Classification for sales tax purposes must adhere to the common parlance standard, prioritizing consumer understanding over strict technical definitions.

JUDGMENT :

M.S. Sonak, J.

1. Heard learned counsel for the parties.

2. This is a reference arising under Section 61 of the Bombay Sales Tax Act, 1959 (“said Act”) made to this Court by the Maharashtra Sales Tax Tribunal (“Tribunal”) to determine the following question:-

“Whether on a true and proper interpretation of entry 18(2) of the Schedule ‘C’ Part II of the Bombay Sales Tax Act, 1959 the Tribunal was correct in holding that the product “Coffee and Instant Drinks Nescafe Premix” sold vide Invoice No. M 81- 32778 dated February 7, 1998 is not covered by the Scope of entry 18(2) of Schedule ‘C’ Part II, but is covered by the Entry 3 of Schedule ‘C’ Part II?”

3. The Statement of Facts accompanying the reference order encapsulates the facts and circumstances in which the above question came to be referred for determination of this Court. The same is transcribed below for the convenience of reference: -

“M/s. Nestle India Ltd is dealing in diverse consumer produce. One of them is Nescafe prepared Mix for vender machines the dealer is registered under Bombay Sales Tax Act, 1959. The dealer had filed a petition before the Commissioner of Sales Tax for seeing determination on the rate of tax on "Coffee and Instant Drinks 'Nescafe Premix' sold vide invoice No. M 81-32779 dated 7.2.1998. It was argued before the Commissioner that in common parlance, the impugned product is known as "Instant Coffee". The product was nothing but instant coffee. Since Instant Coffee could be prepared by making the impugned product in hot water. The dealer argued that the impugned products to be covered under the Schedule Entry C-II-3 which specifically includes "Instant Coffee subject to 8% sales Tax.

The Commissioner of Sales Tax observed that the impugned product is not instant coffee. The product contains ingredients like.

From the aforesaid description, he came to the conclusion that impugned product is in form from which coffee a beverage is prepared. Therefore, the Commissioner held that the "coffee and Instant Drinks Nescafe Premix" would be powder from which no alcoholic beverages are prepared and covered by Schedule Entry C-II-18(2) liable for sales tax at the rate of thirteen paise in a rupee.

Being aggrieved by the order passed by the Commissioner under section 52(1)(c) of the Bombay Sales Tax Act, 1959, the dealer filed appeal before the Maharashtra Sales Tax Tribunal. The Tribunal relied on the Supreme Court Judgment in the case of M/s. Forage & Co. Vs. Municipal Council of Greater Bombay, JT 1999 (9) SC 57. In which, Supreme Court held that the concept of quantity was not at all decisive of the matter.

The Tribunal set aside the D.D.Q. Order passed by the Commissioner and held that the Coffee and Instant Drinks Nescafe Premix is covered by the Schedule Entry C-II-3 of the B.S.T. Act liable for sales tax at the rate of eight paise in a rupee.”

4. To determine the above question, we must refer to Entries C-II-3 and C-II-18 in the Schedule to the Bombay Sales Tax Act. The two competing entries read thus :-

“Entry C-II-3

5. In this case, we are concerned with the classification and consequently the determination of tax rate for the respondent’s product “Nescafe premix”. There is no dispute that this product is used for preparing Nescafe through a vending machine by simply pouring hot water into the premix. There is also no dispute about the contents of the premix i.e. Soluble Coffee Powder 8.5%, Sucrose 54.0%, Partially skimmed milk powder 37%, Maltodextrin 0.5%.

6. Therefore, the question which arises for our determination is whether the above product could be classified under Entry C-II-3 thereby attracting tax of 8% or the same was classifiable under Entry C-II-18 (2), thereby attracting a tax of 16 %.

7. By judgment and order dated 8 December 1998, the Commissioner of Sales Tax determined that the product would be governed by Entry C-II-18(2). On an ap