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Tagoob Mohammad of Kanchili Vs. the Commercial Tax Officer - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petition No. 1196 of 1965
Judge
Reported in[1971]28STC110(AP)
AppellantTagoob Mohammad of Kanchili
RespondentThe Commercial Tax Officer
Appellant AdvocateM. Suryanarayana Murthy, Adv.
Respondent AdvocatePrincipal Government Pleader
Excerpt:
- all india services act, 1951. sections 32(c) (as amended by section 3 of amendment act, 2005] & 10 & general clauses act, 1897, section 6: [g.s. singhvi, cj, dr.g. yethirajulu, ramesh ranganathan, g.bhavani prasad, c.v. nagarjuna reddy, jj] exemption of building from applicability of provisions of act held, (per majority) section 32(c) of the act provides that the provisions of the act shall not apply to any building the rent of which as on the date of the commencement of the a.p. buildings ( lease, rent and eviction) control (amendment) act 2005 exceeds rs.3,500/- per month in the areas covered by the municipal corporations in the state and rs.2,000/- per month in other areas. there is nothing in the provisions of the amendment act which either expressly or by necessary implication.....madhava reddy, j. 1. the questions that arise for consideration in this petition for the issuance of a writ of prohibition or for any other direction filed by a registered dealer is whether 'watery cocoanuts' are 'oil-seeds' within the meaning of section 14(vi) of the central sales tax act (hereinafter referred to as the central act) and whether they are exigible to tax in, the course of inter-state trade or commerce when they have already suffered tax under the andhra pradesh general sales tax act, 1957 (hereinafter referred to as the state act).2. the petitioner who is a registered dealer under the andhra pradesh general sales tax act and who mainly deals in watery cocoanuts at kanchili in srikakulam district filed returns disclosing a gross turnover of rs. 4,64,979.64 in watery.....
Judgment:

Madhava Reddy, J.

1. The questions that arise for consideration in this petition for the issuance of a writ of prohibition or for any other direction filed by a registered dealer is whether 'watery cocoanuts' are 'oil-seeds' within the meaning of Section 14(vi) of the Central Sales Tax Act (hereinafter referred to as the Central Act) and whether they are exigible to tax in, the course of inter-State trade or commerce when they have already suffered tax under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as the State Act).

2. The petitioner who is a registered dealer under the Andhra Pradesh General Sales Tax Act and who mainly deals in watery cocoanuts at Kanchili in Srikakulam district filed returns disclosing a gross turnover of Rs. 4,64,979.64 in watery cocoanuts and claimed an exemption on a turnover of Rs. 24,858.50 for the year 1964-65 through form VI returns. After scrutinising the return, the Commercial Tax Officer, Srikakulam district, fixed the gross turnover at Rs. 4,60,033.09 and net turnover at Rs. 4,27,060.35 after allowing exemption on a turnover of Rs. 32,972.75. He then issued the impugned notice G.I. No.70/64-65 C.S.T. dated 30th July, 1965, proposing to fix the net turnover as indicated therein under the Central Act and directing the petitioner to file his objections, if any, along with the books of accounts and intimating him that on failure to do so, the assessment would be completed as notified therein. In the said notice, while fixing the taxable turnover at Rs. 4,27,060.35, he proposed to tax the same as under :

at 2% (covered by 'C' form) Rs. 2,19,164.17at 10% (not covered by 'C' form) Rs. 2,07,896.18Rs. 4,27,060.35

3. It is contended by the petitioner that the Commercial Tax Officer, Srikakulam district, respondent herein, is acting patently without jurisdiction in issuing the notice and proposing to assess the turnover in respect of 'watery cocoanuts' under the Central Act, that the expression 'cocoanuts' includes both watery cocoanuts and 'dried cocoanuts', that cocoanuts are 'oil-seeds' within the meaning of Section 14(vi) of the Central Act which are goods declared to be of special importance in inter-State trade or commerce and that since 'cocoanuts' have already been subjected to tax under the State Act, they are not exigible to further tax under the Central Act. Alternatively, it is contended that 'watery cocoanuts' are either 'fruits' or ''vegetables' and are, therefore, exempt from the tax payable under the State Act in view of the G.O. Ms. No. 1091 Revenue dated 10th June, 1957. In view of Sections 6 and 9 of the Central Act, the tax payable by any dealer under the Central Act on sales of goods effected by him in the course of inter-State trade or commerce shall be levied and collected by the Government of India in the manner provided by Sub-section (3) of Section 9 in the State from which the movement of the goods commenced. 'Watery cocoanuts' are exempted from tax by G.O. Ms. No. 1091 Revenue dated 10th June, 1957, the same being either 'fruits' or 'vegetables', and therefore, no tax under the Central Act is leviable.

