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TMI Blog2008 (1) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... g exemption under section 5(3) of the Central Sales Tax Act. The return filed by the assessee/petitioner was accepted by the assessing officer. Thereafter the Joint Commissioner of Commercial Taxes exercising his power under section 21(2) of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as, "the KST Act") reopened the assessment, on the ground that the order of the assessing officer is prejudicial to the interest of the State and held that the petitioner is not entitled to claim exemption under section 5(3) of the Central Sales Tax Act, 1956 (hereinafter referred to as, "the CST Act") in regard to the coffee beans purchased by it and exported after curing the same. The petitioner filed its objections on the ground that as no manufacturing process is involved after curing it, it does not change the nature of coffee and relying upon entry 18 of Part C of the Second Schedule of the KST Act, Coffee, that is to say,- (i) Coffee including coffee beans and coffee seeds (whether raw or roasted) excluding those covered by serial number three of the Third Schedule and in items (ii), (iii) and (iv) below. (ii) Coffee powder excluding French coffee; instant coffee and coffee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shori Lal and State of Punjab v. Krishna Cotton, Dal and Oil Factory reported in [1970] 25 STC 52. He also relied upon the judgments of the apex court in the Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers reported in [1980] 46 STC 63 and Sterling Foods v. State of Karnataka reported in [1986] 63 STC 239. Relying upon these three judgments, he contends that the revisional authority as well as the Tribunal have committed a serious error in not granting exemption to the assessee by relying upon the decision of the apex court in Aspinwall and Co. Ltd. v. Commissioner of Income-tax [2002] 125 STC 101; [2001] 251 ITR 323. According to him the word "manufacture" used in Aspinwall's case [2002] 125 STC 101; [2001] 251 ITR 323 cannot be applied to the case of the assessee since the case therein was considered by the apex court under the Income-tax Act whereas the case of the assessee herein comes under the provisions of the CST and KST Acts. He further contends that the word "manufacture" has been considered while considering the sales tax payable by an assessee in State of Punjab v. Chandu Lal Kishori Lal and State of Punjab v. Krishna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coffee exported by the assessee. If the coffee purchased and exported by the assessee are one and the same, then we have to answer the question of law in this petition in favour of the assessee and against the Revenue. In the circumstances we have to examine the nature of coffee purchased and the nature of the coffee exported by the assessee. In order to levy tax under section 5(3)(a) of the KST Act, entry 18 of Part C of the Second Schedule of the KST Act deals with the nature of coffee taxable under the Sales Tax Act which is extracted as hereunder: Coffee, that is to say,- (i) Coffee including coffee beans and coffee seeds (whether raw or roasted) excluding those covered by serial number three of the Third Schedule and in items (ii), (iii) and (iv) below. (ii) Coffee powder excluding French coffee; instant coffee and coffee drink. (iii) Instant coffee. (iv) French coffee. From this it is clear that "coffee" means coffee beans and coffee seeds whether raw or roasted excluding coffee powder, French coffee, instant coffee and coffee drink. Under the Sales Tax Act, there is no different entry for a coffee bean/coffee cherry (uncured coffee). What is described in entry No. 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be determined on the basis of what is commonly known or recognised in commercial parlance and further held that the purchase of raw shrimps, prawns and lobsters by the appellant for the purpose of fulfilling existing contracts for export were exempt from purchase tax under the deeming provision of section 5(3) of the Central Sales Tax Act, 1956, even though after making such purchase the appellant subjected them to the process of cutting heads and tails, peeling, deveining, cleaning and freezing before export because they remained the same goods in commercial parlance after such processing and freezing." The honourable Supreme Court in Aspinwall's case [2002] 125 STC 101; [2001] 251 ITR 323 has held: (page 106 of STC) "15. Adverting to the facts of the present case, the assessee after plucking or receiving the raw coffee berries makes it undergo nine processes to give it the shape of coffee beans. The net product is absolutely different and separate from the input. The change made in the article results in a new and different article which is recognised in the trade as a new and distinct commodity. The coffee beans have an independent identity distinct from the raw materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 ITR 323 (SC) is under a different context and it has no bearing on the facts of the case. Considering the Aspinwall's case [2002] 125 STC 101 (SC); [2001] 251 ITR 323 (SC), we are of the opinion that the Tribunal as well as the revisional authority was not justified in modifying the order of assessment passed by the assessing officer as there is no change in the product even after curing the uncured coffee. Therefore, in the light of entry No. 18 of the Second Schedule of the KST Act, we are of the opinion that, whether the coffee is purchased by the assessee as a coffee bean or a coffee seed or a berry coffee, it makes no difference as it is defined only a coffee. In the circumstances, we are of the view that the question of law framed in this petition has to be answered in favour of the assessee by holding that the berry coffee, uncured coffee or a coffee berry are one and the same. Therefore, the assessee is entitled for exemption under section 5(3) of the CST Act. In this result, this petition is allowed. The order passed by the Karnataka Appellate Tribunal in STA No. 464 of 2005 dated May 30, 2006 and the order passed by the revisional authority are hereby set aside a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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