REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2558  OF 2011 [Arising out of SLP (C) No. 11358 of 2008]

Commercial Taxes Officer          …. Appellant

Versus

M/s. Jalani Enterprises                …. Respondent

WITH CIVIL APPEAL NO.  2559 OF 2011

[Arising out of SLP (C) No. 15883 of 2008]

WITH CIVIL APPEAL NO. 2561 OF 2011

[Arising out of SLP (C) No. 27432 of 2008]

WITH CIVIL APPEAL NO. 2562 OF 2011

[Arising out of SLP (C) No. 27433 of 2008]

WITH CIVIL APPEAL NO. 2563 OF 2011

[Arising out of SLP (C) No. 4304 of 2009]

JUDGMENT

Dr. MUKUNDAKAM SHARMA, J.

1. Leave granted.

2. Since  the  issues  involved  in  these  appeals  are  identical,  we  

propose  to  dispose  of  all  these  appeals  by  this  common  

Judgment and Order.

3. In appeals arising out of  SLP (C) Nos. 11358 of 2008 and  

15883 of 2008   the issue which falls for our consideration is as to  

whether Jaljira which is a product manufactured by the respondent  

herein is only an appetizer and is not a masala and therefore liable  

to sales tax at the rate of 10% and not 16%.  In appeals arising out  

of  SLP  (C)  Nos.  27432  of  2008  and   27433  of  2008  a  similar  

question  arises  for  consideration  that  as  to  whether  Jaljira  and  

similar other products are not Masala and therefore they are liable  

to be assessed to sales tax at the rate of 10% and not 16%.   

4. In order to decide the aforesaid issues some factual aspects  

are  required  to  be  mentioned.    The  respondent firm  is  a  

manufacturer and seller of Jaljira and some other products but in  

the present appeals we are concerned only with the product called  

Jaljira.   The respondent  deposited  sales  tax at  the rate  of  10%  

assuming  that  Jaljira  is  not  a  Masala  and  hence  taxable  at  the  

general rate of 10% as residuary entry 199, which reads as under:

“199. General rate, that is all goods that are not covered by  S. No. 1 – 198.                                                       10%”

5. The counsel  appearing for the appellant submitted that the  

respondent is  liable to pay sales tax at  the rate of 16% on the  

product manufactured by it and the assessing officer was justified in  

treating the respondent liable to pay sales tax at the rate of 16%.   

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6. On examining the entire matter it appears that a Notification  

being  notification dated  26.03.1999  was  issued  by  the  State  

Government, which was to the following effect:

Sr. No. Detail of Goods Tax Rate

xxxxxx xxxxxx Xxxxxx

119 All kinds of eatables & non alcoholic potable  

liquids  such  as  fruit  syrups,  distilled  juices,  

jams [chatni, murabbas], fruit juice, dry milk  

power,  drink  concentrates  of  all  types  and  

forms, essence, concentrates, corn flaks and  

wheat flakes, custard powder, baking powder,  

ice-cream powder and packed masala.

12%

Subsequently  another  notification being  notification dated  

29.03.2001 was issued by the State Government to the following  

effect:

Sr. No. Detail of Goods Tax Rate

xxxxxx xxxxxx Xxxxxx

82 Dry  Fruits,  Supari,  Kirana  items,  Masala  

(different from packed masala) such as Mirch,  

Dhanai,  Saunf,  Methi,  Ajwain,  Sua,  Halsdi,  

Kathodi, Amchur, Elaichi, Jeera (cumin seed)

4%

184 All kinds of eatables & non alcoholic potable  

liquids  such  as  fruit  syrups,  distilled  juices,  

jams [chatni, murabbas], fruit juice, dry milk  

power,  drink  concentrate  of  all  types  and  

forms, essence, concentrates, corn flaks and  

16%

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wheat flakes, custard powder, baking powder,  

ice-cream powder and packed masala.

Subsequent thereto also a notification was issued by the appellant  

herein on 22.03.2002 making the same effective from the date of  

its issuance, wherein Entry 80 includes the following:  

Sr. No. Detail of Goods Tax Rate

80 Dry  Fruits,  Supari,  Kirana  items,  Masala  

([when sold in unmixed form, whether lose or  

in polyethylene packs]) like  Mirchi, Dhaniya,  

sonf,  methi,  ajwain,  suwa,  haldi,  kathodi,  

amchoor and asalia, jeera (cumin seed)

4%

Whereas Entry 186 includes the following:

Sr. No. Detail of Goods Tax Rate

186 All  kinds  of  eatables  &  non-alcoholic  potable  

liquids such as fruit syrups, distilled juices, jams  

[chatni,  murabbas],  fruit  juices,  drink  

concentrates  of  all  types  and  forms,  essences,  

concentrates,  corn  flaks  and  wheat  flakes,  

custard  powder,  baking  powder,  ice-cream  

powder and [multi-ingredient packed masala].

