1966 (4) TMI 65 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of bone-meal and crushed bone under Madhya Pradesh General Sales Tax Act, 1958 and Central Provinces and Berar Sales Tax Act, 1947.
2. Necessity of analysis of crushed bone or bone-meal to determine tax exemption eligibility.

Analysis:
The judgment pertains to a reference under section 44(1) of the Madhya Pradesh General Sales Tax Act, 1958, regarding the taxability of bone-meal and crushed bone. The Sales Tax Tribunal referred three questions for decision, including the taxability under specific entries of the Acts and the necessity of analysis to determine eligibility for tax exemption. The assessee, engaged in manufacturing crushed bones and bone-meal, contended for tax exemption under the Acts, which was initially rejected by the Sales Tax Officer and upheld in subsequent appeals. The Tribunal remitted the matter to the Sales Tax Officer to establish if the products met fertilizer standards under the Fertilizer (Control) Order, 1957.

The judgment clarifies that bone-meal and crushed bone are taxable under the Madhya Pradesh General Sales Tax Act, 1958, under specific entries in the schedule. However, under the Central Provinces and Berar Sales Tax Act, 1947, these products are exempt from sales tax as they qualify as fertilizers, as per the common parlance understanding of the term "fertilizer." The Supreme Court precedent emphasized interpreting terms in tax statutes in their popular meaning, and since bone-meal and crushed bone enhance soil productivity, they are considered fertilizers under the 1947 Act, thus exempt from taxation.

Regarding the necessity of analyzing the products to meet fertilizer standards, the judgment aligns with a previous decision, stating it is irrelevant for sales tax assessment purposes. The Court's answers to the referred questions affirm the taxability of bone-meal and crushed bone under the respective Acts and the exemption under the 1947 Act. The Tribunal is directed to proceed with the appeal based on the Court's answers. As both parties partially succeeded, they are left to bear their own costs in the reference.

In conclusion, the judgment provides clarity on the taxability of bone-meal and crushed bone under the mentioned Acts, emphasizing the exemption under the Central Provinces and Berar Sales Tax Act, 1947, based on their classification as fertilizers. The need for analysis to determine tax exemption eligibility is deemed unnecessary for sales tax assessment purposes.