LexM/S TRIMURTHI FRAGRANCES (P) LTD. THR. ITS DIRECTOR SHRI PRADEEP KUMAR AGRAWAL versus GOVT. OF N.C.T. OF DELHI THROUGH ITS PRINCIPAL SECRETARY (FINANCE) AND ORS.
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A B C D E F G H 1046 SUPREME COURT REPORTS [2023] 7 S.C.R. M/S TRIMURTHI FRAGRANCES (P) LTD. THR. ITS DIRECTOR SHRI PRADEEP KUMAR AGRAWAL v. GOVT. OF N.C.T. OF DELHI THROUGH ITS PRINCIPAL SECRETARY (FINANCE) AND ORS. (Civil Appeal No. 8486 of 2011) MAY 04, 2023 [S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.] Central Sales Tax Act, 1956 – ss.14, 15 – Finance Act, 1988 – Central Excise Tariff Act, 1985 – Chapter 21, 24 of the Schedule – Additional Duties of Excise (Goods of Special Importance) Act, 1957 – Finance Act, 2001 – Delhi Sales Tax Act, 1975 – Tamil Nadu General Sales Tax Act, 1959 – Uttar Pradesh Trade Tax Act, 1948 – Taxability of pan masala or gutka/gutkha under the aforesaid State enactments – Whether pan masala was an exempted item, being “tobacco” – Held: The holding in Trimurti Fragrances (P) Ltd case that there is no conflict between the Agra Belting Works line of cases, and the Kothari Products Ltd. line of cases, concludes the question w.r.t the efficacy/validity of notifications introducing as entries in a Schedule(s) and subjecting them to tax, when those articles are part of the statute or are exempted from taxation – Assessees’ contentions fail on this point – Further, the CET Act itself made a distinction between pan masala, whether it contained tobacco or not and all forms of tobacco – Right from 1995, the distinction in the CET Act between pan masala (Chapter 21) and tobacco (Chapter 24) had been made – The definition of pan masala also clarified that despite one of its ingredients being tobacco, it would nevertheless be a separate article – Till 2001, “Pan masala” and chewing tobacco received different treatment – They are not interchangeable or synonymous expressions – Entry 2404 refers to chewing tobacco “including preparations commonly known as “Khara Masala”, “Kimam”, “Dokta”, “Zarda”, “Sukha” and “Surti”” – Gudaku and snuff are dealt with under a separate heading – The effect of inclusion of pan masala with tobacco in Chapter 24 and simultaneously that product’s exclusion from Chapter 21, as well as imposition of ADE with effect from 2001, on ‘pan masala containing tobacco’ meant that the product (i.e. pan masala without tobacco) went out for the [2023] 7 S.C.R. 1046 1046 A B C D E F G H 1047 first time of the reach of State sales tax – All along, goods and products described as pan masala and gutkha were included in Chapter 21 – Therefore, till 2001 and the introduction of ADE, these two products were covered by local or Sales tax levies – Before 2001, pan masala and gutkha fell within Chapter 21, as pan masala, regardless of whether they contained tobacco – Goods classifiable under Chapter 24 i.e. tobacco items were more general, also they did not include pan masala – Subsequent changes made introducing 2404.40 in the CET Act do not affect or change the CST Act – Thus, gutkha and pan masala are not covered under sub-heading 2404.40 so far as CST Act is concerned – Thus, the arguments of the assessees that the rate of local tax cannot exceed the limit under the CST Act, rejected. Disposing of the appeals, the Court HELD: 1.1 At the relevant time, ‘Pan Masala’ was described as a preparation containing betel nuts and any one or more other ingredients such as lime, katha, katechu, cardamom, copra, menthol and tobacco. This is the definition of Pan Masala under the CET Act which continued till 1995. Heading 21.06 covered ‘Pan Masala’ containing “lime, katha, katechu, cardamom, copra, menthol and tobacco” or any one or more of these ingredients. Chapter 24 dealt with tobacco and manufactured tobacco substitutes and the relevant sub-heading at that time was 2404.41 which deals with chewing tobacco, including preparations commonly known as khara masala, kimam, dokta, zarda, sukha and surti. Parliament Act 22 of 1995, substituted Note-3 to Chapter 21 of the CET Act. “Pan Masala” was described as “any preparation containing betel nuts and any one or more of the following ingredients, viz., lime, katha, katechu or tobacco, whether or not containing any other ingredients such as cardamom, copra and menthol”. The primary ingredient of pan masala therefore, is betel nut, which could be mixed with other ingredients in combination or in isolation. This position prevailed as on 01.03.1988. In 1995, the definition underwent a change. Betel nuts remained the essential ingredient along with “lime, katha or tobacco” together, or separately. Whether the product contained cardamom, copra, and menthol or not was i
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