V. Balakrishna Eradi, C.J.
1. The Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam, is the revision petitioner in all these cases, which arise out of assessments to sales tax made against the respondent-company for the years 1969-70 to 1974-75 (inclusive). These cases may be conveniently divided into two groups on the basis of certain distinctive features relating to the course of action adopted by the assessing authority and the first and second appellate authorities in relation to the assessments for those years. The first group consists of T. R. C. Nos. 135 of 1979, 136 of 1979 and 141 of 1979, which respectively relate to the assessment years 1969-70, 1971-72 and 1970-71. The second group consists of T. R. C. Nos. 160 of 1979, 166 of 1979 and 169 of 1979, which relate to the assessment years 1972-73, 1974-75 and 1973-74 respectively.
2. The assessee-The United Coffee Supply Co. Ltd., Palghat-is a dealer in raw coffee beans, roasted coffee beans, pure coffee powder, French coffee, etc. According to the assessee, the company had effected purchases of raw coffee beans in the State of Kerala, despatched those goods to its factory at Coimbatore, where it was processed, and converted it into different varieties, such as roasted beans, pure coffee, and French coffee. The question arising before us concerns the exigibility to tax of the turnover pertaining to the sales effected by the assessee of the aforesaid products which are said to have been received l>y him from the factory at Coimbatore and sold from its depot in Palghat.
3. In the proceedings for assessment to sales tax under the Kerala General Sales Tax Act (hereinafter called the Act) taken against the assessee by the Sales Tax Officer, Palghat, for the years 1969-70 to 1971-72 (covered by the first group), the assessee claimed exemption from tax in respect of the entirety of the turnover relating to the sale of the aforementioned products on the basis that the goods in question had already been subjected to tax in the State of Kerala at the stage of purchase of the raw coffee beans by the assessee. In putting forward this contention the underlying assumption was twofold, namely, that the products received back by the assessee from its factory at Coimbatore could be traced to the raw coffee beans purchased by the assessee in the State of Kerala and despatched to Coimbatore for processing, and secondly that the varieties of the products so received all fell within the description 'coffee' contained in item 37 of the First Schedule to the Act. In other words, according to the assessee, the commercial identity of the article had not undergone any change notwithstanding its having been subjected to some mode of processing at the factory in Coimbatore and it had retained its original character as coffee. Admittedly, the disputed turnover relates to sales effected by the assessee from its depot at Palghat of 'French coffee' which is an admixture of pure coffee and chicory, the proportion being 55 per cent pure coffee and 45 per cent chicory. The assessee-company has no case that it had effected any purchase of chicory in the State of Kerala so as to contend that tax had been paid in respect of the chicory portion contained in the French coffee.
4. The Sales Tax Officer, while finalising the assessments for the aforesaid three years accepted the assessee's contention in so far as it pertained to the sales of roasted coffee beans and pure coffee powder. But as regards the turnover of sale of French coffee, he held that the sale was effected by the assessee for the first time within the State of the said commodity and hence were chargeable to tax. The assessee took the matter in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner took the view that the chicory content contained in the French coffee sold by the assessee was liable to be taxed, since in respect of the pure coffee content of the said commodity the assessee had already paid tax at the time of his purchase of the raw coffee beans within the State. In so holding the Appellate Assistant Commissioner obviously assumed that the pure coffee content of the amalgam had been derived out of the raw coffee beans which the assessee had purchased within the State of Kerala and despatched to Coimbatore. The State did not prefer any appeal against the decision of the Appellate Assistant Commissioner ; but the assessee filed the second appeals contending that no tax could be levied even in respect of the chicory content of the French coffee sold by the company. In those appeals the Tribunal was also concerned with the limited question as to whether what had been sold by the assessee under the name 'French coffee' was liable to be taxed treating the sales effected by the assessee as first sale within the State in respect of the said commodity.
5. For the years 1972-73 to 1947-75 covered by the second group, the Sales Tax Officer brought to tax the entire sales turnover of the assessee relating to all the three varieties of the products received from the Coimbatore factory, namely, roasted coffee beans, pure coffee and French coffee, holding that there was no evidence before him to connect those goods with the raw coffee beans in respect of which tax had been levied within this State on the occasion of the purchase effected by the assessee. The Appellate Assistant Commissioner, before whom the matter was carried in appeal by the assessee, adopted in respect of these years also the view taken by him while disposing of the appeals pertaining to the first group that only the chicory content of French coffee sold by the assessee was liable to be subjected to tax and that in respect of the pure coffee content of the French coffee as well as in respect of the sales of roasted beans and pure coffee powder the sales effected by the assessee were not liable to be treated as first sales within the State so as to attract liability to tax. The department preferred second appeals before the Tribunal putting forward the contention that no material at all had been produced by the assessee to establish that the products that the assessee is said to have received from Coimbatore had been made out of the raw coffee beans purchased by the assessee in Kerala in respect of which sales tax had already been levied and hence there was no scope at all for treating the sales effected by the assessee in respect of any of the aforementioned varieties of products as other than first sales within the State. Another point put forward by the revenue in the appeals filed by it was that 'French coffee' sold by the assessee which had been admittedly prepared by the same process involving the admixture of 55 per cent of pure coffee powder with 45 per cent chicory could not be regarded as falling within the scope of the entry 'coffee' contained in item 37 of the First Schedule to the Act.
