Commissioner of Sales Tax Maharashtra State Vs Nestle India Limited (Bombay High Court)
This reference under Section 61 of the Bombay Sales Tax Act, 1959 was made by the Maharashtra Sales Tax Tribunal to the High Court for determining whether the product “Coffee and Instant Drinks Nescafe Premix,” sold through a specific invoice dated 7 February 1998, was correctly classifiable under Entry 18(2) of Schedule C-II or under Entry 3 of the same Schedule. The facts show that the assessee dealt in various consumer products, including Nescafe premix used in vending machines. The assessee sought determination of the applicable tax rate, arguing that the product was known in common parlance as “instant coffee” since it prepared a coffee beverage simply by adding hot water, and therefore fell under Entry C-II-3 attracting 8% sales tax. The Commissioner rejected this view, holding that it was not instant coffee because it was a mixture containing only 8.5% soluble coffee powder along with sucrose, partially skimmed milk powder, and maltodextrin. According to the Commissioner, it was a powder from which a non-alcoholic beverage was prepared and thus fell under Entry C-II-18(2) attracting 13% tax under the relevant period.
The Tribunal, hearing the assessee’s appeal, relied on a Supreme Court judgment which held that the quantity of an ingredient is not decisive in classification issues. It set aside the Commissioner’s order and held that the product fell under the specific entry for “coffee” and “instant coffee.” The matter was then referred to the High Court for resolution.
