1957 (6) TMI 15 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the notices issued under the Bengal Finance (Sales Tax) Act.
2. Whether the petitioner is a "dealer" under section 2(c) of the Sales Tax Act.
3. Whether betel leaf (pan) is a "vegetable" under item No. 6 of the schedule appended to the Bengal Finance (Sales Tax) Act.

Detailed Analysis:

1. Legality of the Notices:
The petitioner challenged the legality of three notices issued under the Bengal Finance (Sales Tax) Act, which required the petitioner to produce certain books of accounts and documents and to show cause why a penalty should not be imposed under section 11(2) of the Act. The petitioner argued that these notices were invalid as they were based on the incorrect assumption that the petitioner was a dealer and that betel leaf was not exempt from taxation.

2. Definition of "Dealer":
The petitioner contended that he was not a dealer within the meaning of section 2(c) of the Sales Tax Act. The petitioner described his role as an Aratdar in the Howrah betel leaf market, where he facilitated transactions between cultivators and purchasers, guaranteed payment, and collected money from purchasers. The opposing affidavit described a slightly different system, where Aratdars played a more active role in the sale process. Due to these conflicting accounts, the court determined that it was not possible to resolve whether the petitioner was a dealer based solely on affidavits. The court decided to leave this issue open for determination by the Sales Tax Authorities upon taking evidence.

3. Classification of Betel Leaf as a "Vegetable":
The primary issue was whether betel leaf (pan) qualified as a "vegetable" under item No. 6 of the schedule appended to the Bengal Finance (Sales Tax) Act, which would exempt it from taxation. The petitioner argued that betel leaf should be considered a vegetable, relying on definitions from the Oxford English Dictionary and the broad interpretation of the term "vegetable" to include plants cultivated for food or used with food. The opposing counsel argued that the term "vegetable" should be interpreted narrowly, referring to the amendment in 1954 which defined "vegetable" as "Sabji, Tarkari and Sak," and emphasizing that the legislative intent was to restrict the meaning to food items.

The court referred to previous judgments from the Patna, Nagpur, and Allahabad High Courts, which had consistently held that betel leaf was not a vegetable within the meaning of similar sales tax statutes. The court also considered the scheme of the schedule, noting that items 1 to 8 were all food items, suggesting that "vegetable" should be limited to vegetables used for food. The court concluded that betel leaf did not fall within the meaning of "vegetable" as used in item 6 of the schedule, aligning with the restricted interpretation adopted by other High Courts.

Conclusion:
The court dismissed the petitions, holding that the notices issued under the Bengal Finance (Sales Tax) Act were valid, the issue of whether the petitioner was a dealer would be determined by the appropriate authorities, and betel leaf did not qualify as a vegetable under item 6 of the schedule. The rule was discharged, and there was no order as to costs. The operation of the order was stayed for four weeks from the date of the judgment.

Separate Judgments:
The judgments in C.R. No. 3904 of 1953 and C.R. Nos. 3890 to 3903 and C.R. No. 3905 of 1953 were governed by the findings in C.R. No. 3560 of 1953, leading to the dismissal of these petitions as well.