4. The respondent resisted this petition on the ground that 'watery cocoanuts' are not 'oil-seeds' and they being not 'declared goods' are not covered by Schedule 3 to the State Act. 'Watery cocoanuts' and 'cocoanuts' are two distinct commodities of merchandise. The nature of the goods when the transactions are entered into must be taken into account in adjudging whether cocoanut is an 'oil-seed', 'fruit' or 'vegetable'. So viewed, 'watery cocoanuts' could not be deemed to be 'oil-seeds', 'fruits' or 'vegetables'. Therefore, they do not fall within the ambit of Section 14(vi) of the Central Act or item 5 of the Third Schedule to the State Act or exempt from tax under G.O. Ms. No. 1091 Revenue dated 10th June, 1957. The contention that the tax under the Central Act shall be levied and collected in the same manner as under the State Act is met by referring to the Central Sales Tax Ordinance (4 of 1969) which has also since been replaced by an Act of Parliament in identical terms. By this Ordinance certain provisions of the Central Sales Tax Act have been amended, Section 9 therefor is substituted by a new section and all assessments are validated. As a result of this amendment, the Commercial Tax Officer is clothed with the jurisdiction to assess goods under the Central Sales Tax Act although they are not liable to tax under the said Act.

5. In order to appreciate the rival contentions, it is necessary to read certain provisions of the State Act as well as the Central Act.

6. Under Section 5 of the State Act every dealer whose total turnover per year is not less than Rs. 10,000 shall pay a tax for each year at the rate of Re. 0.03 on every rupee of his turnover and the tax is levied either at the sale or purchase point as mentioned in the Schedules. Subject to certain restrictions and conditions as may be prescribed, a dealer who deals in the goods enumerated in the Fourth Schedule of the Act, is exempt from tax under the said Act. Section 8 reads as follows :

Section 8 : Exemption from tax in respect of certain goods.--Subject to such restrictions and conditions as may be prescribed, including conditions as to licences and licence fees, a dealer who deals in the goods specified in the Fourth Schedule shall be exempt from tax under this Act in respect of such goods: Provided that a dealer who deals in textiles, sugar or tobacco and its products, on which duties of excise are not levied under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, shall not be so exempt.

7. Apart from this, under Section 9 the State Government is vested with the power to make an exemption or reduction in the rate in respect of any tax payable under this Act by a notification in the Andhra Pradesh Gazette. Section 9 reads as follows :

Section 9 : Power of State Government to notify exemptions and reduction of tax.--(1) The State Government may, by notification in the Andhra Pradesh Gazette, make an exemption or reduction in rate in respect of any tax payable under this Act--

(i) on the sale or purchase of any specified class of goods, at all points or at any specified point or points in the series of sales or purchases by successive dealers; or

(ii) by any specified class of persons, in regard to the whole or any part of their turnover.

(2) Any exemption from tax or reduction in the rate of tax notified under Sub-section (1)--

(a) may extend to the whole of the State or to any specified area or areas therein;

(b) may be subject to such restrictions and conditions as may be specified in the notification, including conditions as to licences and licence fees.

8. In exercise of these powers, the Government in G.O. Ms. No. 1091 Revenue dated 10th June, 1957, has exempted certain fruits and vegetables from tax in the following words :

Notification under the Andhra Pradesh General Sales Tax Act (G.O. Ms. No.' 1091, Revenue dated 10-6-1957, published at pages 108-112 of Rules Supplement to Part I, A.P. Gazette dated 15-6-1957.)

I to III: * * *IV. In exercise of the powers conferred by Sub-section (1) of Section 9 of the Andhra Pradesh General Sales Tax Act, 1957 (Andhra Pradesh Act VI of 1957), the Governor of Andhra Pradesh hereby exempts from the tax payable under the said Act, the sales of the following goods :

1 to 6: * * *7. Fruits other than cocoanuts, which have not been canned, preserved, dried or dehydrated.

8. Vegetables, other than green ginger and garlic, which have not been canned, preserved, dried or dehydrated.

* * *Section 6 of the State Act provides that in respect of declared goods, a dealer is liable to tax at the rate and only at the point of sale or purchase specified against each in the Third Schedule.

Section 6 reads as follows :

Section 6 : Tax in respect of declared goods.--Notwithstanding anything contained in Section 5, the sales or purchases of declared goods by a dealer shall be liable to tax at the rate, and only at the point of sale or purchase, specified against each in the Third Schedule on his turnover of such sales or purchases for each year, irrespective of the quantum of his turnover in such goods; and the tax shall be assessed, levied and collected in such manner as may be prescribed:

Provided that where any such goods on which a tax has been levied are sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be prescribed. Declared goods' are defined under Section 2(f) of the State Act as follows: 'declared goods' means goods declared under Section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), to be of special importance in inter-State trade or commerce.'

