1976 (3) TMI 180 - SC - VAT and Sales Tax

Whether the fertiliser mixtures in question can be treated as the same article as chemical fertilisers composing them? Held that - Appeal dismissed. As in the instant cases, the mixtures produced by the appellant are different from their component parts, their properties and uses are also different and they are sold as different commercial products, the appellant was not entitled to the exemption claimed by it.

Issues Involved:
1. Interpretation of section 3 and item No. 21 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959.
2. Taxability of fertiliser mixtures prepared by mixing various chemical fertilisers.
3. Determination of whether fertiliser mixtures can be considered the same as their component chemical fertilisers for tax purposes.
4. Application of the single point tax scheme to fertiliser mixtures.

Detailed Analysis:

1. Interpretation of Section 3 and Item No. 21 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959
The case involves the interpretation of section 3 and item No. 21 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. Section 3(2) stipulates that the tax on goods mentioned in the First Schedule shall be payable at the rate and only at the point specified therein. Item No. 21 lists various chemical fertilisers and specifies that the point of levy is at the first sale in the State with a tax rate of 3.5%.

2. Taxability of Fertiliser Mixtures
The appellant, a registered dealer, claimed exemptions on turnovers related to sales of fertiliser mixtures for the assessment years 1969-70 and 1970-71. The appellant argued that since the fertiliser mixtures were prepared by dry mixing various chemical fertilisers, which had already suffered tax under item No. 21, they should not be taxed again. However, the assessing officer disallowed the exemption for the entire turnover for 1969-70 but allowed it for the turnover post-August 6, 1970, following the Tamil Nadu General Sales Tax (Third Amendment) Act.

3. Determination of Whether Fertiliser Mixtures Can Be Considered the Same as Their Component Chemical Fertilisers
The principal question was whether the fertiliser mixtures could be treated as the same article as the chemical fertilisers composing them. The Madras High Court, in its earlier judgment, held that each component and the manure mixture have different chemical properties and uses, making it impossible to treat the manure mixture as the same article as the components. This was supported by the decision in Imperial Fertiliser and Company v. State of Madras, which stated that if the mixture sold has different chemical properties and is treated as a different commodity in commerce, its sale cannot be considered a second sale of chemical fertiliser.

4. Application of the Single Point Tax Scheme to Fertiliser Mixtures
The appellant argued that the mixture of one or more chemical fertilisers should be treated as the same article entitled to a single point tax scheme. However, the court noted that fertiliser mixtures are different commercial products with different uses and properties from their components. The court emphasized that the process of mixing, whether it amounts to manufacture or not, is irrelevant. The mixture is a marketable commodity different from its components, thus subject to tax as a different article.

Conclusion:
The court concluded that the fertiliser mixtures produced by the appellant are different from their component parts, have different properties and uses, and are sold as different commercial products. Therefore, the appellant was not entitled to the exemption claimed. The appeals were dismissed with costs.

Appeals Dismissed.

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