1. Common question arises for consideration in these writ petitions filed under article 226 of the Constitution of India, and they are, therefore, heard and disposed of by this common order. In order to appreciate the common question, we first propose to notice the facts in Writ Petition No. 25396 of 1982, W.P. No. 11441 of 1983 and W.P. No. 12224 of 1982 as illustrative only.
2. The petitioner in W.P. No. 25396 of 1982 is a dealer in fertilisers, insecticides and certified seeds of maize, bajra, jowar, etc., in Krishna Nagar, Sandur Taulk. He purchases this seeds from others. He is registered dealer under the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act). The Assistant Commercial Tax Officer, Hospet, respondent 3, by this order made on 22nd November, 1980, determined the gross turnover for the period from 1st April, 1979, to 31st March, 1980, i.e., for the assessment year 1979-80 at Rs. 60,000 but allowed exemption treating the seeds as falling under item No. 9 in Fourth Schedule to the Act.
3. The Commissioner of Commercial Taxes, Karnataka, Bangalore, respondent 1, by a circular No. 39 of 1981-82 (annexure A) dated 9th December, 1981, gave a clarification that the term 'cereals' in item No. 9 means 'edible grains, a grain used as food, restricted its applicability only to such of the grains which are edible and are fit for human consumption' and 'seeds of grains which are non-edible being coated with poisonous preservatives' during the different periods as under :
(i) at 1 1/2 per cent multi-point under the provision to sub-section (1) of section 5 during the period up to 7th September, 1976;
(ii) at 4 per cent multi-point under sub-section (1) of section 5 from 8th September, 1976, to 14th November, 1981;
(iii) at 2 per cent multi-point under sub-section (1) of section 5 from 15th November, 1981, onwards by virtue of Government Notification No. FD165CSL80 dated 10th November, 1981.
4. Thereafter the Assistant Commissioner of Commercial Taxes (Assessment), Bellary, respondent No. 2, served a notice dated 17th March, 1982, under section 21(4) of the Act, on the assessee on 23rd March, 1982, proposing to suo motu revise the order of the Assistant Commercial Tax Officer and bring to tax the entire turnover and called upon the assessee to file objections, if any, within seven days. The assessee did not file any objections and the second respondent set aside the order made by respondent 3 on 22nd November, 1980, and subjected the seeds to multi-point levy under section 5(1) of the Act by his order (annexure B). Respondent 3 served on the assessee notice of demand (annexure C) calling upon him to pay the amounts assessed under annexure B. the petitioner in this writ petition has prayed for quashing annexures A, B and C.
5. The petitioner in W.P. No. 11541 of 1983 is a dealer in fertilisers, insecticides and sowing seeds, i.e., certified seeds. He purchases the seeds from other dealers. He is a registered dealer under the Act. For the assessment year 1978-79 the Commercial Tax Officer, Nippani, determined the gross turnover of certified seeds at Rs. 15,068 but allowed exemption treating the certified seeds at falling under item No. 9 of the Fourth Schedule. Thereafter the Deputy Commissioner of Commercial Taxes, Belgaum Division, respondent 2, issued a notice (annexure B) dated 22nd February, 1983, under section 21(4) of the Act proposing to revise the order of assessment passed by the Commercial Tax Officer and to levy sales tax on the turnover of certified seeds of Rs. 15,068 at 4 per cent under section 5(1) of the Act and also to levy surcharge with effect from 1st April, 1979, and called upon the petitioner to appear before him on 7th March, 1983, to put forth his objections if any. The petitioner in this writ petition has prayed for quashing annexure A, the circular dated 9th December, 1981, issued by respondent 1 and a direction to respondent 2 not to levy tax at 4 per cent.
6. The petitioner in W.P. No. 12224 of 1982 is a dealer in fertilisers, sowing seeds, insecticides, etc. He purchases seeds within the State from other dealers and sells the same to others in the course of business. He is carrying on the business in the name of 'Manjunatha Fertilisers'. The Assistant Commercial Tax Officer, Chitradurga, respondent 2, who is the assessing authority concluded the assessment under the Act for the period from 23rd March, 1981, to 28th October, 1981, and passed an order (annexure B) assessing him to tax under section 5(1) of the Act at 4 per cent on the total turnover of Rs. 36,000. The petitioner's case is that the seeds are cereals and tax is leviable at single point under section 5(4) of the Act and he, being a second dealer, is not liable to be taxed again. The petitioner has challenged both annexures A and B.
7. 'Certified seeds' (hereinafter referred to as 'seeds'), it was contended on behalf of the assessees, are 'cereals' and are, therefore, not subject to multi-point tax and the assessees being purchasers from other dealers, they are not liable to be taxed again. According to the learned counsel for the Revenue, it is only 'cereals' that the subject to single point tax and the certified seeds which are not 'cereals' are subject to point tax under section 5(1) of the Act and not single point tax.
8. The question that arises for our consideration in these writ petitions, therefore, is 'Whether the terms 'cereals' in the Second and Fourth Schedules to the Act takes within its meaning 'seeds' ?' If seeds of paddy, ragi, jowar, maize, etc., are 'cereals' then they are goods in respect of which a single point tax is leviable and if they are not 'cereals', then they are goods in respect of which a multi-point tax is leviable.
