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2012 (8) TMI 864 - HC - VAT and Sales TaxDenial of input tax credit - Held that:- As per the definition of the term "dealer" as extracted above, an agriculturist who sells exclusively agricultural produce grown on land cultivated by him personally shall not be deemed to be a "dealer" within the meaning of the clause. However, Explanation 4(b) to section 2(12) makes it clear that where the agriculturist is a company and is selling pepper, arecanut, cardamom, rubber, timber, wood, raw cashew or coffee grown on land cultivated by it personally, directly or otherwise, such company, shall be deemed to be a dealer in respect of turnovers relating to sales of such produce. It is therefore clear that all agriculturists and all agricultural produce are not kept out of the purview of tax as only those agriculturists who sell exclusively agricultural produce grown on land cultivated by them personally are not required to be registered as dealer as they are not deemed to be a dealer within the meaning of the term "dealer". Similarly, if the agriculturist is a company selling certain specified produce, even if such produce is grown on land cultivated by it personally, such company is deemed to be a dealer in respect of turnover relating to sales of such produce. Therefore, it has to be borne in mind that distinction between agricultural produce and non-agricultural produce is relevant only to a certain extent, for the purpose of understanding whether a person engaged in carrying on business of buying, selling, supplying or distributing goods is a dealer. Petitioners seek to claim deduction of input tax for having purchased agricultural machineries, motor car, fertilizers and chemicals on the ground that they are purchased by them for use in their business which includes growing of and maintaining tea plantation apart from processing and manufacturing tea. This contention cannot be accepted. Fertilizers and chemicals or for that matter agricultural machineries, such as tractors, trailers, transformers, motor car, pump sets and electrical goods, which are used for tea cultivation cannot be regarded as goods falling within the definition of the term "input" for the purpose of the business of the petitioners, which in the instant case is manufacturing and processing of tea for the sale of which output tax is claimed. The "output tax", in the instant case, is not claimed on the sale of tea leaves, on the other hand, the output tax is paid on the sale of manufactured tea. Therefore, the business of the dealer for the purpose has to be understood confining it to the manufacturing process resulting in production of tea and any transaction in connection therewith or incidental or ancillary to it. Fertilizers, pesticides, fungicides, chemicals, used in tea cultivation and the agricultural machineries, pump sets and other electrical equipments, used for growing tea leaves by the tea planters cannot at all be regarded as goods used in the course of production of tea meant for sale. There is no direct relation between the two - Same logic and reasoning applies to coffee as the cultivation and growing of coffee is distinct from manufacturing/preparing coffee for sale - Decided against assessee.
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