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TMI Blog2008 (3) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... e that finds a place under cereal in entry 9 of the Second Schedule to the KGST Act. The first appellate authority had confirmed the findings and conclusions reached by the assessing authority. In the appeal filed by the assessee, the Kerala Sales Tax Appellate Tribunal, Kozhikode Bench in T.A. No. 99 of 1996 had taken the view that maize and maize poha are one and the same commodity and therefore, they are covered by the term "maize" that finds a place under cereal in entry 9 of the Second Schedule to the KGST Act. Aggrieved by the said order passed by the Tribunal, the State had carried the matter in Revision Petition No. 302 of 2000 before this court. For the assessment years 1997-98, 1998-99 and 1999-2000 in the appeals filed by the State Government in T.A. Nos. 156, 157 and 158 of 2001, the Tribunal had concluded that maize and maize poha are commercially different commodities and therefore they would not be covered by the term "maize" under the heading cereal in entry 9 of the Second Schedule to the KGST Act. The assessee being aggrieved by the orders passed by the Tribunal had filed tax revision cases in T.R.C. Nos. 294, 295 and 296 of 2002 before this Court. This court by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Rajasthan [1993] 91 STC 408 and other cases mentioned in this judgment and in the light of the observations made in this judgment. If the Tribunal feels that the matter must go back to the assessing authority for taking further evidence in this matter, certainly the Tribunal is free to do so." The Tribunal after such remand has allowed the State's appeal and has rejected the cross-objections filed by the assessee. The finding of the Tribunal is that, maize and maize poha are commercially different commodities and in the absence of a specific entry in the Schedule, the assessing authority was justified in classifying the same under the residuary entry, i.e. entry 177 of the First Schedule. The finding of the Tribunal in this regard is as under: "We have considered the arguments of both sides and also perused the assessment records. The only question to be decided in this appeal is whether kakai powha is a declared goods falling under entry 9 of the Second Schedule to the KGST Act. It is true that there were conflicting decisions on the same issue by different Benches of the Tribunal. The honourable High Court of Kerala set aside the earlier orders of the Tribunal and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Allahabad High Court in Commissioner of Sales Tax v. Anand Ram Hari Ram [1982] UPTC 987 confirmed by the honourable Supreme Court in S.L.P. No. 11915 of 1982 that maize poha is a foodgrain (cereal)? (iv) Whether the Appellate Tribunal justified in holding that maize and maize poha are different commodity since no manufacturing process is involved while converting maize into maize poha and as the only process involved is steaming and flattening on maize? Is not the approach adopted by the Tribunal in coming to the conclusion that manufacturing process is involved in converting maize into maize poha and that maize and maize poha are different commodities, unsustainable in law in the light of the judgments of the honourable Supreme Court in Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394, Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers [1980] 46 STC 63, [1988] 69 STC 11 (sic)? (v) In a taxing matter, when two views are possible, is not the Tribunal bound to take a view which is favourable to the assessee in the light of various decisions of the apex court and this honourable court? (vi) Whether the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex court in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers [1980] 46 STC 63, wherein the apex court has held that manufacture implies a change, but every change is not manufacture, and yet every change in an article is the result of treatment, labour and manipulation, but something more is necessary. In the said decision, it is further stated that, there must be transformation, a new and different article must emerge having a distinctive name, character or use. Therefore, it is stated that the Tribunal ought to have concluded that maize poha has the same characteristics of maize, and therefore, they are not commercially different commodities. The learned counsel also relies upon the decision of the West Bengal Taxation Tribunal in the case of Ram Bilash Agarwal v. C.T.O., Durgapur Range [2004] 137 STC 510. Reliance is also placed on the decision of the Allahabad High Court in the case of Commissioner of Sales Tax, U.P., Lucknow v. Anand Ram Hari Ram [1982] UPTC 987 and the order passed by the Supreme Court in rejecting the special leave petition filed by the State. Lastly, it is contended that the Tribunal merely relyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act