9. Section 5 of the Act is the charging section. The relevant part of section 5 prior to 7th September, 1976, reads thus :
'5. Levy of tax on sale or purchase of goods. - (1) Every dealer shall pay for each year tax on his taxable turnover at the rate of four per cent :
Provided that if and to the extent to which such turnover relates to -
(i) pulses, including their dhals, flour and husks, wheat (including atta, maida, suji and bran), rice (including parched rice and beaten rice and bran), ragi, jola, maize, bajra, navane, and samey (samey [Words in Kannada script are transliterated here]), the tax shall be calculated at the rate of one and half per cent of such turnover;
(ii) gunny bags, bardans (including batars), hessian cloth and gur (jaggery) of tax shall be calculated at the rate of two per cent of such turnover.
10. Parliament amended section 14 of the Central Sales Tax Act, 1956, by the Central Sales Tax (Amendment) Act, 1976 (103 of 1976), with effect from 7th September, 1976, and declared 'cereals' as one of the goods of special importance. Section 14(1) after 7th September, 1976, reads :
'Section 14. It is hereby declared that the following goods are of special importance in inter-State trade or commerce :-
(i) cereals, that is to say, -
(i) paddy (Oryza sativa L.);
(ii) rice (Oryza sativa L.);
(iii) wheat (Triticum vulgare, T. compactum, T. sphaerococcum, T. durum, T. aestivum L., T. dicoccum);
(iv) jowar or milo (Sorghum vulgare Pers);
(v) bajra (Pennisetum typhoideum L.);
(vi) maize (Zea mays D.);
(vii) ragi (Eleusine coracana Gaertn);
(viii) kodon (paspalum scrobiculatum L.);
(ix) Kutki (Panicum miliare L.);
(x) barley (Hordeum vulgare L.).'
11. The State Legislature gave effect to section 15 of the Central Sales Tax Act, 1956, by enacting the Karnataka Sales Tax (Fourth Amendment) Act, 1976 (Act 78 of 1976), with effect from 7th September 1976. By this amending Act, in section 5 of the Act for the proviso to sub-section (1) the following proviso was substituted, namely :-
'Provided that if and to the extent to which such turnover relates to gur (jaggery) gunny bags, bardans (including batars) and hessian cloth, the tax shall be calculated at the rate of two per cent of such turnover.'
Second Schedule was amended substituting serial Nos. 137 and 138 by the following entries, namely :-
'137. Cereals (whether with or without husk) other than Four per those mentioned in Sl. No. 9 of the Fourth Schedule. cent 138. Flour and husks of pulses, atta, maida, soji and bran Four of wheat, parched rice, beaten rice and rice bran, per cent. soji, maida, atta flakes and bran of maize. and the Fourth Schedule was also amended substituting for the entries relating to serial Nos. 8, 9 and 10 the following entries : '8 Crude oil as specified in Sale by the first or Four per clause (iic) of section 14 earliest of successive cent. of the Central Sales Tax dealers in the State Act, 1956. liable to tax under this Act. 9 Cereals, that is to say, Sale by the first or Four per rice, wheat, jowar or milo, earliest of successive cent. bajra, maize, ragi, kodan, dealers in the State kutki and barley. liable to tax under this Act. 10 Pulses. ......... .........'
By the Karnataka Sales Tax (Amendment) Act, 1978 (Act No. 18 of 1978), in the entry to serial No. 9 in column 2, for the word 'rice' the words 'paddy and rice' were substituted with effect from 1st September, 1978.
12. The words 'that is to say, paddy and rice, wheat, jowar or milo, bajra, maize, ragi, kodon, kutki and barley' after the term 'cereals' in item No. 9 in the Fourth Schedule are apparently meant to exhaustively enumerate the kinds of goods coming within the meaning of the term 'cereals'. In other words, it is only the cereals which are specifically enumerated that are included in item No. 9 of the Fourth Schedule [see State of Tamil Nadu v. Pyare Lal Malhotra : 1983(13)ELT1582(SC) ]. All cereals other than those specifically enumerated in item No. 9 of the Fourth Schedule are included in item No. 137 of the Second Schedule. Both in item No. 9 of the Fourth Schedule and item No. 137 of the Second Schedule, the taxable goods or commodities included are 'cereals'.
13. One of the goods that is declared by section 14 of the Central Sales Tax Act, 1956, is 'cereals'. It is these cereals that are included in Schedules II and IV to the Act. The term 'cereals' is not defined either in the Central Sales Tax Act, 1956, or the Act.
14. The goods, on the sales of which a single point tax is leviable on the first or earliest of successive dealer under section 5(3)(a), are included in the Second Schedule, the goods in respect of which a single point tax is leviable under section 5(3)(b) are included in the Third Schedule and the declared goods in respect of which a single point tax is leviable under section 5(4) are included in the Fourth Schedule. The goods exempted from tax are included in the Fifth Schedule.
15. The tax leviable under section 5(1) of the Act was reduced from 4 per cent to 2 per cent for a period of one year with effect from 15th November, 1981, by a Notification No. FD165CSL80 dated 10th November, 1981, and the tax leviable on certified and treated seeds of pulses and cereals marked poison is completely exempted by a Notification No. FD87CSL82 dated 3rd August, 1982.