9. The same is the definition of 'declared goods' under Section 2(c) of the Central Act. Section 14 of the Central Act which declares certain goods to be of special importance in inter-State trade or commerce reads as follows

Section 14 : It is hereby declared that the following goods are of special importance in inter-State trade or commerce :

(i) to (v) * * *

(vi) oil-seeds, that is to say, seeds yielding non-volatile oils used for human consumption, or in industry, or in the manufacture of varnishes, soaps and the like, or in lubrication, and volatile oils used chiefly in medicines, perfumes, cosmetics and the like,

10. It may at this stage itself be noted under Schedule III of the State Act, among the 'declared goods' in respect of which a single point tax only is leviable, 'cocoanut' is included as item 5 and a tax of Re. 0.02 in a rupee is leviable at the point of last purchase in the State. Schedule IV of the said Act deals with goods exempted from tax under Section 8 and item 9 of the said Schedule relates to 'tender cocoanuts' which is as under :

Tender cocoanuts which are useful only for drinking purposes.

11. Under Schedule II of the State Act, 'watery cocoanuts' are included as item 10 and the tax is leviable as under :

'Description Point of levy Rate of taxof the goods1 to 9 * * *10. Watery cocoanuts (a) At the point of last 2 paise in purchase in the State the rupeeduring the period from 1stAugust, 1963 to the 31stMarch, 1965.(b) At the point of first 3 paise inpurchase in the State. . the rupee Explanation.--The expression watery cocoanuts in item 10 includes all cocoanuts other than cocoanuts falling under item 5 of the Third Schedule and tender cocoanuts falling under item 9 of the Fourth Schedule.

12. Under Section 6 of the Central Act every dealer is liable to pay tax on inter-State sales as specified thereunder. Section 6 of the Central Act reads as follows:

Section 6. (1) Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales effected by him in the course of inter-State trade or commerce during any year on and from the date so notified.

(2) Notwithstanding anything contained in Sub-section (1), where a sale in the course of inter-State trade or commerce of goods of the description referred to in Sub-section (3) of Section 8--

(a) has occasioned the movement of such goods from one State to another; or

(b) has been effected by a transfer of documents of title to such goods during their movement from one State to another;

any subsequent sale to a registered dealer during such movement effected by a transfer of documents of title to such goods shall not be subject to tax under this Act:

Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner a certificate duly filled and signed by the registered dealer from whom the goods were purchased containing the prescribed particulars.

13. The rate at which tax on sales in the case of inter-State trade or commerce could be levied is specified by Section 8 of the Central Act and so far as it is relevant for our purpose is as follows :

8. (1) Every dealer,, who in the course of inter-State trade or commerce--

(a) sells to the Government any goods; or

(b) sells to a registered dealer other than the Government goods of the description referred to in Sub-section (3), shall be liable to pay tax under this Act, which shall be three per cent. of his turnover.

(2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within Sub-section (1)--

(a) in the case of declared goods, shall be calculated at the rate applicable to the sale or purchase of such goods inside the appropriate State; and

(b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent. or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher;

and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law.

(2-A) Notwithstanding anything contained in Sub-section (I) or sub-section (2), if under the sales tax law of the appropriate State the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than three per cent. (whether called a tax or fee or by any other name), the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate.

Explanation.--For the purposes of this sub-section a sale or purchase of goods shall not be deemed to be exempt from tax generally under the sales tax Jaw of the appropriate State if under that law it is exempt only in specified circumstances or under specified conditions or in relation to which the tax is levied at specified stages or otherwise than with reference to the turnover of the goods.

(3) * * *

(4) The provisions of Sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner--

(a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or

(b) if the goods are sold to the Government, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government.

By Section 9 of the Central Act, the tax payable by any dealer is required to be levied and collected by the Government of India in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected. Section 9 of the Central Act to the extent to which we are concerned in this case reads as follows:

9. (1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce (whether such sales fall within Clause (a) or Clause (b) of Section 3) shall be levied and collected by the Government of India in the manner provided in Sub-section (3) in the State from which the movement of the goods commenced :

Provided that, in the case of a sale of goods during their movement from one State to another being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within Sub-section (2) of Section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained the form prescribed for the purposes of Clause (a) of Sub-section (4) of Section 8 in connection with the purchase of such goods.

(2) * * *

(3) The authorities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India and subject to any rules made under this Act, assess, collect and enforce payment of any tax, including any penalty, payable by a dealer under this Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, appeals, reviews, revisions, references, penalties and compounding of offences shall apply accordingly :

Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, by rules made in this behalf, make necessary provision for all or any of the matters specified in this sub-section, and such rules may provide that a breach of any rule shall be punishable with fine which may extend to five hundred rupees; and where the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues.