speaks of cereals. The said entry reads as under: Sl. No. Description of the goods Point of levy Rate of tax 9 Cereals, that is to say, paddy, rice, jower or milo, bajra, maize, ragi, kodon, kutki and barli. At the point of first sale in the State by a dealer who is liable to tax under section 5 The Legislature has enumerated the goods that would fall under entry "cereals". Immediately after the word "cereals", the Legislature has used the expression "that is to say". This expression had come up for consideration and interpretation in the case of State of Tamil Nadu v. Pyarelal 4 Malhotra [1976] 37 STC 319 (SC), wherein it is stated that the said expression is generally employed to make clear and fix the meaning of what is to be explained or defined, and not to amplify the meaning, for which purpose the word "includes" is generally employed. In Sait Rikhaji Furtarnal v. State of Andhra Pradesh [1992] 85 STC 1; [1991] Supp 1 SCC 202, the apex court has observed that the expression "that is to say" is exhaustive and not merely illustrative. In Rajasthan Roller Flour Mills Association v. State of Rajasthan [1993] 91 STC 408, the Supreme Court has observed, that the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ially different category and description." The Central Sales Tax Act is an Act to formulate the principles for determining when a sale or purchase of goods takes place in the course of interState trade or commerce or outside a State or in the course of import into or export from India, to provide for levy, collection and distribution of taxes on the sales of goods, etc. One of the purposes sought to be achieved by this Act is to specify the restrictions and conditions to which State laws imposing taxes on the sale or purchase of certain goods, which are declared to be of special importance. The meaning of the expression "declared goods" is defined in section 2(c) of the Act, to mean goods declared under section 14 to be of special importance in inter-State trade or commerce. Section 14 of the Act enumerates the various goods which are declared to be of special importance in inter-State trade or commerce. Section 15 of the Act imposes restrictions and conditions in regard to tax on sale or purchase of declared goods within the State. The Sales Tax Appellate Tribunal, while allowing the State's appeal has primarily relied on the ratio of the decision in Rajasthan Flour Mills c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and nothing more must be read into except what is clearly stated. The court has further observed, sub-item (i) of item (vi-a) of section 14 refers to gram or gulab gram (cicerarietinum L.) it seems to us, in the first place, that gram or gulab gram which has undergone the process of parching or frying would no longer be gram to which the botanical term specified can be applied. Next, section 15(d) specifically amplifies the context of sub-item (i) of item (vi-a) of section 14 to pulses referred to therein "whether whole or separate, and whether with or without husk". In express terms, therefore, the restriction is limited only to whole or separated gram or gulab gram and gram or gulab gram with husk or dehusked. Section 15 being so specific, it is impermissible to read it as applicable to gram which has been parched or fried. Lastly, the gram having undergone the process of parching or frying would appear to have become a new and distinct commodity. (underlining(1) by us). The apex court in Rajasthan Flour Mills case [1993] 91 STC 408 has distinguished the dicta laid down in Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394 (SC). The court has observed thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities under any other item in any of the Schedules to the Act. It was, therefore, held that the term 'rice' in entry 66(b) includes rice in all its forms. The High Courts while applying the principle of this judgment to the question at issue herein ignored the fact that the said decision did not deal with the meaning and ambit of the several sub-clauses in clause (i) of section 14 of the Central Sales Tax Act and also the fact that the Andhra Pradesh Act did not place parched rice and puffed rice under separate entries in any of the Schedules to the Act. In our opinion, the principle of the said decision has no application in the context and scheme of section 14 and 15." (emphasis(1) supplied by us) In Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394, the Supreme Court has laid down in definite terms that, "a taxing statute is not to be interpreted in such a manner so as to impute an intention to the Legislature to go on taxing what is virtually the same product in different forms over and over again. Such a result would be contrary to basic axioms of taxation. Unless the language of the taxing statute was absolutely clear, it should not be given an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... States, Canada and Australia, the usual