S.P Sinha with Nagendra Prasad Singh, JJ.:— On being directed by this Court to state a case on the undermentioned question of law, which is common for all the periods in question, the Commercial Taxes Tribunal has made the statement:
“Whether Sewal is taxable at the general rate of sales tax prevalent during the period under assessment i.e 1.4.59 to 30.6.59 and not at a special rate of tax applicable to ‘cereals’ under the relevant notification then in vogue?”
2. Same is the question with regard to the other period also, namely, for the period 1.7.59 to 31.3.1961 In substance the question is, whether or not Sewai is a cereal and Includes in the relevant notification. The relevant notification is SYGL 2042/68-12568 F.T dated 27-12-1968 amended from time to time, prescribing the rate of tax, whether general or special, at which particular goods were taxable. The relevant notification reads:—
“Cereals and pulses Including all forms of rice, gram, peas, moong, arhar, masur, khesari, millet, bajra and jowar, wheat, oats, barley, maize, broken pulses, sago, besan, sattu, and flour Including attamaida, suji and bran.”
3. The rate of tax prescribed is special sales tax at 2%.
4. It may be stated that so far as the period 1.4.59 to 30.6.59 is concerned, it would be governed by the Bihar Sales Tax Act, 1947 and so far as the latter period is concerned, by the Bihar Sales Tax Act, 1959. But this fact does not make any difference, in so far as the question referred for opinion is concerned.
5. The facts relevant are as under:—
6. The opposite party (whom I shall hereinafter refer to as the dealer) carried on business of manufacturing and selling Sewai, which is a type of thin thread like article. Since the dealer had not got itself registered under the Act, proceedings under Section 13(5) of the Bihar Sales Tax Act, 1947, equivalent to 16(5) of the Bihar Sales Tax Act, 1959, were initiated for the respective periods. The dealer was held liable to pay sales tax with effect from 1.4.1959 and for all the succeeding periods, stated above. The rate at which the taxable turnover on sales of Sewai was taxed was the general rate at 4% for the first period ending on 30th June, 1959 and at 3% for the succeeding periods ending on the 31st March, 1961.
7. On appeal, the Appellate Assistant Commissioner of Commercial Taxes accepted the dealer's plea that Sewai was either a form of Maida or a wheat product or a cooked food and as such it was not assessable at the general rate of sales tax, but at the special rate of sales tax, namely, at 2% of the turnover.
8. The Department then appealed to the Deputy Commissioner of Commercial Taxes, Patna Division; Patna, who reversed the order of the Assistant Commissioner of Commercial Taxes; on the ground that Sewai was not cereal, being entirely distinct from flour and Maida. It was also not cooked food. The Deputy Commissioner of Commercial Taxes, therefore, directed that the sales of Sewai should be taxed at the general rate of 4% for the period ending 30th June, 1959 and 3% for the period ending 31st March, 1961.
9. The dealer then filed revision applications in respect of the different periods before the Commercial Taxes Tribunal, Bihar, Patna. The Tribunal held that Sewai was nothing but slender threads of wheat paste or more correctly of Malda paste and retains the character of being Malda. It was essentially in the nature of cereals. The Tribunal relied upon the decision of the Assam High Court in the case of (1) Kapil deoram Baijnath Prasad v. J.K Das [(1954) 5 Sales Tax Cases 365]. The Tribunal, therefore, in effect upheld the decision of the Assistant Commissioner of Commercial Taxes.
10. The Commissioner of Commercial Taxes then sought for reference to be made to this Court on the aforesaid question, which the Tribunal refused. It was then that this Court, having been moved by the Department, directed the Tribunal to make a statement of the case on the question of law, aforesaid.
11. These are the relevant facts.
12. Mr. Jain appearing for the petitioner has submitted by reference to the aforesaid notification, by which special rate of sales tax is to be charged on the items described therein, that unless the goods sold fell within the description of the notification, it would not qualify for being taxed at the special rate of sales tax. According to Mr. Jain, although cereals and pulses were to be taxed at the special rate of sales tax, but the said expression ‘cereals’ and ‘pulses’ has to be understood ejusdem generis the items following ‘cereals’ and ‘pulses’. In other words, according to Mr. Jain, unless the goods sold retain the form and character of the, goods described in the said notification, it would not qualify to be taxed at the special rate of sales tax. Sewai, according to Mr. Jain, assumes a form quite distinct and different from Malda or flour. It did not also retain the form of either being a cereal or Malda or flour, on the contrary it assumes a different shape altogether and looks to be of a different species. He, therefore, submitted that on a true interpretation of the said notification, the question must be answered in favour of the Department and against the dealer. In support of his contention, he cited one of the decision of the Supreme Court in the case of (2) State of Tamil Nadu v. Pyare Lal Malhotra [(1976) 37 Sales Tax Cases 319]. This was a case in which it was held that even though the commodities concerned belonged to the genus ‘Iron and steel’ each such Item was a separate taxable commodity for the purpose of sales tax and each of them forms a separate species for each series of sales. I will deal with this case at the appropriate place.
13. Learned counsel appearing for the dealer has reiterated the submissions which found favour with the Tribunal and has supported his argument by a decision of the Bombay High Court in the case of (3) Commissioner Of Sales Tax v. Sultan Shev Co. [(1977) 40 Sales Tax Cases 583]. This was a case in which the question at Issue was the same as is before us, the question was, whether Sewai is a form of cereal. Their lordships held in the affirmative. While dealing with the question, their lordships have referred to the decision on which the Tribunal had relied upon, namely, in the case of (4) Kapildeoram Baijnath Prasad v. J.K Das [(1954) 5 S.T.C 365] and have distinguished the decision of the Supreme Court cited by learned counsel for the Department in the case of State of Tamil Nadu v. Pyare Lal Malhotra [(1976) 37 S.T.C 319].