14. A reading of the above provisions makes it clear that if any goods are declared to be goods of special importance under Section 14(vi) of the Central Act, by virtue of Sections 8 and 9 of the said Act in the course of inter-State trade or commerce, they are exigible to tax under the Central Act to the extent and in the manner provided under the State Act. If they are so liable to tax, the tax under the State Act is liable to be refunded. The intendment of both the Acts prior to the amendment of the Central Sales Tax Act by Ordinance 4 of 1969 is that no declared goods should be exigible to tax both under the State Act and the Central Act in the course of inter-State trade or commerce. If tax has already been collected in respect of such goods under the said Act, Section 15 of the Central Act provides that the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State. Section 15 also further provides that in respect of such goods under the said law the tax shall not exceed 3 per cent. of the sale or purchase price thereof and that the tax shall not be levied at more than one stage. That is the position prior to the amendment of the Central Act by Central Ordinance 4 of 1969. We will advert to the effect of the Ordinance and refer to the relevant provisions thereof later at the appropriate stage.

15. At the outset, we must make it clear that under the impugned notice the respondent proposes to assess the petitioner under the Central Act. 'Cocoa-nuts' as such are not included among the goods declared to be of special importance in inter-State trade or commerce under Section 14 of the Central Act. Until such time as goods are declared to be of special importance in inter-State trade or commerce under Section 14 of the Central Act, they cannot be deemed to be 'declared goods'. That is why the learned Counsel for the petitioner contends that 'cocoanuts' though not specifically included in Section 14 of the Central Act, come within the ambit of item (vi) of Section 14 of the Act which declares 'oil-seeds' as goods of special importance in inter-State trade or commerce. It is also his further contention that the expression 'cocoanuts' also includes 'watery cocoanuts'.

16. We would, therefore, now proceed to consider whether cocoanuts are oil-seeds within the meaning of item (vi) of Section 14 of the Central Act.

Oil-seed' is defined in the Oxford English Dictionary as 'any seed yielding oil'. In the book entitled 'Wealth of India' published by the Council of Scientific and Industrial Research of India at page 271, it is stated that 'the principal use of cocoanuts is in the manufacture of copra, from which cocoanut oil and cocoanut cakes are obtained...Two types of copra are made, viz., milling copra and edible copra.' At page 275 of the same book, it is recorded that 'the percentage of the oil yield from copra ranges between 55 per cent. and 62.5 per cent. according as the oil is extracted in chekkus or the hydraulic press. Cocoanut oil is non-volatile and extensively used both for edible and industrial purposes. In the West Coast, this oil is used for culinary and domestic purposes also. To a small extent the oil is obtained directly from fresh cocoanuts by grating the meat, macerating it with water and boiling. Oil floats to the surface and can be skimmed off. The oil so prepared keeps well for a long time and has a taste different from that of the oil produced in mills.

17. Under Section 14(vi) of the Central Act, 'oil-seed' is stated to be a seed yielding non-volatile oil used for human consumption or in industry or in the manufacture of varnishes, soaps and the like or in lubrication and volatile oils used chiefly in medicines, perfumes, cosmetics and the like. Hence, for bringing goods within the definition of an oil-seed it should not only be a seed, but also one yielding volatile or non-volatile oil. What particular seeds are oil-seeds are not enumerated in Section 14 of the Central Act. The word 'oil-seed' is a genus which comprises of several species. There are oil-seeds which are commonly known as such, for example, castor-seed, linseed, mustard-seed. There may still be other goods which may be both a seed as well as yielding oil but may not be commonly referred to as oil-seeds. If cocoanut has both these properties then, to whatever other uses it may be put to or may be capable of being put to, it must be deemed to be an 'oil-seed'. That cocoanut is a seed does not admit of much argument. For raising a cocoanut plant, it is the watery cocoanut as such that is used before it is dried up. That is the method extensively used for purposes of raising a new cocoanut plant. On seashores without any person particularly planting, a fresh cocoanut when it gets embedded in some sandy soil, grows into a full blown palm. That is the natural growth of a cocoanut palm. Cocoanut palm groves are extensively found in the tropical seashores. That watery cocoanut is a seed is in fact, not seriously disputed. Therefore, we have only to consider if fresh 'watery cocoanut' yields non-volatile or volatile oil. Here again there is not much dispute about the fact that a 'dried cocoanut' yields substantial quantity of oil and such oil is extensively used for human consumption, in industry and in the manufacture of soaps, hair-oils and cosmetics. So, if cocoanut is taken to mean only 'dried cocoanut' there can be no dispute that it is an 'oil-seed' within the meaning of Section 14(vi) of the Central Act.

