TMI Blog1969 (10) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commercial Tax Officer, Srikakulam district, fixed the gross turnover at Rs. 4,60,033.09 and net turnover at Rs. 4,27,060.35 after allowing exemption on a turnover of Rs. 32,972.75. He then issued the impugned notice G.I. No.70/64-65 C.S.T. dated 30th July, 1965, proposing to fix the net turnover as indicated therein under the Central Act and directing the petitioner to file his objections, if any, along with the books of accounts and intimating him that on failure to do so, the assessment would be completed as notified therein. In the said notice, while fixing the taxable turnover at Rs. 4,27,060.35, he proposed to tax the same as under: at 2% (covered by 'C' form) Rs. 2,19,164.17 at 10% (not covered by 'C' form) Rs. 2,07,896.18 ----------Rs. 4,27,060.35 ----------It is contended by the petitioner that the Commercial Tax Officer, Srikakulam district, respondent herein, is acting patently without jurisdiction in issuing the notice and proposing to assess the turnover in respect of "watery cocoanuts" under the Central Act, that the expression "cocoanuts" includes both watery cocoanuts and "dried cocoanuts", that cocoanuts are "oil-seeds" within the meaning of section 14(vi) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the rival contentions, it is necessary to read certain provisions of the State Act as well as the Central Act. Under section 5 of the State Act every dealer whose total turnover per year is not less than Rs. 10,000 shall pay a tax for each year at the rate of Re. 0.03 on every rupee of his turnover and the tax is levied either at the sale or purchase point as mentioned in the Schedules. Subject to certain restrictions and conditions as may be prescribed, a dealer who deals in the goods enumerated in the Fourth Schedule of the Act, is exempt from tax under the said Act. Section 8 reads as follows: "Section 8: Exemption from tax in respect of certain goods.-Subject to such restrictions and conditions as may be prescribed, including conditions as to licences and licence fees, a dealer who deals in the goods specified in the Fourth Schedule shall be exempt from tax under this Act in respect of such goods: Provided that a dealer who deals in textiles, sugar or tobacco and its products, on which duties of excise are not levied under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, shall not be so exempt." Apart from this, under section 9 the State Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase, specified against each in the Third Schedule on his turnover of such sales or purchases for each year, irrespective of the quantum of his turnover in such goods; and the tax shall be assessed, levied and collected in such manner as may be prescribed: Provided that where any such goods on which a tax has been levied are sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be prescribed." "Declared goods" are defined under section 2(f) of the State Act as follows: "'declared goods' means goods declared under section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), to be of special importance in inter-State trade or commerce." The same is the definition of "declared goods" under section 2(c) of the Central Act. Section 14 of the Central Act which declares certain goods to be of special importance in inter-State trade or commerce reads as follows: "Section 14: It is hereby declared that the following goods are of special importance in inter-State trade or commerce: (i) to (v) * * * (vi) oil-seeds, that is to say, seeds yielding non-volatile oils use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of documents of title to such goods shall not be subject to tax under this Act: Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner a certificate duly filled and signed by the registered dealer from whom the goods were purchased containing the prescribed particulars." The rate at which tax on sales in the case of inter-State trade or commerce could be levied is specified by section 8 of the Central Act and so far as it is relevant for our purpose is as follows: "8. (1) Every dealer, who in the course of inter-State trade or commerce- (a) sells to the Government any goods; or (b) sells to a registered dealer other than the Government goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act, which shall be three per cent. of his turnover. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1)- (a) in the case of declared goods, shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted. Section 9 of the Central Act to the extent to which we are concerned in this case reads as follows: "9. (1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce (whether such sales fall within clause (a) or clause (b) of section 3) shall be levied and collected by the Government of India in the manner provided in sub-section (3) in the State from which the movement of the goods commenced: Provided that, in the case of a sale of goods during their movement from one State to another being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within sub-section (2) of section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained the form prescribed for the purposes of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods. (2) * * * (3) The authorities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India and subject to any rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inance and refer to the relevant provisions thereof later at the appropriate stage. At the outset, we must make it clear that under the impugned notice the respondent proposes to assess the petitioner under the Central Act. "Cocoanuts" as such are not included among the goods declared to be of special importance in inter-State trade or commerce under section 14 of the Central Act. Until such time as goods are declared to be of special importance in inter-State trade or commerce under section 14 of the Central Act, they cannot be deemed to be 'declared goods". That is why the learned counsel for the petitioner contends that "cocoanuts" though not specifically included in section 14 of the Central Act, come within the ambit of item (vi) of section 14 of the Act which declares "oil-seeds" as goods of special importance in inter-State trade or commerce. It is also his further contention that the expression "cocoanuts" also includes "watery cocoanuts". We would, therefore, now proceed to consider whether cocoanuts are oil-seeds within the meaning of item (vi) of section 14 of the Central Act. "Oil-seed" is defined in the Oxford English Dictionary as "any seed yielding oil ". In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... palm. Cocoanut palm groves are extensively found in the tropical seashores. That watery cocoanut is a seed is in fact, not seriously disputed. Therefore, we have only to consider if fresh "watery cocoanut" yields nonvolatile or volatile oil. Here again there is not much dispute about the fact that a "dried cocoanut" yields substantial quantity of oil and such oil is extensively used for human consumption, in industry and in the manufacture of soaps, hair-oils and cosmetics. So, if cocoanut is taken to mean only "dried cocoanut" there can be no dispute that it is an "oil-seed" within the meaning of section 14(vi) of the Central Act. The further question, however, is whether "watery cocoanut" yields oil though admittedly it is a seed. Oil is extracted generally from dry cocoanuts, but in some parts of India, especially in Kerala and Mysore, it is extracted even from the copra recovered from fresh cocoanuts. The copra of "watery cocoanut" before it dries up may not yield as much oil as dried copra. The oil which it yields may also contain some watery substance which may have to be eliminated for the purpose of recovering pure cocoanut oil. All the same it yields sufficient quantity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cretary, Malabar Market Committee[1964] 15 S.T.C. 634., the Kerala High Court following the decision in K. Seshagiri Pai Co. v. Deputy Commissioner of South Kanara[1961] 12 S.T.C. 629. took the same view. A Division Bench of our court in Sri Krishna Cocoanut Co. v. State of Andhra Pradesh[1962] 13 S.T.C. 193. were considering the question whether "cocoanuts" are included within the expression oil-seed. Chandra Reddy, C. J., speaking for the Bench observed: "Incontrovertibly, cocoanuts also are comprehended within the expression 'oil-seeds'." Thus when prior to the inclusion of watery cocoanuts, as distinct from other cocoanuts, in a separate Schedule, "cocoanuts" were considered to be "oilseeds" the mere fact that cocoanuts and watery cocoanuts are now included in two separate Schedules of the State Act, they do not cease to be "oilseeds" within the meaning of section 14(vi) of the Central Act so long as both dry cocoanuts and watery cocoanuts are seeds capable of yielding oil. This aspect of the matter can be viewed from another angle. Admittedly dry cocoanuts yield oil and it is not disputed before us that it is an oil-seed. Unless fully grown "watery cocoanut", which is admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to pay tax not exceeding two per cent. on sales effected inside the State and that they were not liable to pay any tax at all when they effected their sales outside the State." Likewise where an assessee, dealing in tobacco, subjected the tobacco sold by him to the following processes: Raw tobacco taken out of the warehouse was unbundled and kept in a heap and was periodically sprinkled with palm jaggery water to keep it soft and wet. The tobacco so treated was taken out little by little and cut into pieces of two sizes worth 6 pies and 3 pies. These two varieties were then separately labelled, arranged and packed in bundles and sold both in wholesale and retail. It was found that the sprinkling of jaggery water on the tobacco was done by dealers in raw tobacco and by manufacturers. The question raised was whether the tundu tobacco sold by the assessee was "chewing tobacco" produced as a result of any manufacturing operation and assessable as a manufactured product