16. The goods in respect of which tax was leviable under section 5(1) prior to 7th September, 1976, are pulses, wheat (including atta, maida, soji and bran), rice (including parched rice and beaten rice and bran), ragi, jola maize, bajra, navane and samey (samey [Words in Kannada script are transliterated here]). After 7th September, 1976, section 14 of the Central Sales Tax Act, 1956, declared cereals as one of the goods of special importance in inter-State trade or commerce. To give effect to section 15 of the Central Sales Tax Act, the State Legislature with effect from 7th September, 1976, shifted cereals and pulses to Schedules II and IV. What is shifted, therefore, is not all the goods specified in section 5(1) of the Act, but only goods that are cereals. We do not, therefore, accept the submission made on behalf of the assessees that the very goods in respect of which sales tax was leviable under section 5(1) are shifted to Schedules II and IV with effect from 7th September, 1976, and single point tax is, therefore, leviable on all those goods.
17. As the term 'cereals' is not defined in the Central Sales Tax Act, 1956, or the Act, the learned counsel for the assessees invited our attention to the definition of the term 'cereals' in the dictionaries.
18. In the Mysore University English-Kannada Dictionary, 'cereal' means 'Dhanyadha aharada khalugalu manushyara aharahkagi upagogisuva dhanyakhalu ghodi jola athava ithara dhanya dinda madida thindi.' [Words in Kannada script are transliterated here]
19. Shorter Oxford English Dictionary defines the terms as : 'cereals' pertaining to cereal ...... or pertaining to corn or edible grain. Any grasses which are cultivated for their seed as human food; commonly comprised under the name of corn or grain. Words and phrases defines the term 'cereal' as a prepared food stuff or grain as oatmeal or flaked corn used as a breakfast food. Webster's Third New International Dictionary defines the term ''cereals' relating to grain or to the plants that produce it : made of grain ................. a plant (as a grass) yielding farinaceous seeds suitable for food (as wheat, maize, rice); also, the seeds or grains so produced either in their original state or commercially prepared; a prepared foodstuff of grain (as oatmeal or corn flakes) used specially as a breakfast food.'
20. Encyclopaedia britannica (Volume 5 at page 203) explains cereals thus :
'Cereals, of grains, are members of the grass family that are cultivated primarily for their starchy seeds (technically dry fruits), which are used for human food, feed for livestock, and as a source of industrial starch. Wheat, rice, maize (called corn in the U.S. and Canada), rye, oats, barley, sorghum, and some of the millets are the common cereals.
* * * Wheat, rice, and rye are grown primarily for consumption as human food, while much of the maize, barley, oats and sorghum grown in North America, Europe, and Australia is fed to livestock to produce meat, dairy, and poultry products.'
21. According to the dictionary meaning 'cereals' mean a grain or a plant of the grass family (like wheat, rice, maize, ragi, jowar, etc.) yielding starchy seeds - technically known as dry fruits - suitable for and used as, food for man and livestock. They are also used as a source of industrial starch. Wheat, rice, maize, ragi, jowar, etc., are primarily grown as human food and are known as foodgrains; prepared food stuffs of grains (as oatmeal or cornflake) used as breakfast food is also cereal. In North America, Europe and Australia, much of the maize, barley, oats and sorghum are fed to the livestock to produce meat, dairy and poultry products. The dictionaries give all shades of meaning of the words 'cereals'.
It was argued on behalf of the assessees that cereal is essentially a 'seed' and only because it is used to be a 'seed'. It was also argued that this cereal which is a seed is subjected to some processing to preserve it and to improve its genetic qualities and by this process, the cereal does not become a separate commercial commodity but continues technically, scientifically and botanically the same commodity. It was further argued that the use to which the cereal is put to is a determining factor in interpreting the term 'cereal'.
22. At this stage, we may with advantage, refer to the meaning of the word 'seed' in the dictionaries.
In the Mysore University English-Kannada Dictionary 'seed' is 'Bithane bija (bithane) kalu.'
In the Shorter Oxford English Dictionary 'seed' is that which is or may be sown, the ripe (ovules) of the plant or plants as collected for the purposes of being sown.
In Webster's Third New International dictionary 'seed' is something that is sown or to be sown.
23. Parliament has enacted the Seeds Act (54 of 1966) for regulating the quality of certain seeds for sale and for matters connected therewith. Under this Act 'seed' means any of the following classes of seeds used for sowing or planting :
(i) seeds of food crops including edible oil seeds and seeds of fruits and vegetables;
(ii) cotton seeds;
(iii) seeds of cattle fodder;
(iv) jute seeds.