18. The further question, however, is whether 'watery cocoanut' yields oil though admittedly it is a seed. Oil is extracted generally from dry cocoa-nuts, but in some parts of India, especially in Kerala and Mysore, it is extracted even from the copra recovered from fresh cocoanuts. The copra of 'watery cocoanut' before it dries up may not yield as much oil as dried copra. The oil which it yields may also contain some watery substance which may have to be eliminated for the purpose of recovering pure cocoanut oil. All the same it yields sufficient quantity of oil. Thus watery cocoanut while yielding oil may yield some watery substance also. But in order to come within the definition of an oil-seed, it is not necessary that it should yield oil and nothing else; it is enough if it is a seed and also yields oil. 'Watery cocoanut' satisfies both these requirements and, therefore, irrespective of the fact whether it yields less oil than dried cocoanut or yields some watery substance other than oil, since in fact it yields substantial quantity of oil, which is used for human consumption and in industry and other purposes mentioned in Section 14(vi) of the Central Act, it must be deemed to be an oil-seed within the meaning of that section.

19. Since cocoanuts both fresh and dried are extensively used for oil, in Alikoya & Co. v. State of Kerala [1961] 12 S.T.C. 567 their Lordships did not find the necessity for any discussion and held that 'cocoanut' is an 'oil-seed'. The view expressed by us receives support from a judgment of the Mysore High Court in Kasthuri Seshagiri Pai & Co. v. Deputy Commissioner of South Kanara [1961] 12 S.T.C. 629 in which the learned Judges observed that 'a cocoanut as ordinarily understood, is the cocoanut grown on the top of a cocoanut tree with its husk and shell and if that cocoanut is capable of developing into another cocoanut plant when planted, it is not possible, in our opinion, to hold that a cocoanut is not an oil-seed because, a cocoanut without the husk is incapable of developing into another cocoanut plant when planted.' The learned Judges also observed 'both cocoanut and copra are commodities from which oil can be extracted. Cocoanut oil is what is extracted both from cocoanut and copra although cocoanut oil is generally extracted from dried copra.' They came to the conclusion that 'it is a flowering plant's unit of reproduction or germ capable of developing into another such plant. It is common knowledge that the unit of reproduction of the cocoanut plant which is admittedly a flowering plant, is the cocoanut with its shell and husk and that it is such cocoanut when planted that becomes capable of developing into another cocoanut plant. That being so, it is clear that a cocoanut is a seed and since oil can be extracted from a cocoanut, it is an oil-seed within the meaning of that expression occurring in Section 14(vi) of the Central Sales Tax Act.' In Kumaran & Co. v. Secretary, Malabar Market Committee [1964] 15 S.T.C. 634 the Kerala High Court following the decision in K. Seshagiri Pai & Co. v. Deputy Commissioner of South Kanara [1961] 12 S.T.C. 629 took the same view. A Division Bench of our court in Sri Krishna Cocoanut Co. v. State of Andhra Pradesh [1962] 13 S.T.C. 193 were considering the question whether 'cocoanuts' are included within the expression oil-seed. Chandra Reddy, C.J., speaking for the Bench observed : 'Incontrovertibly, cocoanuts also are comprehended within the expression 'oil-seeds'.' Thus when prior to the inclusion of watery cocoanuts, as distinct from other cocoanuts, in a separate Schedule, 'cocoanuts' were considered to be 'oil-seeds' the mere fact that cocoanuts and watery cocoanuts are now included in two separate Schedules of the State Act, they do not cease to be 'oil-seeds' within the meaning of Section 14(vi) of the Central Act so long as both dry cocoanuts and watery cocoanuts are seeds capable of yielding oil. This aspect of the matter can be viewed from another angle. Admittedly dry cocoanuts yield oil and it is not disputed before us that it is an oil-seed. Unless fully grown 'watery cocoanut', which is admittedly a seed capable of producing a plant, is inherently capable of yielding oil and in fact contains oil, it could not have, after it is dried up, yielded oil, for watery cocoanut is not put through any manufacturing process to become a dry cocoanut. By the mere efflux of time and natural exposure to the tropical climate, a fresh watery cocoanut dries up and becomes admittedly a seed yielding oil. The oil that it yields must have been there ever since the cocoanut was fully grown. Hence, there is no reasonable basis for excluding the ''watery cocoanut' from the category of oil-seed merely because it is used for culinary and other purposes as well. The substantial identity of the 'watery cocoanut' after undergoing its natural process remains unaltered and it is this test that is to be applied in the matter of assessing goods to sales tax.

