TMI Blog2006 (7) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... .) Advocates for the appellants. -------------------------------------------------- The judgment of the court was delivered by ASHOK BHAN J. The appellant is a public limited company and a dealer registered under the Karnataka Tax on Entry of Goods Act, 1979 (hereinafter referred to as "the Entry Tax Act"). It is engaged in the manufacture of tyres of two wheeler motor vehicles. Appellant is located in Metagalli in Mysore and Metagalli is a local area within the definition of "local area" in section 2(A)(5) of the Entry Tax Act. The main input in the manufacture of tyres is rubber which the appellant procures from the neighbouring State of Kerala. Sub-section (1) of section 3 of the Entry Tax Act prescribes that there shall be levied and collected tax on entry of any goods specified in the First Schedule into a local area for consumption, use or sale therein, at such rates not exceeding 5 per cent of the value of the goods, as may be specified retrospectively or prospectively, by the State Government by issuance of notifications. Section 2 of the Entry Tax Act defines the various expressions used in the Act. The expression "Agricultural produce or horticultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e marketable. Since the processing does not result in bringing out a new commodity but it preserves the same and renders it fit for being marketed, it does not change its character. It continues to be caoutchouc or latex when it is treated by sulphuric acid and continued to be so even after it is dried with smoke to obtain the shape of sheets. The State of Karnataka being aggrieved by the judgment of the Tribunal filed statutory civil revision petition in the High Court of Karnataka. By the impugned judgment the High Court has allowed the civil revision petition and quashed and set aside the judgment of the Tribunal. The High Court conceded that raw rubber is an agricultural produce but held that in view of the definition of "agricultural produce or horticultural produce" in section 2(A)(1) of the Entry Tax Act, which clearly excludes rubber, rubber brought in the local area by the appellant could not be considered as agricultural produce for the purposes of the Entry Tax Act. That Sl. No. 2 of the Second Schedule specified agricultural produce, does not exempt rubber from payment of entry tax and, therefore, when the definition of agricultural produce in section 2(A)(1) and enum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar as the present Act is concerned, it is this definition that will govern the expression "agricultural produce". He, therefore, contends that while reading entry No. 2 of the Second Schedule to the Entry Tax Act there is absolutely no scope to include in the entry "rubber" which has been specifically excluded in the defining section. That the Tribunal appears to have been influenced by some of the earlier judicial decisions which relate to the definition of "agricultural produce" under the Karnataka Sales Tax Act. It was pointed out by him that as far as the present Act is concerned, the Legislature has deliberately included and excluded certain items and therefore while interpreting the provisions of the present Act, the legislative intention will have to be given effect to in consonance with the definition as contained in the statute. Definition of the expression "agricultural produce or horticultural produce" in section 2(A)(1), sub-section (6) of section 3 providing for exemption in respect of goods specified in the Second Schedule and Sl. No. 2 of the Second Schedule specifying "Agricultural produce including tea, coffee and cotton (whether ginned or unginned)" as relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural produce. According to us, the definition of the agricultural and horticultural produce does not say as to what would be included in the agricultural or horticultural produce, in substance it includes all agricultural or horticultural produce but excludes, (1) tea, coffee, rubber, cashew, cardamom, pepper and cotton from the definition of the agricultural or horticultural produce though all these products as per dictionary meaning or in common parlance would be understood as agricultural produce and (2) "such produce as has been subject to any physical, chemical or other process for being made fit for consumption", meaning thereby that the agricultural produce other than what has been excluded, which has been subjected to any physical, chemical or other process for making it fit for consumption would also be excluded from the definition of the agricultural or horticultural produce except where such agricultural produce is merely cleaned, graded, sorted or dried. For example, if the potatoes are cleaned, graded, sorted or dried, they will remain agricultural produce but in case raw potato is subjected to a process and converted into chips for human consumption it would ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule, only tea, coffee and cotton (whether ginned or unginned) have been given exemption from payment of entry tax and not other items such as rubber, cashew, cardamom and pepper and such other agricultural produce which has been subjected to any process for making it fit for human consumption. Intention of the Legislature is that though tea, coffee and cotton have been excluded in the definition clause from the agricultural produce but for the purposes of the Entry Tax Act tea, coffee and cotton are exempted from payment of entry tax. This is an exception created by the Legislature. If the Legislature intended to create exception for rubber also it could have done it but it chose not to do it. Simply because the Legislature has included tea, coffee and cotton in the Second Schedule exempting it from payment of entry tax does not mean that all other agricultural produce items which have been excluded from the definition of the agricultural produce would stand included in the Second Schedule to the Act exempting them from payment of entry tax. This would be doing violation to the Act as well as acting contrary to the intent of the Legislature. The learned counsel for the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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