1962 (3) TMI 66 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of "green ginger" under the General Sales Tax Act, 1125.
2. Interpretation of the term "vegetables" in the context of tax exemptions.
3. Applicability of notifications and their conditions on tax exemptions for "green ginger."
4. Tax liability under the Central Sales Tax Act, 1956.

Detailed Analysis:

1. Taxability of "green ginger" under the General Sales Tax Act, 1125:
The primary issue was whether "green ginger" is subject to taxation under the General Sales Tax Act, 1125. The petitioner challenged the assessment orders for the periods from 1st October 1957 to 31st March 1958 and from 1st April 1958 to 31st March 1959. The court concluded that "green ginger" should be considered under the entry "vegetables including tapioca except its manufactured product," thus exempting it from taxation.

2. Interpretation of the term "vegetables" in the context of tax exemptions:
The court examined whether "green ginger" falls under the category of "vegetables." It was determined that "green ginger" is indeed a vegetable based on common commercial understanding and culinary usage, similar to "green chillies," which were already exempt. The court referred to dictionary definitions and previous judgments to support this interpretation, emphasizing that terms in statutes should be understood in their common commercial sense rather than scientific or technical meanings.

3. Applicability of notifications and their conditions on tax exemptions for "green ginger":
The court analyzed two relevant notifications: one dated 15th June 1950 by the Travancore-Cochin Government and another dated 25th March 1958 by the Government of Kerala. The first notification required a license for exemption, while the second did not. The court held that "green ginger" was exempted from taxation by these notifications for the periods covered, except when a license was not obtained as required by the earlier notification. The explanation added by the notification dated 10th December 1960 was considered a proviso, clarifying that "green ginger" was not exempt from taxation from that date onwards.

4. Tax liability under the Central Sales Tax Act, 1956:
The petitioner's turnover in respect of "green ginger" was also assessed under the Central Sales Tax Act, 1956. The court had to consider the applicability of sub-section (2) of section 8 of the Central Sales Tax Act, both before and after its amendment on 1st October 1958. For the period up to 1st October 1958, the court held that there was no liability under the Central Act since "green ginger" was exempt under the State Act. However, for the period from 1st October 1958 onwards, the amended sub-section (2) and sub-section (2A) of section 8 allowed for taxation under the Central Act, even if the State Act imposed only a purchase tax and not a general exemption.

Conclusion:
The court quashed the assessment orders to the extent they imposed tax on "green ginger" for the periods when it was exempt under the relevant notifications and the General Sales Tax Act. For the period from 1st October 1958 to 31st March 1959, the court upheld the tax liability under the Central Sales Tax Act, directing the respondent to determine the turnover and assess the petitioner accordingly. The petitions were disposed of with no order as to costs.