20. Where the petitioners, who purchased raw cotton and sold ginned cotton and cotton seed after ginning the raw cotton, were sought to be taxed under the East Punjab General Sales Tax Act, 1948, as amended by the East Punjab General Sales Tax (Amendment) Act, 1958, and the subsequent Amendment Acts Nos. 13 and 24 of 1959, on their purchases of raw cotton and also on their sales of ginned cotton effected inside the Punjab State, the petitioners contended that Punjab Act No. 7 of 1958 was ultra vires the Constitution inasmuch as it offended the provisions of the Central Sales Tax Act, 1956, and that they were not liable to pay any tax when they sold their goods outside the State and were liable to pay tax at 2 per cent. only when they sold their goods inside the State it was held by the Punjab High Court in Raghbir Chand Som Chand v. Excise and Taxation Officer [1960] 11 S.T.C. 149 'that ginned and unginned cotton are essentially the same commodity and buying unginned cotton and selling ginned cotton are two transactions dealing with the same commodity and that as this commodity has been declared under Section 14 of the Central Sales Tax Act, 1956, as one of the goods of special importance in inter-State trade or commerce, the person dealing in it is entitled to the benefits of Section 15 of that Act and inasmuch as under the East Punjab General Sales Tax Act, 1948, as amended by Punjab Act No. 7 of 1948, the person has to pay additional tax, the law imposing that tax is invalid and that therefore the petitioners were only liable to pay tax not exceeding two per cent. on sales effected inside the State and that they were not liable to pay any tax at all when they effected their sales outside the State.' Likewise where an assessee, dealing in tobacco, subjected the tobacco sold by him to the following processes : Raw tobacco taken out of the warehouse was unbundled and kept in a heap and was periodically sprinkled with palm jaggery water to keep it soft and wet. The tobacco so treated was taken out little by little and cut into pieces of two sizes worth 6 pies and 3 pies. These two varieties were then separately labelled, arranged and packed in bundles and sold both in wholesale and retail. It was found that the sprinkling of jaggery water on the tobacco was done by dealers in raw tobacco and by manufacturers. The question raised was whether the tundu tobacco sold by the assessee was 'chewing tobacco' produced as a result of any manufacturing operation and assessable as a manufactured product under Section 5(vii) of the Madras General Sales Tax Act, 1939, and the Madras High Court in Pachiappa Chettiar and Bros. v. State of Madras [1962] 13 S.T.C. 202 held 'that no process of manufacture was involved which would attract the taxability of the product under Section 5(vii) of the Act.

21. The learned Government Pleader in this context referred us to a decision of the Supreme Court in Hajee Abdul Shukoor & Co. v. State of Madras [1964] 15 S.T.C. 719 (S.C.) and contended that in determining whether particular goods are exigible to tax or not, the court is not bound to consider whether goods are put to any manufacturing process before being offered for sale. If the goods which are sought to be taxed are marketable commodities the mere fact that without any further manufacturing process they become a different type of marketable commodity, the same cannot be deemed to be excluded from tax. In Hajee Abdul Shukoor & Co. v. State of Madras [1964] 15 S.T.C. 719 (S.C.) their Lordships were considering whether tanned and untanned hides and skins could be treated as two different marketable commodities and whether both those commodities could be made liable to sales tax and held that they were. On the same parity of reasoning, it is contended that watery cocoanuts although they may become dry cocoanuts without any manufacturing process since 'watery cocoanuts' are marketable commodities as distinct from dried 'cocoanuts' both must be treated as two different goods and, therefore, liable to tax if they are dealt with as merchandise after they are dried as 'dry cocoanuts'. It is, however, unnecessary for us to consider whether 'watery cocoanuts' and 'dry cocoanuts' are two different items of merchandise and different marketable commodities. Even assuming that they are two different commodities if both are oil-seeds as envisaged by Section 14(vi) of the Central Act, they would be declared goods and would be exigible to tax as provided under Sections 8 and 9 read with Sections 14 and 15 of the Central Sales Tax Act. For the same reason it is not necessary for us to consider whether cocoanuts could be split up further into 'watery cocoanuts' and 'dry cocoanuts' for the purpose of making them liable to sales tax.

22. The learned Government Pleader laid great stress on the principle that in determining whether particular goods are exigible to tax or not, the meaning of the words used and the reference to the goods made in taxing statute, should be understood as in popular usage. They should be given a popular meaning and not a technical definition. It is contended that cocoanut is never referred to in popular parlance as an 'oil-seed' and therefore, 'watery cocoanut' should not be regarded as an 'oil-seed'. It is true that cocoanut is not referred to as an oil-seed as such, for, it is put to a variety of uses. But under Section 14(vi) of the Central Sales Tax Act the Legislature in declaring oil-seeds to be goods of special importance in the course of inter-State trade or commerce further proceeded to describe what it means and intends by the expression 'oil-seeds' and has referred to the qualities that must be found to exist before a particular commodity could be called an 'oil-seed', in the following words :

'Section 14(vi): Oil-seeds, that is to say, seeds yielding non-volatile oils used for human consumption, or in industry, or in the manufacture of varnishes, soaps and the like, or in lubrication, and volatile oils used chiefly in medicines, perfumes, cosmetics and the like.'

