1. At the instance of the Commissioner of Sales Tax, the Appellate Tribunal, Sales Tax, Delhi, has referred the following question of law for the opinion of this Court :
'Whether, on the facts and in the circumstances of the case, the learned Financial Commissioner was justified in holding that soft and watery coconuts were 'fresh fruits' within the meaning of entry 8 of the Second Schedule to the Bengal Finance (Sales Tax) Act, 1941, and dry coconuts, i.e., copra, were 'oil-seeds' under entry 5 of the Third Schedule to the said Act ?'
2. The assessment year in question is 1968-69. The Assessing Authority, Ward No. 25, vide its order dated 11th July, 1972, completed the assessment. He did not levy tax on coconuts sold by the dealer on the ground that the same were fresh fruits within the meaning of entry 8 of the Second Schedule to the Bengal Finance (Sales Tax) Act, 1941 (hereinafter called 'the Act').
3. The Assistant Commissioner, Sales Tax, issued a show cause notice under section 20(3) of the Act to the dealer to explain as to why the assessment order in question be not revised inasmuch as the sale of coconuts be taxed at the rate of 2 per cent. In response to this notice, the counsel for the dealer appeared and produced the books of account which were examined. The Assistant Commissioner relying on the judgment in the case of Tagoob Mohammad of Kanchili v. Commercial Tax Officer, Srikakulam  28 STC 110 (SC) held that watery coconuts were oil-seeds and as such were taxable at the rate of 2 per cent. Accordingly by suo motu revision he raised an additional demand for Rs. 1,531.50.
4. Aggrieved by the aforesaid order of the Assistant Commissioner, the dealer filed a revision petition before the Financial Commissioner under section 20(3) of the Act. The Financial Commissioner classified coconuts into two categories (1) fresh coconuts, i.e., soft and watery, and (2) dry coconuts or copra, and by his order dated 28th July, 1975, held that there was no doubt in his mind that the fresh watery and tender coconuts as sold by the fruit and vegetable merchants and commonly used as fresh fruit can be classified as 'fresh fruit' and the other type of coconuts, i.e., dry or copra, could be classified as 'oil-seeds' as clearly laid down in section 14 of the Central Sales Tax Act. In the light of his findings he remanded the case to the assessing authority with a direction that he should apportion and bifurcate the sale of coconuts in the manner indicated above and thereafter pass the necessary orders according to law.
5. The Commissioner of Sales Tax sought reference of the aforesaid question of law on the ground that the two categories as made by the Financial Commissioner were artificial. As a consequence, the aforesaid question of law has been referred to this Court for opinion.
6. The question for consideration is whether soft and watery coconuts could be classified as 'fresh fruit' so as to fall within entry 8 of the Second Schedule to the Act. The expression 'coconut' does not find mention in the Act or in any of the schedules thereto. The Supreme Court in the case of Sri Siddhi Vinayaka Coconut & Co. v. State of Andhra Pradesh : 1SCR440 held that 'watery coconuts' and 'dried coconuts' are two distinct commodities commercially speaking. Watery coconuts are put to a variety of uses, e.g., for cooking purposes, for religious and social functions, whereas dried coconuts are used mainly for extracting oil. A Division Bench of the Andhra Pradesh High Court in the case of Tagoob Mohammad of Kanchili v. Commercial Tax Officer, Srikakulam  28 STC 110 referred to above, after discussing various cases, on the subject, came to the conclusion that 'watery coconuts' are oil-seeds and are declared goods within the meaning of section 14(vi) of the Central Sales Tax Act, 1956. It was further held that if a commodity possesses all the qualities of an oil-seed mentioned in section 14(vi) of the Central Act, such a commodity cannot be excluded from the ambit of the expression 'oil-seeds' merely because it is not, in popular parlance or mercantile transactions, referred to as oil-seeds. This case of the Andhra Pradesh High Court was considered by their Lordships of the Supreme Court in the case of Sri Siddhi Vinayaka Coconut & Co. : 1SCR440 referred to above. The correctness of the decision was not questioned before the Supreme Court. The contention of the learned counsel for the petitioner before us was that in certain circumstances green and watery coconut may be classified as 'fresh fruit' but the said coconut is never sold in Delhi as the same is a perishable item. The watery coconut which is sold in Delhi can never be classified as a 'fresh fruit' as the same is not a perishable item. The contention, in our opinion, has merit and we do not find any ground to disagree with the view taken by the Division Bench of the Andhra Pradesh High Court. In this view of the matter, it cannot be said that the Financial Commissioner was right in categorising the two types of coconuts which are sold by the respondent in Delhi and the said categorisation is only artificial.
7. For the reasons recorded above, we answer the question referred in the negative, i.e., in favor of the department and against the assessed. Since there was no appearance for the respondent we make no order as to costs.
8. Reference answered in the negative.
Print this page
Email this page