TMI Blog1979 (3) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... was resisted by them on the ground that the cashewnut had already suffered taxation but the assessing authorities did not agree with them. The Sales Tax Appellate Tribunal also, when some of the cases were taken to it, declined to accede to the contention of the petitioners. That is how these writ petitions and tax revision cases have arisen. The Tribunal and the sales tax authorities held the view that kernel is a different commodity from cashewnut and that both of them are liable to be taxed at the point of their first purchases in the State. Indeed, that is the point of view urged before us also by the learned Government Pleader for Commercial Taxes. Learned counsel for the petitioners, on the other hand, vigorously argued that cashewnut and kernel are not different commodities and that, in fact, in common and commercial parlance, no distinction is made between the two. Therefore, the principal question that will have to be decided is whether cashewnut and kernel mentioned in item 12 of the Second Schedule are different commodities and are separately taxable. Sri M. Suryanarayana Murthy, one of the petitioners' learned counsel, raised the three following contentions: (1) Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that schedule. Clause (b) of sub-section (2) refers to goods in the Second Schedule and lays down that tax shall be levied on them at the rates and only at the point of purchase specified as applicable thereto, effected in the State by the dealer purchasing them. Clause (c) of sub-section (2) deals with goods mentioned in the Fifth Schedule. Third Schedule contains the declared goods in respect of which a single point tax only is leviable under section 6. These are the goods which are declared as goods of general importance under section 14 of the Central Sales Tax Act. Fourth Schedule contains goods exempted from tax under section 8. The proviso to sub-section (4) of section 5 says that in respect of the same transaction, the buyer or the seller, but not both, as determined by such rules as may be prescribed, shall be taxed. The second part of the same proviso lays an embargo against imposition of tax on any dealer who has been taxed in respect of the purchase of any goods when he sells the same goods. Cashewnut and kernel occur in the Second Schedule and they are placed in item 12. Item 12 did not exist in the Second Schedule till 1974. By virtue of section 14 of the A.P. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase in the State. The intention of the legislature is therefore discernible that cashewnut and kernel should be taxed on their first purchase in the State. It is difficult to think that the legislature wanted to tax both the first purchases of cashewnut and kernel taken out of the cashewnut which had already been subjected to tax. The intention of the legislature appears to be not to make any distinction between cashewnut and kernel and to make the first purchase point of that commodity in the State taxable, whether it was in the form of cashewnut or kernel. This understanding of the item is strengthened by the ordinary and commercial name given to the commodity in day to day life. The popular meaning of "cashewnut", as it is understood in the commercial world, is generally its kernel. When a purchaser goes to a market and asks for cashewnut, he means its kernel and, in fact, the vendor gives him kernel when he asks for cashewnut. Cashewnut and kernel are not separately defined in the Act or in the schedule. Particularly, in a taxing statute, the meaning given to a commodity in common parlance and commercial field should be accepted. If authority is needed for this proposition, v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Palmyrah fibre and stalks in item 7 and cashewnut and kernel in item 12 belong to the same category each and the word "and" is used between them to give an exhaustive enumeration of the goods belonging to the same category and to remove ambiguity. Whether they are in the form of cashewnut or kernel, they are of the same kind and once they have been subjected to tax at first purchase, the other form cannot be taxed. This takes us to the important question whether cashewnut and cashew kernel are two distinct and separate commodities. As we have pointed out, cashew kernel is not a distinct commercial commodity from cashewnut. The petitioners would have it that cashewnut cannot be used unless kernel is prepared out of it. On the other hand, the revenue's case is that cashewnut is dried and cashew kernel is taken out after breaking open the shell of the nut. Therefore, there is a process of taking out the kernel involved and, consequently, kernel is a separate commodity from cashewnut. It is of common knowledge that cashewnut is different from its fruit and kernel is the inside portion of the nut. The cashew fruit is put to one use while kernel, which is called "cashewnut" in commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the High Court was not seriously disputed before them. With the consequence it can be safely taken that it was not a conclusion by the Supreme Court as to the respective natures of cashewnut and its kernel. Reliance was also placed by the revenue's learned counsel on another decision of the Supreme Court in Hajee Abdul Shukoor Co. v. State of Madras[1964] 15 S.T.C. 719 (S.C.)., where the question arose as to whether tanned hides and skins were different from raw hides and skins. In that connection, Raghubar Dayal, J., who spoke for the court, only referred to the State of Travancore-Cochin's case[1953] 4 S.T.C. 205 (S.C.)., and observed that it was held there that raw cashewnuts become a different commodity commercially after the application of certain process as a result of which they are converted into edible kernels. We do not think that these incidental references by the Supreme Court to cashewnut and kernel would detract from the view we have taken. Further, these observations of the Supreme Court were with specific reference to the Travancore-Cochin Act. On the other hand, there are several decisions of this Court and some other High Courts, which lend support to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cter as horticultural produce. The same reasoning applies with equal force to cashew kernel. The Supreme Court held in Tungabhadra Industries Ltd. v. Commercial Tax Officer[1960] 11 S.T.C. 827 (S.C.). that hydrogenated oil continues to be "groundnut oil" notwithstanding the processing which is merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desire to consume groundnut oil. We would like to add that cashewnut is processed only for the purpose of making it usable. Therefore, when the kernel is used it is commercially called "cashewnut". We may also usefully refer to the recent decision of the Supreme Court in Alladi Venkateswarlu v. Government of Andhra Pradesh[1978] 41 S.T.C. 394 (S.C.). A.I.R. 1973 S.C. 1214 at 1218., where it was held that puffed and parched rice, though some process was involved, continued to be rice. In the light of the foregoing consideration, we are clearly of the opinion that "cashewnut" and "cashew kernel" are essentially the same commodity though some sort of processing is involved to take the kernel out of the cashewnut. In any case, even if there is any ambiguity about the meaning of item ..... X X X X Extracts X X X X X X X X Extracts X X X X
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