23. The Legislature evidently intended that if a particular commodity possessed these qualities, viz., it should yield oil, and such oil should be used for human consumption or in industry or in the manufacture of varnishes etc., it should be deemed to be goods described as oil-seeds under Section 14(vi) of the Central Act. If particular goods answer to this description by possessing all the qualities of an oil-seed mentioned in Section 14(vi), in our opinion, such goods cannot be excluded from the ambit of the expression 'oil-seeds' merely because they are not in popular parlance or mercantile transactions referred to as 'oil-seeds'.

24. In view of the above discussion it follows that 'watery cocoanuts' are 'oil-seeds' and are 'declared goods' within the meaning of Section 14(vi) of the Central Sales Tax Act.

25. In this view of the matter we do not deem it necessary to consider if 'watery cocoanuts' are 'fruits' or 'vegetables' and exempt from tax under G.O. Ms. No. 1091 Revenue dated 10th June, 1957.

26. The next question that falls for our consideration is as to what is the effect of the Ordinance 4 of 1969.

27. Mr. Suryanarayana Murthy, the learned Counsel for the petitioner contends that inasmuch as under Sections 8 and 9 of the Central Act the tax is to be levied in the same manner as provided under the State Act, 'watery cocoanuts' which have already been subjected to tax under the State Act at the point of purchase are not exigible to tax under the Central Sales Tax Act and in support of this contention he relies upon a decision in Sri Krishna Coconut Co. v. Commercial Tax Officer [1968] 22 S.T.C. 404 (to which one of us was a party). In that decision following the principle, viz., 'that the expression 'levy', meaning 'impose', in Section 9(1) of the Central Act referred to the expression 'levied' in Section 5(3)(a) of the State Act and, therefore, the Central Act had not made a departure in the manner of levy of tax on the specified goods which are taxed only at the single point under the State Act' enunciated in State of Mysore v. Lakshminarasimhiah Setty and Sons [1965] 16 S.T.C. 231 (S.C.) it was held 'that as under the State Act during the period August-September, 1966, levy on 'watery cocoanuts' had to be made only on the first sale point, tax under the Central Sales Tax Act, 1956, cannot be levied on any subsequent sales.' If the position of law were to remain unchanged, we would have no hesitation in accepting the contention of the learned Counsel for the petitioner. But Ordinance 4 of 1969 had made a substantial change in the manner of levy of tax under the Central Sales Tax Act. By Section 2 of the Ordinance it is provided as follows :

During the period of operation of this Ordinance the Central Sales Tax Act, 1956 (hereinafter referred to as the principal Act) shall have effect subject to the amendments specified in Sections 3, 4, 5, 6, 7 and 8.

28. In Section 2(j) of the principal Act for the words 'and determined in the prescribed manner', the words 'and determined in accordance with the provisions of this Act and the rules made thereunder' were directed to be substituted by Section 3 of the Ordinance.

29. Section 3 further directs that these words shall be deemed always to have been substituted.

30. As pointed out by the Supreme Court in Civil Appeals Nos. 1228 and 1229 of 1969, The State of Kerala v. P.P. Joseph & Co. and Joseph Elias [1970] 25 S.T.C. 483 (S.C.), 'the effect of the amendment is that the turnover for the purpose of the Central Sales Tax Act has to be determined in accordance with the provisions of the Central Act and the rules made thereunder.' The effect of the amendment is that this provision has retrospective operation from the date on which the principal Act was enacted.

31. Section 4 of the Ordinance amends Section 6 of the principal Act by the insertion of Sub-section (1A) after Sub-section (1) of Section 6 of the principal Act by employing the following words :

(1A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State.

32. Further, for Section 9 of the principal Act, the following Section was substituted by Section 6 of the Ordinance.

9. (1) Notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, re-assessment, levy or collection of any tax made or purporting to have been made, any action or thing taken or done in relation to such assessment, re-assessment, levy or collection under the provisions of the principal Act before the commencement of this Ordinance, shall be deemed to be as valid and effective as if such assessment, re-assessment, levy or collection or action or thing had been made, taken or done under the principal Act as amended by this Ordinance and accordingly--

(a) all acts, proceedings or things done or taken by the Government or by any officer of the Government or by any other authority in connection with the assessment, re-assessment, levy or collection of such tax shall, for all purposes, be deemed to be, and to have always been, done or taken in accordance with law;

(b) no suit or other proceedings shall be maintained or continued in any court or before any authority for the refund of any such tax; and

(c) no court shall enforce any decree or order directing the refund of any such tax.

