V. Balakrishna Eradi, C.J.
1. These three tax revision cases have been filed by the State represented by the Deputy Commissioner of Sales Tax (Law), Ernakulam, against the common order passed by the Sales Tax Appellate Tribunal (hereinafter called the Tribunal) in three appeals filed by the same assessee in respect of assessments to sales tax made for the years 1973-74, 1974-75 and 1975-76.
2. The assessee is a co-operative society-Champakulam Village Service Co-operative Society, Alleppey. During the relevant assessment years, the society, as part of its business, had been dealing in various varieties of fertilisers such as rock phosphate, ultrafos, dolomite, peramphos, azo and thomas phosphate. In the retuns filed by it for the three assessment years the assessee had not included the aforementioned varieties of fertilisers in the taxable turnover on the basis that the sales effected by the assessee in respect of these goods not being the first sales within the State were not taxable inasmuch as the goods fall within the description 'chemical fertilisers including bone-meal' in item 54 of the First Schedule to the Kerala General Sales Tax Act (hereinafter called the Act). The assessing authority however brought to tax the turnover relating to the sales of the aforementioned varieties of fertilisers and finalised the assessments on that basis. The appeals filed by the assessee before the Appellate Assistant Commissioner of Sales Tax, Alleppey, were dismissed by the said authority and the assessments were confirmed. The assessee thereupon filed second appeals before the Tribunal reiterating the contention that the disputed turnover related to 'chemical fertilisers' covered by item 54 of the First Schedule to the Act and since, admittedly, the sales effected by the assessee were not the first sales of the goods in question within the State, they were not taxable. While dealing with the said contention, the Tribunal took the view that the question whether rock phosphate is a 'chemical fertiliser' coming under item 54 of the First Schedule was concluded by the decision of this Court in State Trading Corporation of India Ltd. v. Sales Tax Officer 1972 K.L.J. 741, and hence the claim for exemption put forward by the assessee had to be upheld. The Tribunal went on to state that the other varieties of fertilisers dealt in by the assessee were only 'similar items known under different names' and hence the assessee was entitled to exemption in respect of the sales of the different varieties of fertilisers effected by it. The legality and correctness of the decision so rendered by the Tribunal are under challenge in these tax revision cases filed on behalf of the State.
3. Item 54 of the First Schedule, as it stood at the relevant time, was as follows:
--------------------------------------------------------------------------------Sl. No. Description of the goods Point of levy Rate of tax--------------------------------------------------------------------------------(per cent)54. Chemical fertilisers includ- At the point of first 2.ing bone-meal. sale in the State bya dealer who is liable to tax under Section 5.--------------------------------------------------------------------------------
It is contended by the learned Government Pleader appearing on behalf of the revision-petitioner that neither rock phosphate nor any of the other varieties of fertilisers sold by the assessee such as ultrafos, dolomite, thomas phosphate, peramphos and azo can be regarded as 'chemical fertilisers' so as to attract the applicability of item 54 of the First Schedule. It was urged by the Government Pleader that in the decision of a learned single Judge of this Court reported in State Trading Corporation of India Ltd. v. Sales Tax Officer 1972 K.L.J. 741, there has been no pronouncement by this Court on the question whether rock phosphate is a chemical fertiliser or not and that there was also no occasion for this Court in that case to consider the said question and pronounce upon it since it was conceded by both sides that rock phosphate was a chemical fertiliser falling within the scope of item 54. On this basis it was submitted by the Government Pleader that the Tribunal has erred in treating the said question as having been concluded by the aforesaid decision of this Court and in not dealing with the question on the merits before it proceeded to set aside the orders passed by the first appellate authority and the assessing authority.
4. Relying on a certain passage contained in Volume 9 of Encyclopedia of Chemical Technology (Second Edition) by Kirk-Othmer published by Inter-science Publishers, John Wiley & Sons, Inc. in New York, the Government Pleader contended that rock phosphate is a mineral (phosphate ore), which is collected by conducting mining operations in areas where there are extensive deposits of sedimentary origin and that very often the ore is used as a fertiliser in the very form in which it is obtained from the mine or after crushing into powder form. According to the Government Pleader, in order to classify an item of fertiliser as chemical fertiliser it must satisfy the test of its being a substance produced by human agency by application of chemical process to some raw material and the said test is not satisfied in the case of rock phosphate.
5. The Government Pleader is, in our opinion, right in his submission that the decision of this Court in State Trading Corporation of India Ltd. v. Sales Tax Officer 1972 K.L.J. 741 cannot be regarded as an authority laying down that rock phosphate is a chemical fertiliser. There was no occasion for this Court in that case to consider the said question because no contention was put forward by the State that rock phosphate was not a chemical fertiliser. Hence this Court proceeded to decide the case on the assumption that rock phosphate was a chemical fertiliser which was a premise admitted by both sides. The Tribunal was, therefore, manifestly in error in thinking that this Court had laid down in the above decision that rock phosphate is a chemical fertiliser and that in view of the said precedent which was binding on it no independent consideration of the said question was called for at the hands of the Tribunal.