This Act provides for the Constitution of Central Seed Committee to advise the Central and State Governments, the Central Seed Laboratory and State Seed Laboratories. This Act empowers the Central Government, if it is of opinion that it is necessary or expedient to regulate the quality of seed of any kind or variety to be sold for purposes of agriculture, to declare such kind or variety to be a notified kind and variety for the purpose of this Act and also to specify the minimum limits of germination and purity with respect to any such seed, and the mark or label to indicate that such seed conforms to the minimum limits of germination and purity specified and the particulars which such mark or label may contain. The Act further regulates the sale of notified kinds or varieties of seeds, for constitution of the Certification Agency and the Central Seed Certification Agency and the Central Seed Certification Board, for the grant of certificate to seeds conforming to the prescribed standards including the minimum limits of germination and purity, for revocation of certificates so given. The Act also provides for the appointment of Seed Analysts and Seed Inspectors, for taking of samples of the notified kind or variety of seed from the dealer, etc., for analysing the sample. A contravention of the provisions of the Act is also made penal. The object of the Act, therefore, is to ensure that quality seeds or certified seeds are made available to the growers. The assessees are all dealers in certified seeds. These are seeds in respect of which the Central Government under the Seeds Act controls the limits of germination and purity, as also specified the mark or label to indicate that the said seeds conform to the minimum limits of germination and purity. The Central Government regulates the quality of the seeds and the authorities constituted enforce the maintenance of the minimum limits of germination, purity, etc. All this clearly establishes that parliament has also considered seeds as a distinct commercial commodity of importance and has not considered the seed as part of the grain itself.
24. The word 'seed' both according to the dictionary and the Seeds Act and as commonly understood means, that which is grown and collected for being sown and used for sowing and planting, to produce a new crop. In other words, 'seed' means :
'Bithane bija bithane kalu'. [Words in Kannada script are transliterated here]
25. Wheat, paddy, ragi, jowar and other cereals are known as food crops and are mainly grown for human consumption. The are known as foodgrains. No doubt, if wheat, paddy, ragi, jowar and other cereals are sown, seedlings sprout from them. The predominant or the general use of purpose of growing these cereals is to use them as human food. They are not grown to use them as seed to grow fresh crop. The test is not whether by sowing cereals, seedlings can be raised but whether they are primarily or predominantly grown for purpose of raising a new crop or for sowing.
26. We can take judicial note of the fact that a common man in a village who grows paddy, ragi and other cereals raises the crop for human consumption and does not use the crop grown as seeds. He selects and collects the best from out of the wheat, paddy, ragi, etc., he has grown for the purposes of sowing and raising a new corp. He does not use them as food. He makes a distinction and treats each as a distinct commodity. He does not identify one with the other. He calls those collected by him for raising the fresh crop as 'seed-paddy', 'seed-ragi', 'seed-jowar', etc., and does not call them paddy, ragi, etc.
27. A grower now with the advancement of science, technology and in the method of cultivation, etc., will generally buy seeds for sowing and raising good crops. He will not and is not required to keep apart a portion of the grain he grows, for sowing. He knows that the gain he raises is not the seeds for him and the 'seeds' for sowing is something other than the grain he grows. The seeds are sold, not by the grain merchants but by the 'certified seed dealers'. The seeds are sold in bags or packets sealed, containing a label giving the particulars as to the weight, etc., of the seeds, and that the seeds conform to the minimum limits of germination and purity specified by Government. In fact the learned counsel for the assessees produced before us, one or two sealed bags of seeds when we noticed that in addition to labels referred to above, the word 'poison' in bold letters printed on the bags, which is a clear warning that the seeds are unfit for human consumption. No one will mistake the grain for the seed or the seed for the grain. No one who wants to buy grain will go to a certified seed dealer and purchase seed and no one who wants to buy seed will go and buy grain from a grain merchant. No one will use grain as a seed and the seed as grain. That apart, the 'dry fruits' will be subjected to a processing and treated with chemicals and poison thereby making it unfit for human consumption and improving it as a seed. Even if these seeds could be made fit for human consumption by subjecting the same to another process as argued on behalf of the assessees, the resulting commodity, it cannot be forgotten, will be another new commercial commodity. That apart, what we are concerned with is the article or goods the assessees are dealing at the relevant time and not what it could be at a future date and what use it could be put to then. The seeds are now not fit for human consumption being indisputable, they are and cannot be considered as grain fit for human consumption. The price of grain and seeds vary to a large extent. The grain may be sold in bulk. The seeds are sold in small sealed bags of not more than a few kgs. They are not sold in one and the same shop or place. The same person does not deal both in grains and seeds. In common parlance and commercially also 'grains' and 'seeds' are understood as two distinct commercial commodities.
28. On the foregoing discussion, we cannot accept the contention urged on behalf of the assessees that the dry fruits after processing have only improved in their quality without any change in their identity. What is made more acceptable to the customer is not the cereal, the human food but a 'seed' to be sown to raise a fresh crop.
29. Learned counsel for the assesses argued that botanical names used against the cereals give an indication that so long as the goods or commodities belong to the same 'families' from the botanists view, they should not be treated as different commodities. According to them seed of a cereal and the cereal belong to the same family and are not commodities. We cannot accept this submission. The legislature itself has specified paddy and rice as separate commodities in entry 9 of the Fourth Schedule. Paddy is rice with husk. But still the legislature has treated them as two distinct and separate commodities for levying tax because as understood commercially and in common parlance, they are not one and the same but different commodities. This clearly shows that ever when from the botanist's view several articles belong to the same family or group each one of them is a different commercial commodity. The Supreme Court has also held that paddy and rice are two different commodities : Ganesh Trading Co., Karnal v. State of Haryana : AIR1974SC1362 .