16%

A letter  dated  12.11.2001 was  issued  by  the  Deputy  Secretary,  

Finance Department, Tax Division, Government of Rajasthan to the  

Commissioner, Commercial Taxes Deptt, Rajasthan, Jaipur, which  

reads as follows:

“……..I am to state that “Packed Masala” used in  

entry number 184 means, a Masala where two or  

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more ingredients  are mixed and sold  in  packed  

conditions. Spices sold singly will continue to be  

taxed as per entry number 82……”

7. In the backdrop of the aforesaid facts, an assessment order  

was  passed  by  the  assessing  officer  so  far  as  respondent  is  

concerned.   In  the  said  assessment  order  it  is  sated  that  the  

respondent has shown its product Jaljira, which is manufactured by  

it, as liable to sales tax at the general rate of 10%.  The officer,  

however,  referred  to  the  contents  of  the   notification dated  

29.03.2001 holding that jaljira is a masala and the same falls in the  

category of packed masala and therefore liable to be taxed at the  

rate of 16% as mentioned under Entry No. 184 of rate notification.  

8. On examining the entire matter the assessing officer held that  

Jaljira  manufactured  by  the  assessee  is  spice,  which  is  sold  in  

different types of packing due to which it would come within the  

category of packed masala for which tax rate is 16%.   

9. The respondent  itself  has described Jaljira  as  spice  on the  

packed  containers  of  Jaljira  marketed  by  it.   The  officer  also  

referred to the application dated 07.07.1984 filed by the proprietor  

of the Respondent firm for registration under Rajasthan Sales Tax  

Act  as  well  as  under  the  Central  Sales  Tax  Act.   In  both  the  

applications it is sated as follows:

“Manufacturing  of  food  products,  mix  MASALA,  AURVEDIC  MEDICINES,  all  types  of  MEDICINES,  MEDICATED – NON MEDICATED food for sale.”

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10. There are other materials also which are referred to by the  

officer on record indicating that the assessee itself  described the  

product Jaljira as Masala.  That is how the product is described in  

the bill books of sale, even for the assessment year 2001-2002.   

11. Placing reliance on all those facts the assessing officer held  

that the product manufactured by the assessee known and called as  

jaljira is a Masala falling under Entry 184.  It is also undisputed fact  

in the present case that except for the assessment year 2001-2002  

with which we are concerned, the respondent assessee is paying  

sales tax for subsequent assessment years for jaljira at the rate of  

16%  in  view  of  the  notification dated  22.03.2002  wherein  it  

categorically sated that multi-ingredient packed masala would carry  

taxable rate of 16% in view of entry No. 186.  The assessing officer  

has specifically stated that jaljira is multi-ingredient packed masala  

and  therefore  respondent  is  liable  to  pay  sales  tax  on  the  

manufactured Jaljira at the rate of 16%.  But the submission of the  

Respondent is that for the assessment year in question, the said  

notification dated 22.03.2002 being not applicable and the earlier  

notification being applicable, rate of sales tax at the rate of 10% for  

the same is only payable.   

12. Being  aggrieved  by  the  aforesaid  order  passed  by  the  

assessing officer,  the respondent  preferred an appeal  before the  

Deputy  Commissioner  (Appeals)  Commercial  Taxes,  Ajmer  

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challenging the order passed by the Commercial Tax Officer, Special  

Circle-II,  Jodhpur.    The  Deputy  Commissioner  (Appeals)  by  his  

order  dated  01.08.2005  held  that  Jaljira  is  not  a  Masala  and  

therefore tax levied at general rate of 10% was justified and he set  

aside the demand raised by the Assessing Authority.   

13. Appellant filed two appeals before the Rajasthan Tax Board,  

Ajmer  challenging  the  aforesaid  order  of  Deputy  Commissioner  

(Appeals), Ajmer.  The Rajasthan Tax Board, Ajmer by its common  

order  dated  11.12.2002  set  aside  the  order  dated  01.08.2005  

passed by the  Deputy  Commissioner  (Appeals)  and restored the  

orders passed by the Assessing Authority.   

14. Being aggrieved by the said order the respondent herein filed  

a Revision Petition before the Rajasthan High Court which came to  

be allowed by the  High Court under the impugned judgment and  

order.  Feeling aggrieved the appellant filed the present appeals on  

which we heard learned counsel appearing for the parties and also  

perused the records.   

15. In  the  impugned  judgment  and  order  passed  by  the  High  

Court it was held that Jaljira cannot be termed as a Masala in itself,  

but it is a mixture of masalas and other materials, which can be  

used for digestion.  The  High Court therefore held that Jaljira is  

nothing but edible preparation ready for use either directly or after  

dissolving in water for human consumption and as it is not used as  

additional constituent in any food substance, therefore, it cannot be  

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termed as packed masala.  The aforesaid findings were arrived at  

by the High Court after referring to the contents of Jaljira shown to  

be as follows:

Sr. No. Name of Item Percentage

1. Salt 40%

2. Kala Namak 1%

3. Nimbu Ka Sat (Citric Acid) 8%

4. Sonth 10%

5. Kalimirch 10%

6. Pudina 10%

7. Hing 1%

8. Jira 18%

9. Lalmirch 2%

According  to  the  High  Court Jaljira  would  therefore  fall  in  the  

residuary clause and therefore tax should be levied at the rate of  

10% and not 16%.

