1969 (2) TMI 127 - SC - VAT and Sales Tax

Whether respondent-company was not a dealer within the meaning of section 2(viii) of the Kerala General Sales Tax Act, 1963? Held that - Appeal dismissed. The juxtaposition of the word manufacture with agriculture and horticulture is significant and cannot be lost sight of. The intention in employing the word produced obviously was to introduce an element of volition and effort involving the employment of some process for bringing into existence the goods. The respondent in the present case has not been found to have done anything towards the production of the trees and even the cutting has been done by the contractor. The respondent therefore cannot possibly be regarded as a person who sells goods produced by him by agriculture, horticulture or otherwise.

Summary

Issues:
1. Whether the respondent can be considered a "dealer" under the Kerala General Sales Tax Act, 1963.
2. Whether the respondent is liable to pay sales tax on the sales of trees of spontaneous growth.

Analysis:
The case involved an appeal by special leave from the Kerala High Court's decision to dismiss a revision petition challenging the Sales Tax Appellate Tribunal's ruling. The Tribunal had held that the respondent-company was not a "dealer" as per section 2(viii) of the Kerala General Sales Tax Act, 1963. The respondent had sold trees of spontaneous growth in its estate, and the assessing authority levied sales tax on the amount. The Appellate Tribunal, however, did not agree that the respondent was a "dealer" as it did not engage in any process to produce timber from the trees sold.

The primary issue was whether the respondent could be classified as a "dealer" under the Act. The definition of "dealer" includes a person who sells goods produced by him through agriculture, horticulture, or other processes. The appellant argued that maintaining a private forest to produce and sell valuable timber should be considered a process under the definition. However, the Court disagreed, stating that trees of spontaneous growth without any human intervention cannot be considered as produced through agriculture, horticulture, or any other process. The element of production must be present, and the respondent did not contribute to the production of the trees sold.

The Court emphasized that the term "produced" in the definition of "dealer" implies bringing forth goods through effort and volition. The juxtaposition of "manufacture" with "agriculture" and "horticulture" is significant, indicating the need for a deliberate process to bring goods into existence. Since the respondent did not play a role in the production of the trees and even the cutting was done by a contractor, they could not be considered a person selling goods produced by agriculture, horticulture, or any other process. Consequently, the appeal was dismissed, and no costs were awarded due to the respondent's absence.

In conclusion, the judgment clarified the criteria for determining whether a person qualifies as a "dealer" under the Kerala General Sales Tax Act, emphasizing the necessity of active involvement in the production process to meet the statutory definition. The decision reaffirmed that mere ownership and sale of naturally grown goods without human intervention do not constitute production under the Act's provisions.