30. The purpose of enumerating different commodities in a statute dealing with sales tax at a single point is to indicate the various types of goods which would constitute a separate class. The single point levy is on the commodity specified. The commodity, for the purposes of attracting liability at single point taxation, must retain the identity as a commercial commodity as the sales tax law is intended to tax sales of different commodities and not to tax only the production of particular substance out of which the new commodity emerges or is produced to attract the liability at single point. If the identity is lost and a different commercial commodity is produced as a result of subjecting it to a process, then the resulting commercial commodity is not the same commodity and therefore the assessee cannot claim exemption.
31. In the words of Holmes, J., in 245 U.S. 418,
'A word is not crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used. The words 'cereals' and 'seeds' are therefore to be understood and interpreted in the context they are used, the development or progress achieved in science, agriculture, economic and social life of our people.'
32. Legislature was aware that the producer, dealer and the consumer and every one who is affected by this Act would not be botanists but common men. It is therefore not the botanist's conception or understanding as to what is a cereal or a seed that must influence the interpretation of the words 'cereal' and 'seed'. The terms 'cereals' and 'seeds' have therefore to be interpreted not as understood according to strict dictionary, technical, scientific, botanical meaning but has to be understood or construed in its popular sense, i.e., sense with which people conversant with the subject matter with which the statute is dealing would attribute to it. If so understood and interpreted and given the popular sense meaning, then it only means 'cereals' are grains that are edible or fit for human consumption. It may be, the cereals, if sown produce sapplings but they are not used as seeds to raise a new crop. In the same way 'seeds' are to be interpreted as is understood in common parlance and given its popular sense meaning and if so understood, it only means seeds of a cereal grown or used for raising a new crop.
33. Articles and goods are to be construed not in any technical sense, not from a botanical point of view but as understood in common parlance by those who deal with them like dealers, purchasers and consumers. In the words of Story, J., in 200 Chests of Tea (1824) 9 Wheatson (US) 430 the particular words used by the legislature in the denomination of articles are to be understood according to the common commercial understandings of the terms used, and not in their scientific or technical sense, for the legislature does not suppose our merchants to be naturalists or geologists or botanists. It is further observed 'that the legislature does not suppose our merchants to be naturalists or geologists or botanists'.
34. Whether sale of peanuts and cashewnuts was exempt from levy of excise tax came up for consideration before the Supreme Court of Canada in Planters Nut and Chocolate Co. Ltd. v. The King (1952) 1 DLR 385. The Supreme Court of Canada held that though from the botanical point of view peanut and cashewnuts where vegetables and fruits and though the meaning given to the words fruits and vegetable in the various dictionaries also include nuts of any sort, still for the purpose of Excise Act, peanuts and cashewnuts were not fruits and vegetables as they were never understood in common parlance as fruits and vegetables.
35. In Ganesh Trading Company's case : AIR1974SC1362 the assessee carried on business of buying paddy and after getting it husked, sold rice. On the purchase of paddy, he paid tax under the Punjab Sales Tax Act, 1948. In computing the total turnover for levying sales tax, he claimed exclusion of the turnover relating to paddy over which tax had been paid. The Supreme Court held that the dictionary meaning is not relevant; what is relevant is how these articles are understood in common parlance by the commercial community and has observed 'It was true that rice was produced out of paddy but it is not true to say that paddy continued to be paddy even after dehusking; that rice and paddy are two different things in ordinary parlance and paddy is dehusked and rice is produced, there has been a change in the identity of the goods and the assessee is therefore not entitled to the deduction.' In a later decision in State of Karnataka v. Raghurama Shetty : 3SCR280 , the Supreme Court has reiterated the principles stated in Ganesh Trading Co.'s case : AIR1974SC1362 and has held that paddy and rice are two different commodities and the milling of paddy involves a manufacturing process.
36. In Ramavatar Bhudai prasad v. Assistant Sales Tax Officer, Akola : 1SCR279 , in considering whether betel leaves are vegetables, the Supreme Court held that betel leaves could not be regarded as vegetables because vegetables are grown in a kitchen garden or in a farm and are used for the table and as such the term vegetables do not include 'betel leaves' although from the botanical and technical point of view 'betel leaves' may come from the same family as vegetables.
37. In Anwarkhan Mehboob Co. v. State of Bombay : 1SCR709 , while construing the word 'consumption', the Supreme Court had to consider whether the raw tobacco after it was subjected to a process, i.e., removal of stems and dust, was converted into a commercially different commodity 'bidipatti', held that raw tobacco was converted into bidipatties, a commercially different commodity, and there was therefore 'consumption' of tobacco. It is true, as argued on behalf of the assessees, the provision of Sales Tax Act was not considered or interpreted by the Supreme Court in this case. But still, the Supreme Court has considered that when an article is subjected to a process, it is converted into a commercially different article.
