Case Note & Summary
The case concerns the classification of saffron (kesar) under the Bombay Sales Tax Act, 1959 for the purpose of sales tax. The respondent-assessee, a registered dealer, purchased saffron from Kashmir and sold it in Maharashtra. On 1 December 1990, the assessee applied under section 52 of the BST Act to the Commissioner of Sales Tax seeking determination whether the sale of saffron was exempt from tax, with reference to a sale bill dated 23 November 1990 for 10 boxes of saffron sold to Puranchand & Sons, Kirana Merchants. The Commissioner, by order dated 28 March 1991, held that saffron is a culinary and flavouring essence covered by Entry 78 of Schedule C Part II to the BST Act, liable to tax at 15%. The assessee appealed to the Maharashtra Sales Tax Tribunal, which by order dated 30 September 1993 allowed the appeal, holding that saffron is an ayurvedic medicine in natural form covered by Entry 214 of the Notification issued under section 41 of the BST Act, liable to tax at 4%. The Commissioner then sought a reference to the High Court under section 61(1) of the BST Act. The High Court framed the question of law as whether the Tribunal was justified in holding that saffron is not a culinary and flavouring essence but an ayurvedic medicine in natural form. The High Court noted that the Tribunal had relied on the fact that saffron is used in ayurvedic preparations and is recognized as a medicine in the Ayurvedic Pharmacopoeia. The Court observed that the Commissioner's classification as culinary essence was not supported by evidence, whereas the Tribunal's finding was based on material on record. The High Court answered the question in the affirmative, in favor of the assessee and against the Revenue, holding that saffron is an ayurvedic medicine in natural form covered by Entry 214 of the Notification under section 41 of the BST Act, liable to tax at 4%.
Headnote
A) Sales Tax - Classification of Goods - Ayurvedic Medicine vs Culinary Essence - Saffron/Kesar - Entry 78 Schedule C Part II vs Entry 214 Notification under Section 41 Bombay Sales Tax Act, 1959 - The assessee sold saffron and sought determination whether it is exempt from tax. The Commissioner held it is culinary essence under Entry 78 liable at 15%. The Tribunal reversed, holding it is ayurvedic medicine in natural form under Entry 214 liable at 4%. The High Court upheld the Tribunal's view, noting that saffron is used in ayurvedic preparations and is not a culinary essence. Held that saffron is an ayurvedic medicine in natural form covered by Entry 214 of the Notification under section 41 of the Bombay Sales Tax Act, 1959, liable to tax at 4% (Paras 1-5).
Issue of Consideration
Whether saffron/kesar is a culinary and flavouring essence covered by Entry 78 of Schedule C Part II to the Bombay Sales Tax Act, 1959 liable to tax at 15% or an ayurvedic medicine in natural form covered by Entry 214 of the Notification issued under section 41 of the said Act liable to tax at 4%.
Final Decision
The High Court answered the question in the affirmative, in favor of the assessee and against the Revenue, holding that the Tribunal was justified in law in holding that saffron/kesar is not culinary and flavouring essence covered by Entry 78 of Schedule C Part II to the Bombay Sales Tax Act, 1959, but is an ayurvedic medicine in natural form covered by Entry 214 of the Notification issued under section 41 of the Bombay Sales Tax Act, 1959, liable to sales tax at 4%.
Law Points
- Classification of goods under sales tax law
- Interpretation of taxing entries
- Ayurvedic medicine vs culinary essence
- Natural form of medicine