6. It is true that the particulars furnished in the Encyclopedia of Chemical Technology (Second Edition) by Kirk-Othmer and in Encyclopedia Americana, Volume 11, disclose that rock phosphate is an ore which is obtained by conducting mining operations and that the said ore can be put to use as a fertiliser either in its natural condition after reducing the rock pebbles into powder or in a reformed state after subjecting it to treatment with sulphuric acid or phosphoric acid, etc., so as to render it soluble and capable of being easily absorbed by the plants. Inasmuch as there is no material on record to show in what form the 'rock phosphate' was sold by the assessee and there has also not been any satisfactory investigation of the matter by the Tribunal we would, ordinarily, have been inclined to direct the Tribunal to re-investigate into the said question after permitting the parties to adduce such additional evidence as they may wish to place before the Tribunal in respect of the matter. But, such a course has now been rendered unnecessary in view of the clear indication given by the legislature itself about its. intention to regard rock phosphate in all its forms as a 'chemical fertiliser' by the amendment effected in item 54 of the First Schedule to the Act by Act 21 of 1978 [The Kerala General Sales Tax (Amendment) Act, 1978]. By the said amendment, which was introduced by Section 22 of Act 21 of 1978, original item 54 of the First Schedule was deleted and in its place a new item was substituted, which has 23 sub-items. In sub-items (i) to (xxii) are specified various varieties of fertilisers and sub-item (xxi) is rock phosphate. Sub-item (xxiii) is in the nature of a residuary item and it reads : 'Any other chemical fertilisers.' The word 'other' used in sub-item (xxiii) furnishes a clear and conclusive indication that the varieties of fertilisers mentioned in sub-items (i) to (xxii) are treated by the legislature as 'chemical fertilisers'. There cannot, therefore, be any doubt that under the amended item No. 54 rock phosphate has been treated by the legislature as a 'chemical fertiliser'. In the Notes on Clauses appended to the Bill, which was ultimately enacted as Act 21 of 1978, it is mentioned in respect of Clause 22 (which corresponds to Section 23 of the Act) that the purpose of the amendment was, inter alia, 'to modify the description of certain goods specified therein'. From this it is clear that the amendment has not effected any material change in the scope of item 54, as it originally stood, but has merely modified the description of the goods as given in that item, while retaining the identity of the goods. As already noticed, the description of the goods contained in original item 54 was 'chemical fertilisers including bone-meal'. If the amendment has given only a more detailed description of the goods covered by the said item, as is made clear by the Notes on Clauses referred to above, it must necessarily follow that rock phosphate, which is now shown as sub-item (xxi) in the amended item 54, was even originally intended by the legislature to be taken in by the description 'chemical fertilisers including bone-meal'. There is, therefore, no longer any room for controversy or speculation as to whether rock phosphate is a fertiliser falling within the description 'chemical fertiliser' in item 54 of the First Schedule, as it stood prior to the amendment. In this view, it is unnecessary for any further investigation being conducted as to whether or not rock phosphate in its different forms is liable to be treated as a chemical fertiliser. On this limited ground we uphold the conclusion recorded by the Tribunal that rock phosphate is a chemical fertiliser falling within the purview of item 54 of the First Schedule to the Act.
7. The question still remains as to whether the other varieties of fertilisers going by the names ultrafos, dolomite, peramphos, azo and thomas phosphate are also liable to be treated as chemical fertilisers falling within the scope of item 54 of the First Schedule. In regard to these items the Tribunal has merely mentioned that these are 'similar items known under different names', obviously meaning that they are similar to rock phosphate. In our opinion, the Government Pleader is right in his submission that the said observation is not based on a consideration of any of the materials available on record. If the aforementioned varieties of fertilisers are merely different brand names under which rock phosphate itself is sold, the assessee will undoubtedly be entitled to the benefit of exemption from taxation on the ground that the goods are covered by item 54 of the First Schedule and the sales effected by the assessee are not the first sales within the State by a dealer liable to tax under the Act. But, if, on the other hand, these varieties of fertilisers cannot be regarded as mere rock phosphate in its natural form but are products derived by subjecting rock phosphate, by itself or along with any other raw materials, to some chemical process then the question will have to be considered as to whether the aforementioned varieties of fertilisers fall within the scope of item 54. This is a matter which requires to be investigated after giving an opportunity to both sides to adduce further evidence relating to the same. Hence, while confirming the finding of the Tribunal that the assessee is entitled to exemption from taxation in respect of the sales effected by it in respect of rock phosphate, we set aside the order of the Tribunal and remand the three appeals-T. A. Nos. 823, 824 and 825 of 1977-to the Tribunal for fresh disposal after a de novo determination of the aforesaid question as to whether the varieties of fertilisers sold by the assessee under the names ultrafos, dolomite, peramphos, azo and thomas phosphate are chemical fertilisers falling within the purview of item 54 of the First Schedule. The Tribunal will afford an opportunity to both sides to adduce further documentary evidence in respect of this matter and it will also be at liberty to remit the case for determination to the assessing authority if such a course is considered necessary by the Tribunal.
8. The tax revision cases are disposed of as above. The parties will bear their respective costs.