38. In Sakthi Sugars Ltd. v. Deputy Commercial Tax Officer  23 STC 232, the Madras High Court had to consider whether 'sugarcane sets' are sugarcane. Sugarcane sett is a portion of cane stalk (cutting) such as is used for planting. Sugarcane is the genus of which the sugarcane sett is the specie. But the Court held that sugarcane sets are not sugarcane as is understood in commerce and trade and in common parlance. In Kampli Co-operative Sugar Factory Ltd. v. State of Mysore  35 STC 332, this Court, following the Sakthi Sugars case  23 STC 232 has held that sugarcane sets are not sugarcane.
39. In Soundarapandian v. Commissioner of Commercial Taxes  46 STC 211; (1980) 1 Kar LJ 410, this Court had to consider whether water colour and paints colour fall under entry 97 of the Second Schedule to the Act, which entry reads :
Paints, colours, dyes and varnish. - Though, according to the dictionary meaning, water colour, poster colour and all colours ................... fall within the meaning of the word 'colours', colours and varnishes in the context they are used and in the sense as ordinarily understood and attributed to these words by people usually conversant with and dealing in such goods and held that the goods included at entry 97 are those normally dealt with by hardware and or paint merchants which are used for surface paintings of walls, doors, furniture, etc., and do not comprehend colours used by students are artistes dealt with by a stationer.
40. In Mohta Trading Co. v. Commissioner of Sales Tax  38 STC 11, the assessee was a dealer in cotton sewing thread. The assessee claimed that in respect of the assessment years 1959-60 and 1960-61 the sales made by him in respect of 'cotton sewing thread and cones' was not liable to sales tax as it came within the meaning of the words 'cotton yarn as cops and cones' which was totally exempt from sales tax. It was argued on behalf of the assessee that there was no difference between cotton sewing thread and cotton yarn for the former was made of the latter. The process involved was only twisting the yarn in certain thickness. The yarn did not undergo any process of manufacture to convert it into sewing thread. Basically it was maintained that the thread was a part and parcel of yarn. The Allahabad High Court observed : Undoubtedly cotton sewing thread is made of cotton yarn but these are two well known and distinct commodities available for sale. In the commercial world these are two distinct commodities. These two items have different uses. Cotton yarn cannot be used for the purpose of sewing as cotton thread nor can cotton sewing thread be used as cotton yarn. While cotton sewing thread is used particularly for the purposes of sewing or stitching or sewing tow objects together, to wit, sewing a button on a coat, cotton yarn cannot be used for the same purpose. Similarly, cotton yarn is used for weaving or knitting cloth but cotton sewing thread could not be used for the said purpose. It would thus be seen that the two items are distinct and separate entities in the commercial world and further these two items have distinct and separate user although the cotton sewing thread basically emanates from cotton yarn after going through a process and held that 'cotton sewing thread on cops and cones' does not come within the meaning of the words 'cotton yarn on cops and cones' and was therefore not entitled to the exemption.
41. In Jeewajee & Co. v. State of Tamil Nadu  34 STC 4, the assessee had processed canvas cloth, stitched the edges with eyelets and sold the finished product as tarpaulins. On the question whether 'tarpaulins' would fall within the term 'textiles' and would be exempt from payment of sales tax under section 8 of the Tamil Nadu General Sales Tax Act, 1959, read with item 4 of the Third Schedule it was held by the Madras High Court that even assuming that processed canvas cloth out of which tarpaulin is made is taxable, as the processed canvas cloth was not sold as such but the tarpaulin was sold as a separate finished product it could not be treated as 'textile' falling under item 4 of the Third Schedule to the Act.
42. It was argued on behalf of the assessee that if groundnut oil is interpreted to include vanaspati, textile is interpreted to include dryer felts, rice is interpreted to include beaten rice (chira) and puffed rice, maida is interpreted to include shevaya (vermicelli), and dal is interpreted to include broken dal in various sizes with different names, there is no reason why 'cereals' should not be interpreted to include 'seeds'.
43. In Porritts & Spencers (Asia) Ltd. v. State of Haryana : 1983(13)ELT1607(SC) , the Supreme Court considered whether 'dryer felts' manufactured by the assessee fell within the category of 'all varieties of cotton, woollen or silken textiles' specified in item 30 of Schedule B to the Punjab General Sales Tax Act, 1948. The word 'textiles' is not defined in the Punjab Act. The Supreme Court adopted the principle 'that in a taxing statute, words of everyday use must be construed not in their scientific or technical sense but as understood in common parlance or in its popular sense' following Ramavatar's case : 1SCR279 , Motipur Zamindary's case : AIR1962SC660 and Wasi Ahmed's case : 3SCR149 and has explained the terms 'popular sense' as 'that sense people conversant with the subject-matter with which the statute is dealing would attribute to it' and held that 'whatever be the mode of weaving employed woven fabric would be 'textiles'. What is necessary is no more than weaving of yarn and weaving would mean blending or putting together by some process so as to form a fabric' and further held that 'dryer felts' are textiles within the meaning of that expression in item 30 of Schedule B. The dryer felts are woven fabrics and are therefore held to come within the meaning of textiles.