term is corn, which originally referred to any grain, but which now refers exclusively to maize, having been shortened from the form, "Indian corn". Many forms of maize are used for food, sometimes classified as various subspecies; flour corn, pop corn; dent corn; flint corn; sweet corn; waxy corn; amylo maize; pod corn; and striped maize. In the United States and Canada, the primary use of the maize is as a feed for livestock. However, consumption of corn and corn meal constitutes a staple food in many regions of the world. Maize can also be prepared as "hominy", in which the kernels are bleached with iye or grits which are coarsely ground corn. These are commonly eaten in the South Eastern United States, goods handed down from native Americans. Another common food made from maize is corn flakes. In fact, the maize is mostly widely grown cereal crop. In the global production of cereal crops, the maize rank first after rice (paddy) and wheat. Meal is a primary product obtained from maize. The meal can be obtained by manual or mechanically milling. There are different ways to make manually the maize meal, for example, in traditional culture o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve place under heading 19.04 due to lack of aforesaid preparation. Not only that but the said heading also excludes maize (corn) from the purview of the aforesaid heading as such the maize pauva manufactured by them cannot be classified under sub-heading No. 1904 of Chapter 19 of the Central Excise Tariff Act, 1985. Before classifying aforesaid product under Heading 19.04, it is essential to ascertain whether it is prepared food. Reference is also made by the learned counsel for the assessee to the decision of the Allahabad High Court in the case of Commissioner of Sales Tax, U.P., Lucknow v. Anand Ram Hari Ram, Kanpur [1982] UPTC 987, which decision according to the learned counsel has been affirmed by the apex court, while rejecting the special leave petition filed by the State. In the aforesaid decision, the question before the court was, whether Makai pawa is taxable as corn flakes or food grains. While answering the said issue, the court has observed: Whether Makai Pawa is taxable as cornflakes under Notification No. ST-II-2989/X-10 (2)-1974 dated April 3, 1975 at the rate of seven per cent or as foodgrains at the rate of four per cent. The question was raised under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1] 47 STC 124 (SC), and in that, it is stated, that the nature and extent of processing and of the change brought about as a result thereof may vary from case to case and there may, may not be, application of energy of force to effect a processing. It is the effect of the processing operations that is material for determining whether there has been processing of goods. In Delhi Cold Storage P. Ltd. v. Commissioner of Income-tax [1991] 191 ITR 656, the apex court has observed that processing as an action which brought forth some change or alteration of goods or the materials so as to bring into existence a different substance from what it was at the commencement of the process. In Commissioner of Sales Tax v. D.S. Bist [1979] 44 STC 392 (SC), it is held drying, roasting and packing of tea leaves is held to be processing. In the present case, the maize is heated and steamed, then processed for flattening. The flattened maize is also called maize poha. By this process, in our view, the change so brought about certainly would bring about a new commercial commodity. In our view, even the opinion of Food Procession and Nutrition Centre, Balussery would assist us, in arriving at the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Alladi Venkateswarlu's case [1978] 41 STC 394. We are of the firm view that maize and maize poha are indeed different commercial commodities. Having regard to the employment of the words "that is to say", we cannot expand the scope of the entries. In doing so, we would be unjustifiably interfering with the power of the State to levy tax on a commodity which is commercially different from cereal in question, namely, maize. Undoubtedly, maize poha is the product of manufacture. What was not edible is transformed into the edible form. As found by the Tribunal, it differs in size, shape and structure. It has a higher utility. We also find merit in the finding of the Tribunal that the raw material is consumed. We would accordingly hold that maize and maize poha are commercially different commodities, and maize poha is not covered by the term maize under "cereal" in entry 9 of the Second Schedule to the KGST Act. Accordingly, we reject these revision petitions and confirm the orders passed by the Sales Tax Appellate Tribunal, Additional Bench, Kozhikode in T.A. Nos. 145/2003, 157/2001, 156/2001, 158/2001, 282/2003 and 99/ 1996. Consequently, all pending interlocutory applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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