under section 5(vii) of the Madras General Sales Tax Act, 1939, and the Madras High Court in Pachiappa Chettiar and Bros. v. State of Madras[1962] 13 S.T.C. 202. held "that no process of manufacture was involved which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar parlance as an "oil-seed" and therefore, "watery cocoanut" should not be regarded as an "oil-seed". It is true that cocoanut is not referred to as an oil-seed as such, for, it is put to a variety of uses. But under section 14(vi) of the Central Sales Tax Act the Legislature in declaring oil-seeds to be goods of special importance in the course of interState trade or commerce further proceeded to describe what it means and intends by the expression "oil-seeds" and has referred to the qualities that must be found to exist before a particular commodity could be called an "oil-seed", in the following words: "Section 14(vi): 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." The Legislature evidently intended that if a particular commodity possessed these qualities, viz., it should yield oil, and such oil should be used for human consumption or in industry or in the manufacture of varnishes etc., it should be deemed to be goods described as oil-seeds under section 14(vi) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of operation of this Ordinance the Central Sales Tax Act, 1956 (hereinafter referred to as the principal Act) shall have effect subject to the amendments specified in sections 3, 4, 5, 6, 7 and 8." In section 2(j) of the principal Act for the words "and determined in the prescribed manner", the words "and determined in accordance with the provisions of this Act and the rules made thereunder" were directed to be substituted by section 3 of the Ordinance. Section 3 further directs that these words shall be deemed always to have been substituted. As pointed out by the Supreme Court in Civil Appeals Nos. 1228 and 1229 of 1969, The State of Kerala v. M/s. P.P. Joseph Co. and M/s. Joseph Elias[1970] 25 S.T.C. 483 (S.C.)., "the effect of the amendment is that the turnover for the purpose of the Central Sales Tax Act has to be determined in accordance with the provisions of the Central Act and the rules made thereunder." The effect of the amendment is that this provision has retrospective operation from the date on which the principal Act was enacted. Section 4 of the Ordinance amends section 6 of the principal Act by the insertion of sub-section (1A) after sub-section (1) of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lakshminarasimhiah Setty and Sons[1965] 16 S.T.C. 231 (S.C.). only such of those goods as were liable to tax prior to the Ordinance and were not liable to assessment on account of the said decision should be deemed to have been now made exigible to tax but not goods which were not liable to tax under the Central Act even prior to the judgment of the Supreme Court. We are unable to agree with this contention. While the judgment of the Supreme Court may have occasioned the amendment, the scope of the amendment cannot be limited by any consideration that the amendment was effected only with a view to meet the situation created by the said judgment. The wording of the amended sections are very clear. Their Lordships of the Supreme Court had occasion to consider the effect of the amendment in Civil Appeals Nos. 1228 and 1229 of 1969, The State of Kerala v. M/s. P.P. Joseph Co. and M/s. Joseph Elias[1970] 25 S.T.C. 483 (S.C.). Shah, Ag. C.J. (as he then was) speaking for the court laid down as follows: "The effect of the Ordinance is to supersede the judgment of this court in Yaddalam Lakshminarasimhiah Setty's case(1). It is now made clear that even if no tax was leviable under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act. Mr. Suryanarayana Murthy, the learned counsel for the petitioner, however, contends that since these goods were already subjected to tax under the State Act, they are entitled to a refund of that tax under section 15(b) of the Central Act. It may be that the petitioner is so entitled. But the fact that he is entitled to refund of the tax paid by him under the State Act can arise only after the tax under the Central Sales Tax Act is assessed. Further, the claim for refund is subject to such conditions as are provided in the State law. These are all matters which fall for consideration after the goods are assessed to tax under the Central Sales Tax Act and do not take away the jurisdiction of the respondents to make an assessment under the Central Act. In this view of the matter we must hold that the impugned notice, in so far as it proposes to assess the petitioner's turnover on "watery cocoanuts" at ten per cent. is illegal and without jurisdiction and the sales tax authorities are not entitled to call upon the petitioner to show cause in this behalf. The other part of the notice, viz., the proposal to tax the petitioner's turnover at two per cent. is perfectly legal an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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