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CASE NO.: Appeal (civil)  6636 of 2002

PETITIONER: Commissioner of Trade Tax, U.P.

RESPONDENT: Associated Distributors Ltd.

DATE OF JUDGMENT: 05/05/2008

BENCH: Ashok Bhan & Dalveer Bhandari

JUDGMENT: J U D G M E N T Reportable

WITH Civil Appeal No.3270 of 2008 arising out of SLP (C)  No.13762 of 2003, Civil Appeal No.3271 of 2008 arising  out of SLP (C) No.6196 of 2006 AND Civil Appeal No.2112 of  2007.    

Dalveer Bhandari, J.

1.      Leave granted in the Special Leave Petitions.

2.      These appeals are directed against the judgment and  order dated 09.11.2001 of the High Court of Judicature at  Allahabad passed in Trade Tax Revision No.656 of 2001.  

3.      In these appeals, a common question of law arises,  therefore, for the sake of convenience the facts of only Civil  Appeal No.6636 of 2002 are recapitulated.  

4.      The issue involved in these appeals is confined to the rate  of tax applicable on the sales of Bubble-gum.  According to the  appellant, Bubble-gum is taxable as an unclassified good and  would attract the duty at the rate of 10% inclusive of  surcharge.  In the impugned judgment, the High Court arrived  at the conclusion that Bubble-gum is a confectionery item  and, therefore, be taxed at the rate of 6.25%.

5.      The Tax Assessing Officer for the assessment year 1994- 95 has levied the tax with additional tax at the rate of 10%  treating Bubble-gum as unclassified and non-scheduled item.  In an appeal filed by the respondent, the learned First  Appellate Court accepted the submission of the respondent  and taxed Bubble-gum at the rate of 6.25%.  The appellant  aggrieved by the said order preferred the second appeal before  the Sales Tax Tribunal, Branch-II Ghaziabad.  The Tribunal in  detail discussed the controversy involved in the case.  

6.      Under the UP Sales Tax Act, a notification fixing the rate  of tax on Bubble-gum for the year 1994-95 was not issued.  Under the Government Notification No.Vya Ka.-2-1225/Eleven  dated 31.3.92 and Notification No.Vya.Ka.-2-3403/Eleven  dated 1.10.94, the liability for payment of tax has been fixed  for Sweets, Sweetmeat, Namkeen, Cooked Food, Revadi,

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Gajak, Biscuit, Double-bread, Cake, Pastry, Rusk and the  products of Sugar under the UP Sales Tax Act,  

7.      It is pertinent to mention here that the official language  of the State of Uttar Pradesh is Hindi.  If any difference is  found between the notifications in English and Hindi, the  notification issued in Hindi will be applicable.  On the said  notification, the courts have decided that confectionery comes  within sweets (mithai) and sweetmeat, but it has not been  mentioned that Bubble-gum comes within the category of a  Sweet.   

8.      This court in the case of Pappu Sweets and Biscuits &  Another v. Commissioner of Trade Tax, U.P., Lucknow  (1998) 7 SCC 228 observed thus:

"12. "There is no doubt that a toffee is a  sweetmeat, as understood by the people where  toffee originated" and that "Toffee and other  things of that nature are of foreign origin and  are sweets or sweetmeat according to those  people and their nature cannot be changed  simply because their origin is different from  what is usually conveyed by the word ’mithai’  in this part of the country", the High Court  preferred to decide the issue by relying upon  how toffee is understood by the people of the  country where it originated rather than by  considering how "toffee" is understood in India  and more particularly in the State of U.P. As  held by this Court in CCE v. Parle Exports (P)  Ltd. (1989) 1 SCC 345 p. 357 para 17: "The words used in the  provision, imposing taxes or  granting exemption should be  understood in the same way in  which these are understood in  ordinary parlance in the area in  which the law is in force or by the  people who ordinarily deal with  them."

In that case, the question that had arisen for  consideration was whether non-alcoholic beverage  bases are food products or food preparations in  terms of Central Excise Notification No. 55/75 dated  1-3-1975. This Court observed that non-alcoholic  beverages are not understood in India as food  products or food preparations, though they might  have been regarded as such in foreign countries.  The High Court, therefore, should have applied the  test of popular parlance by finding out how toffee is  understood in the country and more particularly in  the State of U.P. No evidence was led by the State to  substantiate its case that "toffee" is considered as  sweetmeat either by the dealers in toffees or by the  consumers. On the other hand, evidence was led by  the appellant in CA No. 1692 of 1997 indicating that  toffee is not considered as sweetmeat, that they are  not sold in shops selling sweetmeats but are sold in  shops selling confectioneries or other types of goods,  and that the consumers do not buy toffees as

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sweetmeat or treat them as such. It was, however,  contended by the learned counsel for the State that  sometime before this exemption notification was  issued by the State, the Allahabad High Court had  in two cases held that toffee is a sweetmeat. But it  was so held in a different context and no evidence  was led by the State to show that thereafter, the  dealers in toffees and consumers started treating  them as sweetmeat. In the Hindi version of the  notification for the word sweetmeat the word  "mithai" is used. The word "mithai" has a definite  connotation and it can be said with reasonable  amount of certainty that people in this country do  not consider toffee as "mithai". The High Court  committed a grave error in holding that as some  manufacturers of toffees sell their products by  describing them as sweets it can be said that in  commercial circles toffee is known as sweetmeat."