44. In Alladi Venkateswarlu v. Government of A.P. : 3SCR190 , the Supreme Court while considering whether atukulu (parched rice) and muramaralu (puffed rice) are 'rice' within the meaning of entry 66(b) of the Andhra Pradesh General Sales Act, 1957, gave a broad enough interpretation of the term 'rice' in accordance with the common sense rule of interpretation and held that the term 'rice' as ordinarily understood is wide enough to include both parched rice and puffed rice and therefore 'atukulu' (parched rice) and 'muramaralu' (puffed rice) are rice within the meaning of entry 66(b).
44A. In Kapildeoram Baijnath Prosad v. J. K. Das  5 STC 365, the Assam High Court, interpreting entry 1 of the Third Schedule to the Assam Sales Tax Act, 1947, which exempted from taxation 'all cereals and pulses including all forms of rice' had to consider whether chira, which is beaten rice, and muri, which is parched rice could be classified as rice 'in all forms' and held that the word 'forms' could not be confined to mere varieties of rice, as that would be putting a construction upon the language of the entry which unwarrantably narrowed its meaning and the idea behind that entry was to exclude all cereals from taxation and that chira and muri, to all intents and purposes, were cereals and had not lost their character of cereals by any process of transformation so as to be called by any other name and are therefore exempt from sales tax.
45. In Ghasi Ram Hari Ram v. Commissioner of Sales Tax  30 STC 88, the Delhi High Court construing entry 1 of the Second Schedule to the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi, which exempted from taxes all cereals including all forms of rice (except when sold in sealed containers), held that the expression 'all forms of rice' would ............... embrace within its fold, rice in all its forms as distinguished from its mere varieties or sizes. It would include rice in its various shapes and conditions as for example rice in its raw form, fried form or parched form. Different varieties of rice and different rice may be covered by the word 'rice' itself. But here the exemption is given to 'all forms of rice'. So rice in all its forms even in the form of 'murmura' would be included in the exemption.
46. In Commissioner of Sales Tax v. Sultan Shev Co.  40 STC 583, the Bombay High Court, construing entry 10 of Schedule A to the Bombay Sales Tax Act, 1959, which exempted from tax 'cereals and pulses in all forms' and flour including atta, maida, besan, suji and bran prepared there from but excluding maize flour except when sold in sealed containers, held that : maida is a form of cereal within the meaning of entry 10 of Schedule A. Shevaya or vermicelli is also maida in the form of slender threads and is therefore a form of cereal. Both maida and shevaya are therefore exempt from sales tax under entry 10 Schedule A to the Act.
47. In Commissioner of Commercial Taxes v. India Sewai Co.  45 STC 28, the Patna High Court interpreted the words 'cereals and pulses' including all forms of ............. wheat ........ and flour including atta, maida, suji and bran to include sewa; and held 'so long as the forms which are cereals and pulses take retain their character of being edible items and identifiable as having been formed out of cereals and pulses, it is immaterial what form the cereals and pulses may take, they would continue to be classified as cereals.'
48. In Tilokchand Prasan Kumar v. Sales Tax Officer  25 STC 118, the petitioner-assesses was carrying on business in cereals and pulses. He was assessed to purchase tax under section 3-D(1) of the U.P. Sales Tax Act, 1948, on the turnover of dal purchased by him from dal mills. The dal mills cleaned arhar dal purchased by them and after removing the husk and outer covering, the dal itself was put through a process which resulted in its breaking down into particles of different sizes which were sold under different names according to their sizes. The only distinction or change between them is their different size. There was also no material to show that broken dal was commercially regarded as different from dal. The Allahabad High Court held that the broken dal cannot be considered as a commodity essentially different from the grain, i.e., arhar dal purchased by the dal mills and is therefore not a new and different article and therefore not liable to be taxed under section 3-D(1).
49. Whether hydrogenated oil called vanaspati was still groundnut oil or a product of groundnut oil came up for consideration before the Supreme Court in Tungabhadra Industries Ltd. v. Commercial Tax Officer, Kurnool : 2SCR14 . There, the Supreme Court adopted the 'common sense' rule of interpretation and held inter alia :
To be groundnut oil two conditions have to be satisfied : it must be from groundnut and it must be oil. That the hydrogenated oil sold by the appellants was out of groundnuts not being in dispute, the only point is whether it continues to be oil even after hydrogenation. Oil is a chemical compound of glycerine with fatty acids, or rather a glyceride of a mixture of fatty acids - principally oleic, linoleic, stearic and plasmatic - the proportion of the particular fat varying in the case of the oil from different oil seeds and it remains a glyceride of fatty acids even after the hardening process, though the relative proportion of the different types of fatty acids undergoes a slight change. In its essential nature therefore no change has occurred and it remains an oil - a glyceride of fatty acids - that it was when it issued out of the press.
The Court further held that ... neither absorption of other matter nor intermolecular changes necessarily affect the identity of a substance as ordinarily understood.
Proceeding further, the Court held that ..... hydrogenated oil serves the same purpose as a cooking medium and has groundnut oil. There is no use to which the groundnut oil can be put for which the hydrogenated oil could not be sued, not is there any use to which the hydrogenated oil could be put for which the raw oil could not be used. Similarly we consider that hydrogenated oil still continues to be 'groundnut oil' notwithstanding the processing which is merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desire to consume groundnut oil .....