14. According to learned counsel for the dealer, therefore, the question referred for opinion, must be answered in favour of the assessee, namely; that Sewai has been rightly held to be assessable at the special rate of sales Tax applicable to cereals.
15. The question, as I have analysed even earlier, is whether Sewai is a cereal?
16. It may be stated that admittedly Sewai is prepared out of Maida which is one of the products of wheat. The process which is under gone for turning Malda into Sewai is very simple after mixing water in Maida in certain proportion, it is made into a paste and then slender thread like article is manufactured which is commonly known by the name of Sewai. No doubt, the original form of the cereal, out of which Sewai is prepared, is lost; but the question is merely because in the process of preparing Sewai the cereal has undergone a transformation of its actual form, whether it ceases to he a cereal. One could understand the transformation to be so much as to change the very character and forms of the cereals as not qualifying to be called a cereal but where the cereal has undergone a little process, either for being made tasty or for being made into a thing which can be used differently than as mere grain, we do not think that it can be said with justification that the character of the goods has so changed as to exclude the said goods from the category of cereal. The Assam High Court in the case of Kapildeoram Baijnath Prasad (Supra) was seized with somewhat similar question, as to whether Chira and Muri which are flattened or fried rice, ceased to be cereals. Under the Assam Sales Tax what was exempted from taxation was all cereals and pulses Including all forms of flee. Their Lordships held, to all Intents and purposes Chira and Muri have not changed their character of cereals by any process of transformation, so as to make them being called by any other name. We are in respectful agreement with the decision of the Assam High Court. If the cereal in question has not undergone such a process of transformation, as to make it wholly unidentifiable as a cereal, the article manufactured out of the cereal can not loose its basic character of being a cereal. If wheat is transformed into Maida and Malda into Sewai, we find no justification for thinking that the transformation of the cereal into Sewai has made it unidentifiable as a cereal.
17. Mr. Jain appearing for the Department stressed on the argument that the ‘cereals’ and ‘pulses’ in the notification must be understood in the context of what follows the said two terms. In other words, ejusdem generis. I have already quoted the notification but for the sake of understanding the same, once again I will quote the relevant portion of the same.
‘cereals and pulses Including all forms …. wheat …. and flour including atta, malda, suji and bran.’
18. According to Mr. Jain, the goods sold must retain the form as has been enumerated in the said notification. If the form is so changed that it does not conform to the description given in the notification; the sale of such goods cannot qualify for taxation at the special rate of sales tax. In this context; he has cited the decision of the Supreme Court in the case of State of Tamil Nadu v. Pyare Lal Malhotra (Supra), wherein their Lordships have observed, that although the various forms may belong to the genus ‘iron and steel’, yet each one of them is separate taxable commodity by Itself.
19. In this case a list of goods has been given under the main caption “iron and steel”. Such of those goods, as had been given under the main caption ‘Iron and steel” Were sought to be taxed to sales tax once again and the argument was that since iron and steel had suffered taxation at one point; the goods enumerated under the caption “iron and steel” could not be taxed over again. It was in that context that their Lordships considered the list of the goods given under the main caption ‘iron and steel’ and came to the conclusion that although each one belong to the same genus, ‘iron and steel’, yet each such item was separate taxable commodity for the purpose of sales tax.
20. We do not see as to how this decision at all helps learned counsel for the Department. On the contrary we think this decision lays down the proposition that although on being processed ‘iron and steel’ may form into separate species, yet they continued to belong to the same genus. If the ratio is applied to the instant case, the conclusion will be that although Sawai may have become a separate species, but it continues to belong to the same genus, namely, cereal in the form of wheat.
21. Looking to the notification, under which the several items of the genus ‘cereals’ and ‘pulses’ have been enumerated, it clearly emerges that the items included therein are merely illustrative and not exhaustive. All the same, the sub-items belong to the main genus, namely, cereals and pulses.
22. Now the notification reads that ‘cereals and pulses’ including all forms of wheat and flour including Atta, Malda etc. shall be taxed at the special rate of sales tax. Necessarily it visualises that cereals and pulses can take various forms and so also Atta and Maida. [So long the form which the cereals and pulses take, retain their character of being edible item and Identifiable as having been formed out of cereals and pulses, it is Immaterial what form the cereals and pulses take, they would continue to be classified as cereal. It would be taxable only at the special rate.] As we said earlier, the items given under the genus “cereals” and “pulses” are merely illustrative and not exhaustive. An item which has not figured in the list, cannot, therefore be excluded from the category of cereals and pulses. The only test to be applied is whether the particular form which cereals and pulses take is such which can be Identified as having formed from cereals and pulses. If such identity is maintained, we do not see any reason why it will not qualify for being taxed at the special rate of sales tax.
23. Learned counsel for the dealer has cited the decision of the Bombay High Court in the case of Commissioner Of Sales Tax v. Sultan Shev Co. (Supra) which is directly on the point and with which we agree. We will accordingly answer the question by saying that Sewai was not taxable at the general rate of sales tax prevailing during the respective periods of assessment, but at special rate of sales tax applicable to cereals under the aforesaid notification. The question is answered against the Department and in favour of the dealer. The dealer will be entitled to costs. Hearing fee Rs. 250/-
Appeal dismissed.