines in the present Case. 'chira' it was stated involved 'boiling paddy' its dehydration, frying and then flattening. ' At another place in the judgment it was stated that "chira is rice beaten". The learned Chief Justice, who wrote the main judgment observed as follows: - "if cereal or rice has been so mixed up with other ingredients or so transformed as not to be reasonably called by that name, the position would be undoubtedly different ". . . . . . . . . . . . . . . ". In my opinion, as long as a thing continues to be a cereal and retains its form as such, although it may have undergone some simple process of boiling or parching, it is difficult to hold that it would not be covered by the exemption. . . . . . . . . . . . " Ram Labhaya, J, who concurred in the judgment giving his own reasons, relied in part on the definition of 'cereal' given in Webster's dictionary (already quoted above,) He concluded by saying that: "the legislature has not expressed its mind with sufficient clarity. The language employed is equivocal and ambiguous and there is no reasonable basis for reading the word 'cereals' in a limited or in a narrow sense. " Both on the reasoning contained in the Assam judgment cited above, and in view of the fact that 'cornflakes' are covered by the term 'cereal' according to Webster, we hold that 'cornflakes' are covered by the class of goods referred to in entry No. 4 of the notification dated 2-11-65 as "cereals and pulses in all forms (including 'atta', Maida', 'suji' and 'bran' ). " So far as the notification dated 2-3-63 is concerned, the relevant entry was No, 7 and was, except for some verbal change, the same. Our answar to the reference, therefore, is that 'cornflakes' are 'cereal' or in any case a form of 'cereal'. The rate of tax will be as for the particular grain involved. Where it is maize, the rate will, of course, be as for maize. .;