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Deputy Commissioner of Commercial Taxes Vs. R. Kuppuswamy Chettiar - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case No. 49 of 1971 (Revision No. 29 of 1971)
Judge
Reported in[1976]38STC587(Mad)
AppellantDeputy Commissioner of Commercial Taxes
RespondentR. Kuppuswamy Chettiar
Appellant AdvocateK. Venkataswami, Additional Government Pleader No. I
Respondent AdvocateC. Venkataraman, Adv.
DispositionPetition allowed
Cases ReferredAvadh Sugar Mills Ltd. v. Sales Tax Officer
Excerpt:
- - soaps and the like or inlubrication and volatile oils used chiefly in medicines, perfumes. cosmetics and the like. among these declared goods covered under section 14(vi) are :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. we are of the view that the word 'seed' must retain its meaning in the phrase 'oil-seed' and it is an article, which, while being a seed, is capable also of yielding oil that can well be described as oil-seed.v. ramaswami, j.1. the point that arises for consideration in this case is as to whether fried groundnut kernel is an oil-seed within the meaning of item 6 of the second schedule to the tamil nadu general sales tax act. on the ground that the assessee after purchasing the groundnut kernel fried the same and sold it, a turnover of rs. 25,396.20 relating to sale of fried groundnut was subjected to multi-point tax at 2.5 per cent by the assessing officer. this order was confirmed by the appellate assistant commissioner. but, on further appeal, the tribunal was of the view that even after frying, the characteristics of groundnut kernel were not lost and that, therefore, the turnover will have to be deleted from the assessment. questioning the view of the tribunal, the revenue has filed this.....
Judgment:

V. Ramaswami, J.

1. The point that arises for consideration in this case is as to whether fried groundnut kernel is an oil-seed within the meaning of item 6 of the Second Schedule to the Tamil Nadu General Sales Tax Act. On the ground that the assessee after purchasing the groundnut kernel fried the same and sold it, a turnover of Rs. 25,396.20 relating to sale of fried groundnut was subjected to multi-point tax at 2.5 per cent by the assessing officer. This order was confirmed by the Appellate Assistant Commissioner. But, on further appeal, the Tribunal was of the view that even after frying, the characteristics of groundnut kernel were not lost and that, therefore, the turnover will have to be deleted from the assessment. Questioning the view of the Tribunal, the revenue has filed this revision petition.

2. Item 6 of the Second Schedule to the Tamil Nadu General Sales Tax Act, as it stood in the relevant assessment year 1966-67, reads as follows :

Serial Description of Point of Rate ofNumber the goods levy tax1 2 3 4Per cent.6 (a) Oil-seeds, other than At the point 3cardamom and groundnut, of first salethat is to say, seeds in the State.yielding non-volatileoils used for humanconsumption or in industry or in the manufacture of varnishes.soaps and the like or inlubrication and volatile oils used chiefly in medicines, perfumes.cosmetics and the like.(b) Cardamom. At the point 3of first purchase in the State.(c) Groundnut. At the point 1 1/2of first purchasein theState.

3. The learned counsel for the assessee contended that item 6(a) excludes cardamom and groundnut from oil-seeds and under item 6(c) groundnut was taxable at the first point of purchase in the State at 1 1/2 per cent. Groundnut in item 6(c) has a wider meaning than oil-seeds in item 6(a) and, that even after frying, groundnut kernel is still groundnut, which could be taxed at the point of first purchase in the State at 1 1/2 per cent. We are unable to agree with this contention of the learned counsel. If cardamom and groundnut are not treated as oil-seeds, there would not have been any necessity to exclude those two items in item 6(a). They were excluded from item 6(a) because cardamom was to be taxed on the point of first purchase in the State, while the other items have to be taxed at the point of first sale in the State and groundnut is excluded because the legislature wanted to have different stage of levy and also a different rate with respect to groundnut. These two items were excluded not because the legislature considered that they are not oil-seeds. This interpretation is also fortified by the provisions of sections 14 and 15 of the Central Sales Tax Act, Section 14 enumerates goods which are of special importance in inter-State trade >or commerce. Among these declared goods covered under Section 14(vi) are :

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.