49A. The Supreme Court in Alladi Venkateswarlu's case : 3SCR190 has interpreted the word 'rice' to include 'atukulu' (parched rice) and 'muramaralu' (puffed rice), the Assam High Court in Kapildeoram Baijnath Prosad's case  5 STC 365 and the Delhi High Court in Ghasi Ram's case  30 STC 88 have interpreted the words 'all forms of rice' to include beaten rice and parched rice, the Bombay High Court in Sultan Shev's case  40 STC 583 and the Patna High Court in India Sewai's case  45 STC 28 have interpreted the words 'cereals and pulses in all forms' to include shevya or vermicelli. But in all those cases, the goods or articles in question were only in a new form or appearance without any addition of ingredients or any changes in their character. The goods had not so changed their identity as not to be discernible as 'cereals' fit for human consumption as articles of food. The conclusions in those cases was based on the language of the entries and the use of the words 'all forms' was decisive in construing them. But that is not the position in the entries found in the Act and therefore the ratio in those cases does not assist the petitioners.
50. The processing is adopted in each of these cases and a change in form or size is brought about to make the foodgrains tastier, convenient for sale and more acceptable to the consumers. The articles in question retained their essential or basic character and identity as articles fit for human consumption. So long as the form or shape or the size or the state the goods take retain their character of being edible items, i.e., so long as they could be used as food and identifiable as having been formed from the cereals and pulses, it is of no materiality which form, shape, size or state they take. The dryer felt is basically a textile, a woven fabric. The use it would be put to may be different from the other textiles by it is not the use which determines its character as textiles. Dryer felts satisfy the description of textiles. Strong reliance was placed on behalf of the assessees on another decision of the Supreme Court in Commissioner of Sales Tax, Lucknow v. Bist : 1SCR593 . In this case the assessee was an agriculturist and the tea leaves grown by him in the lands were agricultural produce. He made them marketable and fit for human consumption by the consumers and then sold them. The question that came up for consideration before the Supreme Court was whether the tea leaves which were subjected to some process before they were packed and sold lost their character of being an agricultural produce and become something different. The Supreme Court observed :
Unlike many agricultural products tea leaves are not marketable in the market fresh from the tea gardens. Nobody eats tea leaves. It is meant to be boiled for extracting juice out of it to make tea liquor. Tea leaves are, therefore, only fit for marketing when by a minimal process they are made fit for human consumption. Of course, the processing may stop at a particular point in order to produce inferior quality of tea and a bit more may be necessary to be done in order to make it a bit superior. But that by itself will not substantially change the character of the tea leaves, still they will be known as tea leaves and sold as such in the market and held that the process to which the tea leaves were subjected were necessary for the purpose of saving tea leaves from perishing, making them fit for transportation and marketing them and this process did not rob the tea leaves, the agricultural produce, of their character of being and continuing as such substantially.
The Supreme Court held that the tea leaves sold after processing are agricultural produce. These decisions therefore are of no assistance to the assessees as we have found that seeds are commodities different from cereals.
51. The Government by its Notification No. FD87CSL82 dated 3rd August, 1982, has totally exempted the seeds of pulses and cereals marked as poison from payment of tax under the Act. This notification exempting the 'seeds' from payment of tax, according to the assessees, supports their interpretation of the terms 'cereals'. It is their case that this shows that the legislature never intended to tax seeds and included seeds also within the meaning of the term 'cereals'. The Act confers power of the State Government under section 8A of the Act to make an exemption or reduction in rate in respect of any tax payable under the Act. The State has also the power to cancel or very any notification issued exempting or reducing the payment of tax. The Government has issued the notification on which reliance was placed by the assessees exempting payment of tax as certified seeds of cereals and pulses marked poison. Exemption granted by this notification cannot, therefore, be a guide to interpret the word 'cereal' in the Act.
52. The assessees have challenged annexure A dated 9th December, 1981, issued by the Commissioner of Commercial Taxes-respondent 1. This circular, according to the assessees, is without competence and inconsistent and contrary to the provisions of the Act. The Commissioner has, in effect, drawn the attention of the officers of his department that the word 'cereals' means only edible foodgrains and not seeds that are meant for sowing. This Circular cannot be understood as interfering with the judicial discretion of the departmental officers. Suffice it to say, the circular annexure A, can only be considered as clarifying to the officers of the department the meaning of the terms 'cereals'. We are also of the opinion that the circular correctly sets out the legal position from time to time.
53. In the result and for the foregoing reasons, all the writ petitions fail and are liable to be dismissed. We accordingly discharge the rule and dismiss these writ petitions. But in the circumstances of the cases, we direct the parties to bear their own costs.
54. After we pronounced our order in these cases, oral applications were made by the learned counsel for the assessees for grant of a certificate of fitness to appeal to the Supreme Court under articles 133 and 134A of the Constitution of India.
55. It was argued on behalf of the assessees that the decision in these cases arises a substantial question of law of general importance and the same needs to be decided by the Supreme Court.
56. In disposing of these cases and interpreting the meaning of the word 'cereal' we have followed the principles laid down by the Supreme Court. We are of the view that our decision in these case does not involve a substantial question of law of general importance that needs to be decided by the Supreme Court. We accordingly reject the prayer made for the assessees for grant of certificate.