If the ratio of the aforesaid judgment is properly  comprehended then Bubble-gum in the common parlance  cannot be construed as Mithai (Sweetmeat).  When we apply  common parlance test and in fact ask someone to bring the  sweets from the market, he will never bring Bubble-gum.  In  common parlance, even items of confectionery will not be  construed as sweetmeat (mithai).  In fact, Bubble-gum is not  an item for eating.  It is kept in the mouth and after chewing  the same is thrown out.  The Bubble-gum while kept in the  mouth by the children is also inflated as a balloon.  In fact, it  is used as a ’mouth freshener’.  It is not made only of sugar.  It  contains gum base, vexes etc. along with sugar.  

9.      According to Wikipedia, the encyclopedia, Bubble-gum  is a type of chewing gum especially designed for blowing  bubbles.   

10.     The Commissioner, Sales Tax, UP has relied on judgment  in Nutrine Chewing Gum Products Co. Pvt. Ltd., Arya  Nagar, Lucknow (STI 1985 page 21) and observed that:- "In chewing-gum, sugar is an almost  insignificant\005.over it is not eatable.  Its use is  entirely different. Children use it just for a fun and  athletes for controlling the breath.  In common  parlance also nobody treats it as an item of  confectionery.  I, therefore, hold that chewing-gum  is an unclassified item."          Thus, it is clear that Chewing-gum and Bubble-gum do not fall  in the category of Sweetmeat (mithai).  The learned appellate  Court has relied on the judgment dated 4.4.1998 delivered by  the Sales Tax Tribunal in Second Appeal No.449 of 1992 titled  Gum Products Pvt. Ltd., Ghaziabad v. Commissioner,  Sales Tax.  The Tribunal also relied on the judgment delivered  by the High Court in the case of Pappu Sweets & Biscuits v.  Commissioner of Trade Tax (1995 UPTC 1089); Annapurna  Biscuit Manufacturing Co. Ltd. v. State of UP (1975 UPTC  620) and the judgment of the Sales Tax Tribunal, Kanpur in  Gum India Ltd. Kanpur v. Commissioner of Trade Tax  (1996 STD Tribunal 124).  According to these judgments,  ’Chewing-gum and Bubble-gum, etc. are taxable as

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’sweetmeat’ and confectionery items.  The tribunal also  considered the judgment delivered in the case of Pappu  Sweets (supra).  

11.     The notification issued under UP Sales Tax Act, the  mithai (sweetmeat), cooked food, namkin etc. are under one  entry, but it does not mean that namkin and cooked food is  sweetmeat (mithai).  The copy of Part V & XI and VIII of the  Food Analysis Book which has been submitted, there is a  mention about several items like bread, rusk, foodmeat, white  bread, cream role ice-cream, cone, Bombay Halwa etc.  In this  one of items mentioned is Bubble-gum.  It does not mean that  Bubble-gum is a sweetmeat (mithai) or confectionery.

12.     The Tribunal clearly came to the conclusion that Bubble- gum is neither sweetmeat (mithai) nor confectionery.  The tax  is liable to be paid on Bubble-gum as an unclassified item.

13.     The respondent aggrieved by the said judgment of the  tribunal filed a revision petition before the High Court of  judicature at Allahabad.

14.     The High Court came to the specific finding that the  Bubble-gum cannot be treated as a sweetmeat but it is  certainly an item of confectionery.  In the impugned judgment,  the High Court gave no reasons for its finding.  The  respondent did not give any break up of the ingredients of  Bubble-gum.  It was never the case of the respondent that  Bubble-gum is a sugar product.  Confectionery is not even  mentioned in the notification.  The High Court ought to have  properly comprehended the object of the notification.   

15.     In the facts and circumstances, the High Court should  have applied common parlance test to determine proper  categorization of Bubble-gum. It may be pertinent to mention  that the respondent has not filed any appeal against the said  finding of the High Court that Bubble-gum is not a sweetmeat.  

16.     The appellant aggrieved by the judgment of the High  Court dated 9.11.2001 has preferred this appeal.  

17.     The dispute is confined to the assessment year 1994-95.   According to the respondent, Bubble-gum was covered by the  specific entry at Sl. No.48 of notification dated 7.9.1981 as  amended by notification dated 31.3.1992.  The said entry  no.48  reads as under: "Sweetmeats, namkins, cooked food, rewari, gajak,  biscuits, bread, cakes, pastries, buns, rusks and  sugar products, except any of the aforesaid goods  which are exempt under any other notifications  issued under UP Sales Tax Act."

18.     Learned counsel for the respondent made serious efforts  to demonstrate that the Bubble-gum should be classified in  the category of ’sweetmeat’.  He frankly conceded that the High  Court gave a specific finding that the Bubble-gum cannot be  treated as sweetmeat and that finding was not challenged by

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the respondent.  

19.     The learned counsel for the respondent submitted that  the Bubble-gum contains 60% sucrose by weight and it being  a product of sugar, it should come in the category of  sweetmeat.

20.     The respondent submitted that the expression ’sugar  products’ has not been defined.  It would mean and cover any  product which is very rich in sugar.  A product in which sugar  is predominant constituent over other constituents and which  does not have coverage by any other more specific heading is  clearly a sugar product.

21.     In Pappu Sweets (supra), this court in order to give  meaning to the notification issued by the State of Uttar  Pradesh has laid great emphasis on the common parlance test.   The court gave an apt illustration of a toffee.  Toffee in the  country of origin may be considered as sweetmeat but it  cannot be considered as mithai in this part of the country  (Uttar Pradesh).  Similarly, by no stretch of imagination, can  Bubble-gum be considered as mithai in the State of Uttar  Pradesh. Consequently, ’Bubble-gum’ is taxable as an  unclassified good.   

22.     These civil appeals are accordingly allowed and the  impugned judgment of the High Court is set aside.  In the  facts and circumstances, we direct the parties to bear their  own costs.