6. It was accordingly urged by the department before the Tribunal that in effecting the sales of French coffee the assessee was not dealing in the same goods, namely, raw coffee beans, which had been originally subjected to the levy of sales tax at the point of purchase by the assessee within the State. On this basis it was submitted by ,the department that there was no justification for treating the sales of French coffee as anything other than first sales of the said commodity within the State.
7. The Tribunal disposed of the two groups of cases by two separate orders passed on the same date. On the question whether French coffee is 'coffee' falling within entry No. 37 of the First Schedule, the Tribunal merely followed an earlier decision rendered by it in T. A. Nos. 49 and 60 of 1967 dated 20th July, 1967, wherein it had taken the view that 'French coffee' is 'coffee' within the meaning of the said entry in the Act. Apart from referring to the aforesaid prior decision rendered by it there is no discussion of the said question at all in the present order passed by the Tribunal. On the further question as to whether the Appellate Assistant Commissioner was justified in assuming that the product sold by the assessee as roasted beans, pure coffee and French coffee (for the years covered by the first group this question will arise only in respect of French coffee, since the department had not filed any appeal against the decision of the Appellate Assistant Commissioner) had been actually made out of the raw coffee beans purchased by the assessee in the State of Kerala and despatched to Coimbatore, the Tribunal upheld the contention of the State that the evidence produced by the assessee was not sufficient to establish the identity of the goods so as to justify the conclusion that the goods in question had already been subjected to tax once in this State. The finding of the Appellate Assistant Commissioner that the right to exemption claimed had been proved, was therefore vacated by the Tribunal, but the Tribunal considered that the interest of justice required that the assessee should be given an opportunity to produce further evidence by way of stock books and other records to establish that the coffee products sold in Kerala had been made out of coffee seeds purchased within the State. In this view the Tribunal set aside the order passed by the Appellate Assistant Commissioner and remitted the case to the assessing authority for fresh disposal in accordance with law in the light of the directions and observations contained in the Tribunal's order.
8. In these revision petitions filed by the State, the main contention taken by the learned Government Pleader appearing on behalf of the revision petitioner is that the Tribunal was manifestly in error in thinking that French coffee which is admittedly a product prepared by a process involving the mixing of pure coffee powder and chicory powder in the proportion of 55 per cent and 45 per cent respectively is 'coffee' for the purpose of entry No. 37 of the First Schedule. Secondly, it was argued that the assessee had been already afforded a full and fair opportunity to adduce all available evidence for establishing his case that the products referred to above sold by him by way of roasted coffee beans, pure coffee and French coffee had actually been made out of the raw coffee beans purchased in Kerala and despatched to Coimbatore and the company had totally failed to discharge the onus that lay heavily on it and hence there was no justification for the Tribunal while deciding the second appeal to remand the case to the assessing authority for the purpose of affording a further opportunity to the assessee to adduce supplementary evidence relating to the aforesaid matter.
