1996 (11) TMI 372 - SC - VAT and Sales Tax

Whether the desiccated coconut that is produced by the respondents falls outside the scope of copra within sub-entry (viii)? Held that - Appeal dismissed. Having regard to the fact that there is material on the record, which has been accepted by the High Court, to show that copra is produced by breaking the coconut, it is difficult to hold that desiccated coconut, which is shredded copra, is not copra within the meaning of sub-entry (viii). It is not in dispute, as the High Court has noted, that coconut oil can be extracted from watery coconuts, copra and desiccated coconut. The main object of the coconut for use in the kitchen is met as well by the shredded copra as it is by the coconut itself.

Summary

Issues: Interpretation of sales tax law regarding desiccated coconut and copra for Central sales tax liability.

The judgment by the Supreme Court of India involved appeals by the State of Karnataka against a High Court decision that desiccated coconut is considered the same as coconut for sales tax purposes. The main issue revolved around the interpretation of section 14, entry (vi), sub-entry (viii) of the sales tax law, which declares certain goods as of special importance in inter-State trade or commerce, specifically referring to oilseeds including coconut. The High Court held that shredded copra, which is used to produce desiccated coconut, falls within the definition of coconut under the sales tax law, exempting the respondents from Central sales tax liability on inter-State sales of the product.

The Supreme Court analyzed the definitions of copra and coconut from various sources, including references to dried coconut meat or kernel, and highlighted that desiccated coconut is produced by shredding and drying the fresh meat of the coconut, resulting in a food item with lower moisture content and higher oil content than copra. The Court emphasized that the production process of desiccated coconut is similar to copra, which is considered coconut for the purposes of the sales tax law. The argument presented by the appellant that desiccated coconut is not an oilseed and falls outside the scope of the relevant entry was dismissed, as copra, being a form of coconut, is classified as an oilseed under the law.

The Court addressed the distinction made by the appellant between shredded coconut and whole coconut, noting that both serve the same purpose in producing coconut oil and meeting kitchen requirements. The judgment emphasized that the production process and characteristics of desiccated coconut align with the definition of copra, which is included in the definition of coconut for sales tax purposes. The Court found no reason to interfere with the High Court's decision, concluding that desiccated coconut falls within the scope of coconut as per the sales tax law, and therefore, the appeals were dismissed with no order as to costs.