CA Sandeep Salve
In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994, the Central Government has from time to time issued various notifications to exempt certain taxable services leviable thereon under section 66B of the said Act.
Entry 21 of the notifications number 25/2012-ST dated 20th June, 2012provides exemption to services provided by a goods transport agency. The service tax official dispute the exemption provided for transportation of foodstuff. This article will help to understand the meaning and interpretation of the word “Foodstuff” and the relevant provisions for exemption for transportation of foodstuff.
The relevant extract of the provisions for exemption for services provided by a goods transport agency are as follows :
Notification No. 25/2012-ST with effect from 1st day of July, 2012
21. Services provided by a goods transport agency by way of transportation of –
(a) fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;
(b) goods where gross amount charged for the transportation of goods on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or
(c) goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty;
The government has amended the above entry by way of notifications from time to time. The amended entries are as follows :
Notification No. 3/2013-ST with effect from 1st day of April, 2013
Entry 21 after being amended by above notification stands as follows :-
“21. Services provided by a goods transport agency, by way of transport in a goods carriage of,-
(a) agricultural produce;
(b) goods, where gross amount charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;
(c) goods, where gross amount charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred fifty;
(d) foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages;
(e) chemical fertilizer and oilcakes;
(f) newspaper or magazines registered with the Registrar of Newspapers;
(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
(h) defence or military equipments;”
It can thus be observed that the intention of the Legislature is not to levy service tax on transportation of foodstuff for the period 1st day of April 2013 to 31st March 2015.
In the above backdrop, the question that seeks an answer is what is a foodstuff?
The term “foodstuff” is not been defined under the Finance Act, 1994. Thus, reference needs to be made to judicial pronouncements and dictionary meanings.
The Supreme of India in the case of Gulati & Co (2014-TIOL-31-SC-CT) has explained the meaning of “foodstuff”. The observations of the Apex Court are as follows :
i. Para 13 :By “foodstuffs” is meant food of some kind.
ii. Para 14 : The meaning of “foodstuff” according to lexicographers is as follows:
a) Oxford Advanced Learner’s Dictionary: “a substance suitable for consumption as food”
b) Collins English Dictionary: “any material, substance, etc, that can be used as food”
c) Macmillan English Dictionary for Advanced Learners: “a type of food”
iii. Para 15 :The aforesaid clarifies that the expression “foodstuff” in itself does not constitute a class of products but only encompasses the products which fall into the category of “food”. This necessitates examination of the term “food” to ascertain import of “foodstuffs”.
iv. Para 16: The Shorter Oxford English Dictionary (Third Edition) defines “food” as “what one takes into the system to maintain life and growth”. According to Webster’s Third New International Dictionary, “food” means “material consisting of carbohydrates, fats, proteins and supplementary substances, that is taken or absorbed into the body of an organism in order to sustain growth, repair, and all vital processes and to furnish energy for all activity of the organism; something that nourishes or develops or sustains”. Therefore, “foodstuff” would refer to anything with a nutritive value which is consumed for growth or sustaining ones life.
In the case of K. Janardhan Pillai &Anr. Etc. (AIR 1981 SC 1485),the Supreme Court observed the following :
“It is well known that the food eaten by human beings consists of cereals like wheat, rice or other coerce grains, pulses, oilseeds, vegetables, sugar, fruits and nuts, animal foodstuffs and sea food like meat, beaf, mutton and fish and dairy products like milk, butter, eggs etc. According to Webster’s Third New International Dictionary, the word ‘food’ means ‘fodder’ also. One of the meanings of the word ‘food’ given in that Dictionary is ‘material consisting of carbohydrates, fats, proteins and supplementary substances (as minerals vitamins) that is taken or absorbed into the body of an organism in order to sustain growth, repair, and all vital processes and to furnish energy for all activity of the organism’. In the same Dictionary ‘foodstuff’ is defined as ‘a substance with food value’ and ‘the raw material of food before or after processing’. One of the usages of the said word is given as ‘a bountiful crop of cereal foodstuffs’. Therefore, ‘foodstuff’ need not necessarily mean only the final food product which is consumed. It also includes raw food articles which may after processing be used as food by human beings”.
In view of the above referred to judgements of the Supreme Court, food and foodstuff are not different terms.
Foodstuff is food of some kind. It includes raw food articles, processed food and final food products. It also includes meat, dairy products, animal foodstuff and fodder.
In short, any food is a foodstuff.