TMI Blog1991 (3) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... trade or commerce, paying tax under section 5(4) of the State Act read with entry 9 of the Fourth Schedule of the State Act. They convert the tax-paid wheat into atta, maida or soji and sell the same. The sales tax authorities have not only levied tax treating each of the aforesaid items as a separate goods falling under entry 138 of the Second Schedule to the State Act but also levied turnover tax on the sale turnover of each of these items under section 6-B of the State Act. The petitioners have filed these petitions contending that the said assessment and demand made by the sales tax authorities in respect of their turnover of wheat products is illegal and ultra vires, on the ground that "wheat" is one of the declared goods vide section 14 of the Central Act and it includes atta, maida and soji and therefore tax levied on these items cannot exceed 4 per cent and further the tax cannot be levied at more than one point. The respondents contend that this stand taken by the petitioners is not sustainable in law and each one of the items, namely, atta, maida and soji derived from wheat are goods different from "wheat" and therefore liable to be taxed under the State Act unrestricted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er cent of the sale or purchase price thereof and such tax shall not be levied at more than one stage. Section 5(4) of the Karnataka Act which conforms to section 15 of the Central Act reads: "Notwithstanding anything contained in sub-section (1) or section 5-B or section 5-C a tax under this Act shall be levied in respect of the sale or purchase of any of the declared goods mentioned in column (2) of the Fourth Schedule at the rate and only at the point specified in the corresponding entries of columns (3) and (4) of the said Schedule on the dealer liable to tax under this Act on his taxable turnover of sales or purchases in each year relating to such goods: Provided that where tax has been paid in respect of the sale or purchase of any of the declared goods under this sub-section and such goods are subsequently sold in the course of inter-State trade or commerce, and tax has been paid under the Central Sales Tax Act, 1956 (Central Act 74 of 1956) in respect of the sale of such goods in the course of inter-State trade or commerce, the tax paid under this Act shall be reimbursed to the person making such sale in the course of inter-State trade or commerce in such manner and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport of their contentions that wheat includes atta, maida and soji produced out of it, have relied on the judgment of the Supreme Court in the case of Alladi Venkateswarlu v. Government of Andhra Pradesh [1978141 STC 394. In that case, the question for consideration was, whether rice includes "atukulu" (parched rice) and "muramaralu" (puffed rice). The Supreme Court held that the term "rice" would include both parched and puffed rice and they are in substance same article, though different in form and therefore parched and puffed rice were within the meaning of "rice" in entry 66(b) of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957. In the said ruling, the Supreme Court observed as follows: "We find that the High Court had come to the conclusion that parched rice and puffed rice, not being rice at all, falling within either of the two parts of item 66, were taxable as separate kinds of goods altogether. This meant that, although, the dealer had paid a tax of five paise per rupee on paddy as item 8 in the Second Schedule he will have to pay again a tax at the rate of 4 paise on every rupee of his turnover under section 5(1) if his total turnover was not less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tness in the canned pineapple arises from the sugar added as a preservative. On a total impression, it seems to us, the pineapple slices must be held to possess the same identity as the original pineapple fruit." The next decision relied on was of Sterling Foods v. State of Karnataka [1986] 63 STC 239 (SC). In the said case, the question for consideration was, whether shrimps, prawns and lobsters became commercially different goods after they were processed by cutting heads and tails, peeling, deveining and cleaning them and freezing them. Reversing the decision of this Court, in which this Court held they became commercially different goods, the Supreme Court held that they did not. The relevant portion of the judgment reads: "Here in the present case, it was not disputed on behalf of the Revenue that the purchases of raw shrimps, prawns and lobsters were made by the appellants for the purpose of fulfilling existing contracts for export and after making such purchases the appellants subjected raw shrimps, prawns and lobsters purchased by them to the process of cutting of heads and tails, peeling, deveining, cleaning and freezing and exported such processed and frozen shrimps, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, viz., as to whether the desiccated coconut has to be considered as coconut and nothing more or it should be treated as a separate commercial commodity and, consequently, liable to tax under the Central Act also, should be arrived at by applying the aforesaid principles. ........................ The construction suggested for the assessee on the interpretation of the word 'coconut' used in entry 5 of the Fourth Schedule to the Act and section 14 of the Central Act to the effect that it includes desiccated coconut is plausible on the analogy of, groundnut oil and hydrogenated groundnut oil in the cases of Tungabhadra Industries [1960] 11 STC 827 (SC), rice, parched rice and puffed rice in Alladi Venkateswarlu [19781 41 STC 394 (SC), coal and charcoal as in Jaswant Singh [1967] 19 STC 469 (SC), iron and steel and bars, flats and plates as in Hiralal [1966] 17 STC 313 (SC), shampoo and soap in Prakash Trading Co. [1972] 30 STC 348 (SC), dryer felts and textiles in Porritts Spencer (Asia) Limited [19781 42 STC 433 (SC), sugar and patasa, harda and alchidana in Sakarwala Brothers [1967] 19 STC 24 (SC), milk and condensed milk in Indodan Milk Products [1974] 33 STC 381 (All.) (FB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Supreme Court in Alladi Ventakeswarlu [1978] 41 STC 394 and said other High Courts I hold that atta, maida and sujji, which are obtained merely by reducing the size of 'wheat' grain into smaller particles and powder would be included into item 'wheat' in section 14(i)(iii) and as such should be treated as declared goods under the said statute, as contended on behalf of the petitioner, which I accept." The learned counsel also relied on the decision in State of Andhra Pradesh v. Vayugundla Venkata Subbaiah [1983] 54 STC 133. In this case, a Division Bench of the Andhra Pradesh High Court considered the question as to whether ravva of rice was 'rice' which was a declared goods and consequently no tax was leviable on the sale of ravva produced out of taxpaid rice. The Division Bench held thus: "In Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394, the Supreme Court held that 'atukulu' and 'muramaralu' which are called 'parched rice' and 'puffed rice' in English, are 'rice' within the meaning of entry 66 of the First Schedule to the A.P. General Sales Tax Act. The process by which rice is converted into 'ravva' is no more elaborate than the process b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Statement of Objects and Reasons of the 1972 Act, for an elucidation of the 'definition' of iron and steel, was that the 'definition' had led to varying interpretations by assessing authorities and the courts so that a comprehensive list of specified declared iron and steel goods would remove ambiguity. The Select Committee, which recommended the amendment, called each specified category 'a sub-item' falling under 'iron and steel'. Apparently, the intention was to consider each 'sub-item' as a separate taxable commodity for purpose of sales tax. ................... It is true that the question whether goods to be taxed have been subjected to a manufacturing process so as to produce a new marketable commodity, is the decisive test in determining whether an excise duty is leviable or not on certain goods. No doubt, in the law dealing with the sales tax, the taxable event is the sale and not the manufacture of goods. Nevertheless, if the question is whether a new commercial commodity has come into existence or not, so that its sale is a new taxable event, in the sales tax law, it may also become necessary to consider whether a manufacturing, process, which has altered the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only in the form of broken wheat or flour or rava (soji), these items cannot be treated as different from wheat. At common parlance, 'wheat' as a staple item of food means atta, maida and soji. The decision of the Supreme Court in Pyare Lal Malhotra [1976] 37 STC 319, is of no assistance to the respondents. The fact that the Legislature has not specified each of the products of wheat such as atta, maida and soji separately as declared goods is no ground to hold that they are different from wheat. In fact, it supports the contention of the petitioners that because atta, maida and soji of wheat, are also in substance wheat only, the Parliament has not specified them as separate item of goods. If Parliament intended that each of these items should be taxed again as declared goods, the Parliament would have specified them separately, as has been done in the case of iron and steel by specifying as many as sixteen items. When the Parliament has not done so, to say that atta, maida and soji of wheat are goods different from wheat, which construction enables the levy of tax again or more than once and/or at multi-point without bound by the restrictions incorporated in section 15 of the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to in the case of Sri Lakshmi Coconut Industries [1980] 46 STC 404 (Kar); (1980) 2 Kar LJ 76 and after considering its ratio as also of the later decision of the Supreme Court in Alladi Venkateswarlu [1978] 41 STC 394, this Court held that the ratio in the case of Alladi Venkateswarlu [1978] 41 STC 394 (SC) was apposite to the case of coconut and desiccated coconut as coconut was an item marked for single point levy. It was held that the goods in respect of which the legislative intention was to subject it to single point levy, even after some physical change was brought about in it to make it ready for human consumption, should be considered as one and the same. Though this Court in Sri Lakshmi Coconut Industries [1980] 46 STC 404, had explained as to how the decision of the Supreme Court in Ganesh Trading Company [1973] 32 STC 623, had to be understood and had also indicated that the ratio of the decision in the later decision of the Supreme Court in Alladi Venkateswarlu [1978] 41 STC 394, was apposite to a case of this type, the way in which the Bench of the Tribunal went about the matter ignoring the binding decision of this Court is not happy. By this disregard of a bindin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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