16. The aforesaid findings of the High Court are challenged before  

us by the appellant.  The counsel appearing for the appellant had  

taken us through all the documents on record.  He submitted that  

respondent has itself shown the product manufactured by it Jaljira  

as Packed Masala and therefore the assessing officer was justified  

in  treating the  respondent liable  to pay sales tax at  the rate  of  

16%.   

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17. Each one of the contents of the product referred to above and  

relied upon by the High Court would indicate that most of the items  

used in the manufacture of Jaljira are nothing else but spices.  They  

are grinded and mixed.  When spices are grinded and mixed, it  

gives rise to a new product, which is a mixed masala.  Different  

ingredients  are used in preparation of  Masala  after  grinding and  

mixing several ingredients and when they are so grinded they lose  

their  own  identity  and  character  and  a  new  product  separately  

known to the commercial world comes into existence.   Sales tax is  

levied  on  sale  of  commercial  commodities,  therefore,  individual  

spices could be termed as different commercial commodities.  When  

they are grinded and mixed they give rise to a separate commercial  

commodity altogether which could be taxed separately.  It is settled  

law that when one particular item is covered by one specified entry,  

then the Revenue is not permitted to travel to the residuary entry.  

If from the records it is established that the product in question  

could be brought under a specific entry then there is no reason to  

take resort to the residuary entry.  There is no doubt that Jaljira is  

a drink.   The contents  of  Jaljira  is  put  into water and taken as  

digestive drink but when we look into the manner and method of  

preparation of the product Jaljira, we find that it is a mixture of  

different spices after grinding and mixing.  Therefore, it is nothing  

but a Masala packed into packets of different nature/quantity and  

sold  to  the  consumers.   It  would,  therefore,  for  all  practical  

purposes would come within the Entry No. 184 and it cannot be  

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said that it would come under the residuary entry as held by the  

High Court.   

18. The clarificatory letter dated 12.11.2001 which was issued by  

the  Deputy  Secretary,  Finance  Department,  Tax  Division,  

Government of Rajasthan is also placed on record which specifically  

states that  “Packed Masala” used in entry number 184 means, a  

Masala where two or more ingredients are mixed and sold in packed  

conditions. The said letter is in the nature of clarification of entry  

number 184 with which we are concerned.  Although the said letter  

is an inter departmental communication, the revenue authorities,  

namely, the appellant is governed and bound by the aforesaid letter  

although  the  said  letter  may  not  have  been  circulated  to  the  

respondent  but  it  cannot  be  said  that  clarification  given  by  the  

Department cannot be made use of for interpreting the entry in the  

notification.   

19. Even otherwise, in our considered opinion the entries in the  

notification by themselves are quite clear to include the product in  

question within the ambit and parameters of the expression packed  

masala  and  therefore  the  assessing  officer  was  justified  in  

demanding  sales  tax  from  the  respondent at  the  rate  of  16%  

holding  that  the  product  manufactured  by  the  respondent falls  

within the category of items included in Entry No. 184.   

20. Therefore, appeals arising out of SLP (C) Nos. 11358 of 2008,  

15883 of 2008, 27432 of 2008 and  27433 of 2008 are allowed and  

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the judgment and order passed by the High Court is set aside.  The  

order dated 15.03.2004 passed by the Tax Assessment Officer is  

restored.

21. Having held thus, we may now examine the facts of the appeal  

arising out of SLP (C) Nos. 4304 of 2009.  In this appeal, we are  

concerned with the two financial years, namely, financial years of  

1999-2000  and  2001-2002.   The  aforesaid  discussion  and  the  

findings and the conclusions arrived at would also be applicable so  

far the products of the respondent herein are concerned but except  

for product like Idli Mix and Dosa Mix.   

22. Other  products  of  the  assessee  such  as  Aachar  Masala,  

Jaljeera  powder,  Anar  Masala,  Methi  Chatani,  Pudina,  Lehsoon  

Chatni,  Chat  Masala,  Kitchen  Masala,  Mangodi  Masala,  Sambhar  

Masala, Dal Masala, Kasuri Methi, Heena Powder, Shikkai Powder,  

Lahsoon powder, must be held to be Masala packed falling under  

Entry No. 184 of the notification dated 29.03.2001.  

23. So far as Masala and other products are concerned the same  

principle would apply but at the same time Idli Mix and Dosa Mix  

cannot  be  said  to  be  Masala  and  therefore  the  same  would  be  

excluded  from  being  assessed  for  the  purpose  of  sales  tax  

assessment as ‘masala’.

24. In view of the above, appeal arising out of SLP (C) No. 4304  

of 2009 is also allowed and the judgment and order passed by the  

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High Court is set aside.  The order passed by the Tax Assessment  

Officer is restored.

   ............................................J

       [Dr. Mukundakam Sharma ]

   ............................................J         [ Anil R. Dave ]

New Delhi, March 17, 2011.

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