9. We find that there is force in the first point urged by the Government Pleader that what was sold by the assessee as French coffee cannot be regarded as 'coffee' covered by entry No. 37 of the First Schedule. While 'coffee' is included in the First Schedule as entry No. 37, 'chicory' is given a totally separate treatment by including it as item No. 38 of the same schedule. Assuming that the assessee's case that the product received back by the company from Coimbatore had been actually made out of the raw coffee seeds purchased by the assessee in Kerala, it cannot be said that the identity of the goods had not undergone a material and substantial change. Raw coffee seed no doubt falls within entry No. 37. If it is merely roasted and ground into pure coffee, the identity of the article is not altered. But such is not the position in relation to 'French coffee', which contains only 55 per cent of pure coffee and the rest (45 per cent) being chicory powder, the two having been mixed together in the process of manufacture. In Deputy Commissioner of Commercial Taxes v. Iyanar Coffee and Tea Co.  13 S.T.C. 457 a Division Bench of the Madras High Court had occasion to consider whether the expression 'coffee' occurring in Section 6(v) of the Madras General Sales Tax Act, 1939, would include French coffee. The learned Judges held that French coffee made by admixture of coffee powder and chicory powder is not the same as 'coffee' mentioned in Section 5(v) of the Madras Act. We are in respectful agreement with the said view. Tested with reference to the common man's understanding of the expression 'coffee' or even with reference to the use of the said expression in commercial parlance, 'French coffee' cannot be regarded as coffee. It was urged before us by the counsel for the assessee that pure coffee as well as French coffee are both put to the same use. As pointed out by us in Deputy Commissioner v. Western India Plywoods (P.) Ltd. 1980 K.L.T. 592, the test of user is not a safe or conclusive guide. The question to be considered is whether the goods in question can be regarded as the same as that covered by the particular entry in the First Schedule. A person asking for coffee in the market will ordinarily expect to be supplied pure coffee powder and not 'French coffee' which is something quite different from pure coffee powder. Reference may usefully be made in this connection to the provisions of the Prevention of Food Adulteration Act, which govern transactions of sale in articles of food including coffee. In Appendix B1 under the heading Beverages-Non-alcoholic, 'coffee' is included as item A. 08.01, and it is shown to include, coffee (green, raw or unroasted). The said item in so far as it is relevant for our present purpose reads:
A. 08.01.-(1) Coffee (green, raw or unroasted) means the seed of coffee arabica (coffee liberica, coffee excelsa or coffee robusta) freed from all but a small portion of its spermoderm by decortication.
(2) Roasted coffee means properly cleaned green coffee which has been roasted to a brown colour and has developed its characteristic aroma.
(3) Ground coffee means the powdered product obtained from 'roasted coffee' only and shall be free from husk.
(4) Coffee (green, raw or unroasted), 'roasted coffee' and 'ground coffee' shall be free from any artificial colouring, flavouring, facing, extraneous matter or glazing substance and shall be in sound, dry and fresh condition free from rancid or obnoxious flavour.
Item A. 08.02 refers to chicory. Coffee chicory mixture is thereafter dealt with as a totally distinct article of food under item A. 08.03. That item reads:
A. 08.03.-Coffee chicory mixture of coffee mixed with chicory or coffee and chicory shall be pure ground coffee mixed with roasted and ground chicory and shall be in sound, dry and dust-free condition with no rancid or obnoxious flavour.
(The coffee chicory mixture shall contain caffeine not less than 0.6 per cent and the aqueous extract shall not be more than 50 per cent.
Any tin or other receptacle containing a mixture of coffee and chicory shall not bear any misleading expression.
The expression 'French coffee' may be used if followed by the words 'mixed with chicory' or 'blended with chicory'.)
It is very clear from these three different items contained in the schedule in appendix B to the Prevention of Food Adulteration Rules that, for the purpose of that Act, coffee chicory mixture is regarded as an article distinct and different from 'coffee' and that any tin or other receptacle containing such a mixture should carry the description 'French coffee' or the words 'mixed with chicory' or 'blended with chicory'. Under the law of this land sales of food articles can be effected only in conformity with the aforesaid provision. Hence, nobody asking for coffee in a shop can legally be supplied with French coffee or coffee mixed with chicory.
10. Such being the position, we are unable to agree with the view expressed by the Tribunal that French coffee is the same as 'coffee' covered by entry No. 37 of the First Schedule. Hence the sales of 'French coffee' effected by the assessee have to be treated as first sales within the State and are exigible to tax. The contrary view expressed by the Tribunal will stand set aside.
11. Notwithstanding the contention advanced by the Government Pleader that the Tribunal was not justified in extending an opportunity to the assessee to adduce further evidence on the question as to whether the products received by him from Coimbatore were actually made out of raw coffee beans purchased in Kerala by the assessee, we do not find any justification for interference in revision with the said order of remand passed by the Tribunal. The order of remittal will therefore stand, but in so far as the assessment years 1969-70, 1970-71 and 1971-72 covered by the first group are concerned the scope of the remand will be limited to a consideration of the question as to whether the chicory content of the French coffee sold by the assessee is liable to be subjected to tax within the State. This is for the reason that the State had not preferred any appeal against the orders passed by the Appellate Assistant Commissioner in respect of those assessment years and had allowed his decision to become final. For the remaining three assessment years covered by the second group, namely, 1972-73, 1973-74 and 1974-75, the assessing authority will have to conduct the investigation only in respect of the sales turnover relating to the roasted coffee beans and pure coffee after affording an opportunity to the assessee to establish its case that those products were actually out of raw coffee beans purchased within the State. In the light of our conclusion that the French coffee sold by the assessee cannot be regarded as identical with coffee covered by entry No. 37, the assessee is not entitled to any exemption from tax in respect of the turnover of sales of French coffee. The revision petitions are allowed to the extent indicated above. The parties will bear their respective costs.
1. Prevention of Food Adulteration Rules, 1955.