Sales Tax Act (III of 1951)---

----S. 7---S. R. O. 7, dated 27-6-1951 [as amended by S.R'O. 475(K), dated 14-6-1965]---S.R.O. 9, dated 27-6-1971 [as amended by S.R.O. 823(1)/73, dated 9-6-1973]---Ice cream, a mixture of milk and cream, duly sweetened with traces of powder and flavour refrigerated to semi-solid state was not exempt from Sales Tax under Item 22 of Notification .No. 7, dated 27-6-1951 [as amended].

Muhammad Ilyas Khan for Petitioner.

Date of hearing: 26th January, 1993.

ORDER

M. MAHBOOB AHMAD, C.J: --This reference has been made by the learned Income Tax Appellate Tribunal, Lahore, requesting this Court to answer the following question of law said to have arisen out of the order of the Income Tax Appellate Tribunal, dated 7th June, 1978:---

"Whether on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that Ice cream, a mixture of milk and cream, duly sweetened with traces of powder and flavour refrigerated to semi-solid state was not exempt from sales tax under Item 22 of Notification No. 7, dated 27-6-1951 as amended by SRO 475(K), dated 14-6-1965 Item No. 106 of Sales Tax Notification No.9, dated 27-6-1971 as amended by SRO 823(1)/73, dated 9-6-1973?"

2. The facts necessary for the purposes of this reference, briefly, stated are that the assessee M/s. Elahi Brothers Limited, Lahore, manufacturing Ice cream claimed exemption on the said Item on the basis of Notification No. 7, dated 27-6-1951 as amended by SRO 475(K), dated 14-6-1965, and sales tax Notification No. 9, dated 27-6=1971, as" amended by SRO 823(1)/73, dated 9-6-1973. The assessee claimed that Ice cream is a mixture of milk and cream which has been only sweetened with traces of powder and flavour and refrigerated to semisolid state and, therefore, exempt under the aforementioned notification. The department, on the other hand, canvassed that the Ice cream is a totally different product though made with cream and milk and, therefore, the exemption cannot be allowed. Learned Income Tax Appellate Tribunal, agreeing with the contention of the department, rejected the appeal of the assessee vide order, dated 7-6-1978. The assessee made an application for reference on which the learned Tribunal referred the aforementioned question to this Court for rendering opinion.

3. No one has appeared on behalf of the assessee to contest this reference. The learned counsel for the department has reiterated the contention made by the department before the learned Income Tax Appellate Tribunal and has further submitted that the learned Tribunal in its earlier orders also gave the same view and that the said decisions were not agitated by the assessee.

4. We find force in submission made by the learned counsel for the department and we are of the view that though Ice cream is a product of milk and cream but comes into being through a mechanical process and takes a different shape. It can, therefore, by any stretch of imagination be termed as fresh milk or cream, which could be given exemption under the notification aforementioned.

5. The answer to the question, therefore, is in the affirmative, i.e. that on the facts and in the circumstances of the case the Tribunal was legally justified in holding that Ice cream, a mixture of milk and cream duly sweetened with traces of powder and flavour refrigerated to semi-solid state was not exempt from sales tax under Item 22 of Notification No.7, dated 27-6-1951 as amended by SRO 475(K), dated 14-6-1965 Item No.106 of Sales Tax Notification No.9, dated 27-6-1971 as amended by SRO 823(1)/73, dated 9-6-1973.

M.BA./E-24/L

Order accordingly.