DECIDED BY: HIGH COURT OF BOMBAY, IN THE CASE OF: In Bloom Vs. CST APPEAL NO: SALES TAX REFERENCE NO. 4 OF 2006
IN REFERENCE APPLICATION NO. 88 OF 2002, DECIDED ON JULY 15, 2010
(Per S. J. Kathawalla, J.)
1. Heard learned counsel for the Petitioner as well as learned counsel for the Respondent.
2. This is a reference under section 61(1) of the Bombay Sales Tax Act, 1959 (“the BST Act” for short) made by the Sales Tax Tribunal, Mumbai (“the Tribunal” for short) to seek decision of this Court on the following substantial questions of law:
(a)Whether, on facts and circumstances of the case and on a true and correct interpretation of Schedule entry A36 appended to the Bombay Sales Tax Act, 1959, the Tribunal was legally justified in holding that the `Bouquet of fresh flowers’ is not covered by the said schedule entry A36 pertaining to `Natural flowers’ but it is covered by the Residuary Schedule entry CII152 and hence liable to tax @ 13% ?
(b)Whether, on facts and circumstances of the case and on a true and correct interpretation of Section 2(17) of the Bombay Sales Tax Act, 1959, the Tribunal was legally justified in holding that the activity of preparing bouquets from the natural flowers brings into existence commercially a different product and hence is a `manufacture’?
3. The Applicant M/s In Bloom is carrying on business as Florist and decorators and prepares bouquets from natural (fresh) flowers.
4. The Applicant in order to confirm the tax liability, on 22nd January, 1996, applied to the Commissioner of Sales Tax, Maharashtra State, Mumbai (the Commissioner) to determine the rate of tax on “fresh flowers bouquets”. Along with the Application, the applicant forwarded Invoice No.2790 dated 15.1.1996 by which he had sold fresh flowers bouquet for Rs.250/. The Commissioner passed an order declaring that “bouquet of fresh flowers” is covered by residuary entry CII152 and sales thereof is liable for the sales tax @ 13 paise in a rupee, provided that the dealer is not covered by exemption provided under notification entry J3 under Section 41 of the the BST Act.
5. The Applicant was of the view that the bouquet of fresh flowers is covered under Schedule Entry A36 of the BST Act and is exempted from the tax liability under Section 5 of the BST Act. The Applicant, therefore, being aggrieved by the order of the Commissioner, preferred an appeal before the Tribunal. The Tribunal after hearing both the sides, by its judgment dated 7th June, 2002, confirmed the order of the Commissioner of Sales Tax by dismissing the appeal. The Applicant, not being satisfied with the said judgment, preferred an Application under Section 61(1) of the Bombay Sales Tax Act, 1959, requesting the Tribunal to refer certain questions of law to this Court for decision. In view thereof, the above Reference was made by the Tribunal raising the aforesaid questions of law seeking decision of this Court.
6. The learned Counsel appearing for the Applicant submitted that the bouquets are merely a bunch of flowers tied together and therefore covered by Schedule Entry A36 and therefore not eligible to tax. In support of his submission, he relied on the decision of the Hon’ble Calcutta High Court in the case of Sudhir Ch. Mukherjee Vs. Additional Commissioner, Commercial Taxes, West Bengal and others , reported in 37 STC 554, wherein it is held that preparation of bouquets, garlands etc. is not a manufacturing activity.
7. Mr. V. A. Sonpal, appearing for the Respondent submitted that preparation of bouquets would certainly amount to a manufacturing activity. He pointed out that the definition of the term `manufacture’ at the relevant time, under section 2(17) of the BST Act was as under:
“2(17)”manufacture” with all its grammatical variations and cognate expressions includes:
(a) producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating or adapting any goods, or using or applying such process, as the State Government may, having regard to the impact thereof on any goods or to the extent of alteration in the nature, character or utility of any goods brought about by such process, by Notification in the Official Gazette, specify;
(b) cutting, sawing, shaping, sizing or hewing of timber, and
(c) refining of oil
(d) lacquering of polyester film but does not include such manufacture or manufacturing processes, as may be prescribed.”
8. Mr. Sonpal submitted that the decision of the Hon’ble Calcutta High Court in the case of Sudhir Mukherjee (supra) would not apply to the present case because the Calcutta High Court treated the preparation of bouquets, garlands etc. as not a manufacturing activity in the absence of clear definition of the term `manufacture” in the Calcutta Sales Tax Act. Mr. Sonpal further submitted that the Tribunal, by its order dated 7.6.2002 was correct in holding that the material required for preparing bouquets can be listed as– fresh flowers, Chinese rose, golden grass, earthen pot or basket, silver foil, chamki etc. The height of the bouquet also varies from 2 feet to 5 feet. It shows that though bouquets are made by using fresh flowers and other decorative material, they are not sold as mere flowers. A layman if asked to bring the fresh flowers will never bring bouquet and vice versa. In respect of use also, the concept of the common man about fresh flowers and bouquet is different. A common man will never use bouquet while performing pooja. Thus applying the common parlance test, the bouquets is a different commercial commodity than fresh flowers. The preparation of bouquets is surely a manufacturing activity and hence should be covered by the residuary entry CII152 and not by entry A36.
9. We have considered the above submissions advanced on behalf of the Applicant as well as the Respondent. In a query put by this Court to Mr. Sonpal, the learned advocate appearing for the Respondent, as to what is the definition of a “flower bouquet”, Mr. Sonpal has tendered a list of definitions of different bouquets like “flower bouquet”, “fruit bouquet”, “candy bouquet”, “kitchen bouquet” etc. The definition of “flower bouquet” found in the said list is as under:
“Flower Bouquet: An arrangement of cut flowers.”
10. Schedule entry A36 reads: “Natural flowers including Mahua flowers”. If the `flower bouquet’ as submitted by the learned Advocate for the Respondent is an arrangement of cut flowers, such arrangement of cut flowers by itself would not convert the said flowers into a different commercial commodity nor will it amount to an activity which would have an impact on the nature of the goods and will therefore not fall within the definition of the word “manufacture”. Since bouquet of fresh flowers prepared using golden grass, earthen pot or basket, silver foil, chamki, ribbons and other decorative material, not being a subject matter of dispute involved herein, we do not propose to go into the question whether such change or transformation in substance qua the fresh flowers would fall within the definition of the term “manufacture”. Each product will have to be examined on its own facts and determined for the purpose of its tax ability.
11. In the instant case the invoice submitted by the applicant and on the basis of which, the decision has been given by the Tribunal shows description of the goods as “fresh flowers bouquet”. We, considering the simple arrangement of fresh flowers, answer both the questions set out in Paragraph2 of this judgment in the negative i.e. in favor of the Applicant and against the Revenue.
12. Order accordingly.