4. Thus, oil-seeds of the description referred to in Section 14(vi) of the Central Sales Tax Act could be taxed under Section 15 of the Central Sales Tax Act at one stage either at purchase or sale point and not at more than one stage and at a rate not exceeding 3 per cent. It is only those declared goods falling under Section 14(vi) of the Central Sales Tax Act that are intended to be covered under item 6 of the Second Schedule to the Tamil Nadu General Sales Tax Act. If really groundnut is not treated as an oilseed under item 6 of the Second Schedule and if the legislature wanted to levy only a single point tax at the point of first purchase in the State, it would have found a place in the First Schedule and not in the Second Schedule. We are, therefore, of the view that groundnut referred to in item 6(c) is groundnut as an oil seed and not groundnut in general.

5. The next question that arises, therefore, for consideration is whether fried groundnut kernel could still be considered to be an oil-seed. This court in City Oil Mill v. Joint Commercial Tax Officer [1970] 25 S.T.C. 33., in interpreting Section 14(vi) of the Central Sales Tax Act, held that in order to bring it within the word 'oil-seed', the commodity should be a seed and also capable of yielding oil. In the words of the learned Judge:

It seems to us that only oil-seeds which without subjecting to much processing yield non-volatile oils, that would be within the ambit of the entry in Section 14. Our attention has been invited to the definition of a kernel, which takes in also a seed. But this does not help the petitioner. A kernel, which is in the nature of a seed, that is to say, a seed which can be sown and which will on sowing germinate, can be considered to be a seed; but not a kernel which has lost the property of a seed. There may be many kernels, which may not be seeds and there may be many seeds which may not be kernels. What is important to note in interpreting the scope of the entry is whether the seed, yielding oil, can be looked upon as having the property of a seed. If it has lost the property, it can no longer be considered to be an oil-seed. We are of the view that the word 'seed' must retain its meaning in the phrase 'oil-seed' and it is an article, which, while being a seed, is capable also of yielding oil that can well be described as oil-seed.

6. The same test was laid down in the Supreme Court in Avadh Sugar Mills Ltd. v. Sales Tax Officer : [1973]3SCR546 ., which was also concerned with a case of groundnut. Considering the meaning of the word 'oil-seed', the Supreme Court observed:

A seed is one which germinates. It is not disputed that the groundnut germinates. Hence it is undoubtedly seed. The next question is whether it is generally used for manufacture of oil. Here again, there can hardly be any doubt that groundnut is mostly used for the manufacture of groundnut oil which is used in the manufacture of dalda and other cooking media. Groundnut is one of the items which is mostly used in this country for the manufacture of cooking media.

7. It is seen from these two decisions that in order to be a seed, it must be one which germinates on sowing. In order to be an oil-seed, the test to be applied is whether it is generally used for the manufacture of oil. It is only those commodities which are in commercial circles dealt with as oilseeds that are covered by the entry and not every seed from which by some process or other oil could be extracted. If we apply these decisions, certainly 'fried groundnut kernel' could not be held to be an oil-seed. When it is fried, the germinating property in the groundnut kernel is lost. Most of the oil content, if not all, is also lost by frying. In commercial parlance also, fried groundnut is not dealt with as an oil-seed. We are, therefore, of the view that fried groundnut kernel could not be treated as an oil-seed liable to single point tax as declared goods under item 6 of the Second Schedule to the Tamil Nadu General Sales Tax Act, and it is liable to multi-point tax at 2 1/2 per cent.

8. The order of the Tribunal is, therefore, set aside and the assessment order is confirmed. The petitioner will be entitled to his costs. Counsel's fee Rs. 250.


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