1966 (4) TMI 63 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of bone-meal or crushed bone under specific entries of the Madhya Pradesh General Sales Tax Act, 1958.
2. Necessity of analyzing crushed bone or bone-meal to determine tax liability.

Analysis:

1. The case involved a reference under section 44(1) of the Madhya Pradesh General Sales Tax Act, 1958, regarding the taxability of bone-meal or crushed bone. The Sales Tax Tribunal referred two questions to the High Court for decision. Firstly, whether bone-meal or crushed bone is taxable under specific entries of the Act or exempt from sales tax. Secondly, whether analyzing the product to determine compliance with Fertilizer (Control) Order standards is necessary.

2. The assessee, engaged in manufacturing crushed bones and bone-meal, contended that these products were exempt from tax under the Act. However, the Sales Tax Officer and the Appellate Assistant Commissioner rejected this argument and levied sales tax. The Sales Tax Tribunal considered the definition of "fertilizer" under the Fertilizer (Control) Order, 1957, and remitted the matter to the Sales Tax Officer for further analysis.

3. The High Court determined that bone-meal or crushed bone falls under taxable categories specified in the Act, despite potential classification as fertilizers. The specific entries in the schedules of the Act subject bones of animals, including crushed bones and bone-meal, to tax. The Court emphasized harmonious reading of relevant entries to impose sales tax on such products, irrespective of potential exemption as fertilizers.

4. The Tribunal's reliance on the Fertilizer (Control) Order, 1957, to define "fertilizer" for sales tax purposes was deemed erroneous by the High Court. The Court highlighted the inapplicability of definitions from one statute to interpret terms in another statute. The Tribunal's decision to remand the matter based on Fertilizer (Control) Order's definition was considered flawed.

5. Consequently, the High Court ruled that bone-meal or crushed bone is taxable under specific entries of the Madhya Pradesh General Sales Tax Act, 1958. The exemption for fertilizers under Schedule I does not apply to these products. Additionally, analyzing the products to meet Fertilizer (Control) Order standards is deemed irrelevant for sales tax assessment. The Tribunal was directed to decide the appeal based on the Court's answers. The assessee was instructed to bear the costs of the reference, with counsel's fee fixed at Rs. 100.