ASSOCIATED MANUFACTURING AND PACKING CO. LTD. VS COMMISSIONER OF INCOME-TAX
1991 P T D 352
[Karachi High Court]
Before Saleem Akhtar and Muhammad Aslam Arain, JJ
ASSOCIATED MANUFACTURING AND PACKING CO. LTD.
versus
COMMISSIONER OF INCOME-TAX
S.T.R. No.35 of 1983, decided on 23/01/1991.
Sales Tax Act (III of 1951)---
----S. 7---Notification No. S.R.O. 475(K)/65, dated 14-6-1965---Exemption-- Jelly---Kinds of---Whether "jelly crystal" fell within the meaning of item No.49 inserted by Notification No. S.R.O. 475(K)/65, dated 14-6-1965 and exempt from sales tax.
Jelly is an article of food in a semi-transparent and elastic consistence form prepared from gelatine or mixed fruit, fruit juice or other vegetable substance. Therefore jelly is of two types, one which is entirely made of gelatine in which fruit, juice or vegetable is not added and the other type is prepared from fruit and fruit juice which are mixed for preparing such jelly. According to the admission of the assessee in the jelly prepared by it which is named as jelly crystal fruit, fruit juice or vegetable are not used. So it is made mainly of gelatine and falls in the category of jelly in which fruits and fruit juice are not used. Item 49 refers to fruit and vegetable which are preserved, canned or processed. Therefore, the main ingredient of items of food which are covered by item 49 are processed, canned or preserved fruit or vegetable. Where by any process any food is prepared whose main ingredient is fruit or vegetable it will fall under item 49. If no fruit or vegetable is used it will not be covered by item 49. Therefore on the. basis of admission of the assessee that jelly crystal was prepared by gelatine and fruits or vegetables were not used for its preparation no exemption could be granted to the assessee on its sale.
Encyclopaedia Britannica; Oxford English Dictionary and New Lexicon Webster's Dictionary of English Language ref.
Nemo for Applicant.
Shaikh Haider for Respondent.
Date of hearing: 23rd January, 1991.
JUDGMENT
SALEEM AKHTAR, J: --This reference relates to the assessment years 1969-70, 1970-71, 1971-72 and 1972-73 in respect of which one common question has been referred which reads as follows:--
"Whether the Income Tax Appellate Tribunal was justified in holding that jelly-crystal did not fall within the meaning of item No.49 inserted by Notification No. S.R.O. 475 (K)/65 dated 14th June, 1965."
The applicant is a company engaged in manufacture and sale of custard powder, vimto cordial, cream powder and jelly crystal. The applicant claimed exemption from sales tax on sales of jelly which was allowed by the Sales Tax Officer. Item 49 of Notification No. S.R.O. 475(K)/65 was exempted from sales tax which reads as follows:--
"No.49. Fruits and vegetables preserved, canned or processed."
The applicant filed appeal before the Assistant Appellate Commissioner which was allowed. The department filed further appeal before the Tribunal which was allowed and the exemption claimed by applicant was refused. We have heard Mr. Sheikh Haider Advocate. The applicant and its Advocate have remained absent. The main question is whether crystal jelly is covered by item 49 reproduced above. The applicant manufactures jelly crystal. The Tribunal has recorded its finding in the following manner:--
"The learned counsel of the respondent also candidly admitted that the main constituent of jelly-crystals was gelatine and that fruits or vegetables did not play any part in its manufacture."
Therefore in jelly crystals manufactured by the petitioner on its own admission fruits and vegetables are not used in any form whether preserved, canned or processed.
In Encyclopaedia Britannica jams and jellies have been described as follows:--
"Jams and jellies are preserves containing about, two-thirds their weight of sugar. All kinds of edible fruit can be made into jam but for the preparation of jellies only those fruits are suitable which contain a sufficient proportion of a chemical substance called pectin, on which the gelatinizing power of fruit depends ....
Jellies.---The gelatine must first be soaked about 20 minutes in water, and then melted with a small amount of water by stirring on top of fire. Water should then be added in the proportion of about one pint to one ounce of gelatine, but certain fruits, such as the lemon, require more gelatine ....
For gelatine jellies, one pint of liquid requires about one tablespoon of the usual granulated gelatine. This is soaked five minutes in double its own quantity of cold water, and dissolved in a little hot liquid before stirring into the mixture. The use of manufactured gelatine jellies, already flavoured and needing only the addition of hot water, is wide and increasing.
According to the Oxford English Dictionary Jelly means:--
"An article of focal, consisting chiefly of gelatine, obtained from various animal tissues, as skin, tendons, bones, etc., by boiling and subsequent cooling, having a characteristic soft stiff homogeneous consistence, and usually semi-transparent. Also, in later use, a preparation of the juice of fruit, or other vegetable substances, thickened into a similar consistence."
In the New Lexicon Webster's Dictionary of the English Language the meaning of the jelly has been given as:--
"A semi-transparent, soft food preparation, having an elastic consistency due to the presence of gelatine or other gelatinous substances, used e.g. as a garnish or preservative for meats, or with the addition of fruit juices as a dessert/a food prepared by boiling fruit containing pectin with sugar and allowing the juice to cool/any substance resembling this in consistency."
Jelly is an article of food in a semi-transparent and elastic consistence form prepared from gelatine or mixed fruit, fruit juice or other vegetable substance. Therefore jelly is of two types; one which is entirely made of gelatine in. which fruit, juice or vegetable is not added and the other type is prepared from fruit and fruit juice which are mixed for preparing such jelly. According to the admission of the applicant in the jelly prepared by it which is named as jelly crystal fruit, fruit juice or vegetable are not used. So it is made mainly of gentaline and falls in the category of jelly in which fruits and fruit juice are not used. Item 49 refers to fruit and vegetable which are preserved, canned or processed. Therefore, the main ingredient of items of food which are covered by item 49 are processed, canned or preserved fruit or vegetable. Where by any process any food is prepared whose main ingredient is fruit or vegetable it will fall under item 49. If no fruit or vegetable is used it will not be covered by item 49. Therefore on the basis of admission of the applicant that jelly crystal is prepared by gelatine and fruits or vegetables are not used for its preparation no exemption can be granted to the applicant on its sale. We therefore answer the question in the affirmative.
M.B.A./A-996/KReference answered in the affirmative.