33. Section 6 of the Ordinance also lays down that the new Section 9 'shall be deemed always to have been substituted'.

34. These amendments to the Central Sales Tax Act now make it clear that a tax under the Central Sales Tax Act is not made dependent upon the State Sales Tax Act as regards sales in the course of inter-State trade or commerce. Irrespective of whether tax is leviable under the State Act or not, goods are exigible to tax under the Central Act having regard to the provisions contained in the Central Act. The contention of the learned Counsel for the petitioner that as the Ordinance was effected only with a view to supersede the effect of the judgment of the Supreme Court in State of Mysore v. Lakshminarasimhiah Setty and Sons [1965] 16 S.T.C. 231 (S.C.) only such of those goods as were liable to tax prior to the Ordinance and were not liable to assessment on account of the said decision should be deemed to have been now made exigible to tax but not goods which were not liable to tax under the Central Act even prior to the judgment of the Supreme Court. We are unable to agree with this contention. While the judgment of the Supreme Court may have occasioned the amendment, the scope of the amendment cannot be limited by any consideration that the amendment was effected only with a view to meet the situation created by the said judgment. The wording of the amended sections are very clear. Their Lordships of the Supreme Court had occasion to consider the effect of the amendment in Civil Appeals Nos. 1228 and 1229 of 1969, The State of Kerala v. P.P. Joseph & Co. and Joseph Ellas [1970] 25 S.T.C. 483 (S.C.). Shah, Ag. C.J. (as he then was) speaking for the court laid down as follows :

The effect of the Ordinance is to supersede the judgment of this Court in Yaddalam Lakshminarasimhiah Setty's case [1965] 16 S.T.C. 231 (S.C.) . It is now made clear that even if no tax was leviable under the general sales tax law of the State in respect of intra-State transactions of sale, tax will be leviable on sale of goods effected by a dealer in the course of inter-State trade according to the sales tax law of the appropriate State. By Section 9(2) of the Central Sales Tax Act as modified it is enacted that the authorities empowered to assess, re-assess, collect and enforce payment of any tax under the general sales tax law of the State shall be entitled, on behalf of the Government of India, to assess, re-assess, collect and enforce payment of tax by a dealer under the Act as if the tax payable by such a dealer under the Act was tax payable under the general sales tax law of the State, and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State. Thereby the procedural law prescribed by the general sales tax law of the State applies in the matter of assessment, re-assessment, collection and enforcement of payments of tax under the Central Sales Tax Act, but the liability to pay is determined by the provisions of the Central Sales Tax Act.

35. In view of the pronouncement of the Supreme Court, we must hold that, whether 'watery cocoanuts' are exigible to tax under the Central Sales Tax Act, irrespective of the fact they are liable to tax under the Andhra Pradesh General Sales Tax Act or not, they would be liable to tax in the course of inter-State trade or commerce, under the Central Act once they are held to be 'oil-seeds' within the meaning of Section 14(vi) of the Central Act.

36. As the liability of 'watery cocoanuts' to sales tax in the course of inter-State trade or commerce has to be determined with reference to the provisions of the Central Act, in view of the conclusion we have reached that 'watery cocoanuts' are 'oil-seeds', the notice issued by the respondents, in so far as it proposes to levy tax at ten per cent. is wholly without jurisdiction and illegal. But to the extent this notice proposes to impose a tax at the rate of two per cent., the Commercial Tax Officer has jurisdiction. What is the extent of turnover which is exigible to such tax is, however, a matter for enquiry by the competent authority and to this extent, the respondent cannot be prohibited or in any manner restrained from calling upon the petitioner to show cause why he should not be assessed to tax under the Central Sales Tax Act.

37. Mr. Suryanarayana Murthy, the learned Counsel for the petitioner, however, contends that since these goods were already subjected to tax under the State Act, they are entitled to a refund of that tax under Section 15(b) of the Central Act. It may be that the petitioner is so entitled. But the fact that he is entitled to refund of the tax paid by him under the State Act can arise only after the tax under the Central Sales Tax Act is assessed. Further, the claim for refund is subject to such conditions as are provided in the State law. These are all matters which fall for consideration after the goods are assessed to tax under the Central Sales Tax Act and do not take away the jurisdiction of the respondents to make an assessment under the Central Act. In this view of the matter we must hold that the impugned notice, in so far as it proposes to assess the petitioner's turnover on 'watery cocoanuts' at ten per cent. is illegal and without jurisdiction and the sales tax authorities are not entitled to call upon the petitioner to show cause in this behalf. The other part of the notice, viz., the proposal to tax the petitioner's turnover at two per cent. is perfectly legal and valid and the respondents are fully competent to issue the same and, therefore, they cannot be restrained by the issue of a writ or direction by this Court. As the two items proposed to be taxed are distinct, they could be severed and the notice to the extent it is illegal and without jurisdiction is, therefore, quashed and the respondents are restrained from proceeding to impose a tax at the rate of 10 per cent. on the petitioner's turnover of watery cocoanuts.

38. In the result the petitioner succeeds in part as indicated above and the writ petition is allowed accordingly. The petitioner will get his costs.


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