http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

CASE NO.: Appeal (civil)  6221 of 1999

PETITIONER: The Commissioner, Trade Tax. U.P.

RESPONDENT: S/S National Cereal Product

DATE OF JUDGMENT: 07/03/2005

BENCH: Ruma Pal, Arijit Pasayat & C.K. Thakker

JUDGMENT: J U D G M E N T

WITH CA. Nos. 6222- 6225/1999 CA No. 4313/2001, CA Nos \005\005\005\005..of 2005  @ SLP(C ) Nos.7423-25/2004

RUMA PAL, J.

       Leave granted in special leave petitions.

       The dispute in this case is whether germinated barley or malt is  a cereal  for the purposes of three notifications. Malted barley is  barley which is soaked in water and upon germination, dried. The first  notification is issued under Section 3D of the U.P. Sales Tax Act,  1948 read with Section 21 of the U.P. General Clauses Act, 1904 and  is dated 30th May, 1975. It provided that with effect from 18th June,  1975 the turnover  of first purchases of inter alia foodgrains including  cereals and pulses but excluding Sawan, Kodon, Mandua, Kakun,  Manjhri (or Ankri), Kutu, Ramkana and Paddy would be liable to tax  under clause (b) of sub-section (1) of Section 3D at the rates  mentioned against it.   The second Notification is dated 11th September, 1976.  This  notification was issued under sub-section (2A) of  Section 3A of the  UP Sales Tax Act, 1948.  It provided that with effect from                11th September, 1976 the turnover in respect of foodgrains (including  cereals and pulses) other than cereals and pulses as defined in  Section 14 in the Central Sales Tax Act, 1956 shall be liable to tax at  the reduced rate of 4% at the point of sale to the consumer. The third notification is dated 30th of April, 1977 issued under  Section 3D (1) of the U.P. Sales Tax Act, 1948.  It provided that with  effect from 1st May, 1977, the turnover of first purchases of inter alia  foodgrains including cereals and pulses other than cereals and  pulses as defined in Section 14 of the Central Sales Tax Act, 1956  would be liable to tax at 4%. Earlier the respondent assessee had claimed that the malted  barley sold by it was covered by the word "cereal" in Section 14 of the  Central Sales Tax Act 1956.  The High Court had rejected this claim  by its judgment dated 16th September, 1993 and held that malted  barley was not a cereal within the meaning of Section 14 of the 1956  Act. The respondent\027assessee then moved five rectification  applications before the High Court alleging that the alternative cases  that had been argued by the respondent had not been noted or dealt  with by the High Court in the order dated 16th September, 1993.  The  alternative case of the respondent\027assessee was that even if the  malted barley was not a cereal within the meaning of Section 14 of  the Central Sales Tax Act, 1956 nevertheless it continued to be a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

foodgrain or cereal for the purposes of the three notifications.  In the  further alternative it was urged by the respondent\027assessee that in  any case it was the duty of the Taxing Authority to tax the assessee  under the proper entry if the contention of the assessee had been  negatived by the authorities. The five rectification applications were  disposed of by judgment and order dated 21st September, 1994. The  High Court held that the determination of the alternative cases might  require evidence and therefore it was appropriate to send the case  back to the Sales Tax Tribunal.  Accordingly, it was ordered that the  Sales Tax Tribunal shall decide the question whether the malt  prepared from barley is foodgrain including cereal within the meaning  of the three notifications. It was however, made clear that the Tribunal  would take the finding of the Court that malt and barley were two  different commodities and that malt did not fall within the definition of   word ’cereal’ for the purposes of Section 14 of the Central Sales Tax  Act, as final. On remand, the Tribunal re-examined the meaning of the  definition "malt" and "cereal" in several dictionaries and  encyclopedias and came to the conclusion that the word ’malt’  was    covered by the word "cereal" in the three notifications. The High Court dismissed the revision application of the  Department  by independently considering the definitions given in  various dictionaries and other authoritative works and came to the  conclusion that malt is merely another form of barley and was a  foodgrain within the meaning of the three notifications.

Impugning the decision of the High Court  learned counsel for  the Department submitted that the Tribunal  and the High Court had  erred in holding that the malt was either a cereal or a foodgrain when  the order of remand, which had not been challenged by the  respondent\027assessee, had already held that the malt was not a  cereal. The submission is mis-conceived.  By the order dated 21st  September 1994, the High Court had merely held that the barley malt  was not a cereal for the purposes of Section 14 of the Central Sales  Tax Act.  It was clearly envisaged by the order of remand that despite  such finding, barley malt could still be a cereal or a foodgrain for the  purposes of the three notifications.  Counsel for the appellant then referred to various other  dictionaries to contend that malt is neither cereal nor a foodgrain. The  grain, according to the appellant, is a seed which is yet to be  germinated.  We have considered the various dictionary meanings  referred to by the appellant.  In none of them has the word ’grain’  been limited to an un-germinated seed.  On the contrary, malt has  been described as a foodgrain.     The notifications by which the rate of tax has been fixed in  respect of foodgrains makes it clear that the definition of foodgrains in  the notifications is wider than that in Section 14 of the Central Sales  Tax Act, 1956.  It must be remembered that the notifications are not  exception notifications but contain charging provisions. As such the  onus to prove that the malted barley does not fall within foodgrains or  cereals was on the Revenue. They have failed to discharge the onus.  Both the Tribunal and the High Court have concurrently found that  malted barley is a foodgrain or cereal for the purposes of the three  notifications for reasons that cannot be discarded as perverse. We  therefore see no reason to interfere with their conclusion. Additionally we find that the question of law formulated in the  Special Leave Petition was wholly incorrect.  The question of law as  framed was whether  the Tribunal was justified in holding that  barley  malt falls under the category of cereals and pulses contained in  Section 14 of the Central Sales Tax Act.  That was not the subject  matter of remand nor decided by the Tribunal nor affirmed by the  High Court.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

The appeals are accordingly dismissed without any order as to  costs.