1969 (12) TMI 98 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether 'gram chhilka' is covered by item No. 15 or item No. 54 of Schedule 'B' to the Punjab General Sales Tax Act, 1948, relating to tax-free goods?
2. If not, whether 'gram chhilka' is taxable at the rate of 1 1/2 per cent., which was the rate of sales tax on foodgrains at the relevant time, or 6 per cent., which was the rate of sales tax on commodities other than foodgrains?

Detailed Analysis:

Issue 1: Coverage of 'gram chhilka' under Item No. 15 or Item No. 54 of Schedule 'B'
The primary question was whether 'gram chhilka' (the brown skin taken off the gram seed) qualifies as 'husk of all foodgrains' under item No. 15 or 'fodder of every type (dry or green)' under item No. 54 of Schedule 'B' to the Punjab General Sales Tax Act, 1948, which lists tax-free goods.

- Petitioner's Argument: The petitioner argued that 'gram chhilka' should be considered as 'husk' under item No. 15 or as 'fodder' under item No. 54, thus exempting it from sales tax.
- Respondents' Argument: The respondents contended that 'gram chhilka' is neither 'husk' nor 'fodder' as defined in the tax statute and therefore, its sales were rightly taxed at 6 per cent.

Court's Reasoning:
- Interpretation of 'Husk': The court referred to a Government of India publication which described 'gram husk' as the brown skin of the gram seed, and not the gram chaff separated during threshing. This commercial understanding aligns with the definition in common parlance.
- Dictionary Definition: The dictionary meaning of 'husk' includes the outer covering of a seed, which encompasses 'gram chhilka'. Therefore, 'gram chhilka' falls within the ambit of 'husk' as per item No. 15.
- Interpretation of 'Fodder': The court noted that 'fodder' is defined as coarse food for cattle, horses, and sheep. 'Gram chhilka' is primarily used as cattle fodder, thus fitting within the definition of 'fodder' under item No. 54.

Conclusion on Issue 1: The court concluded that 'gram chhilka' is covered by both item No. 15 and item No. 54 of Schedule 'B', making it exempt from sales tax.

Issue 2: Taxability of 'gram chhilka' at 1 1/2 per cent or 6 per cent
Given the conclusion on Issue 1, the second issue regarding the applicable tax rate did not arise. However, the court addressed it hypothetically.

- Petitioner's Argument: The petitioner argued that if 'gram chhilka' were taxable, it should be taxed at the rate applicable to foodgrains, i.e., 1 1/2 per cent, as per proviso (12) to Notification No. S.O. 175/P.A. 46/48/S-5/66.
- Court's Reasoning: The court clarified that 'churi' (mentioned in the proviso) is not the same as 'gram chhilka'. The proviso specifically lists commodities in their complete forms, not their individual components like 'gram chhilka'.

Conclusion on Issue 2: If 'gram chhilka' were not covered by items Nos. 15 and 54, it would be subject to sales tax at the rate of 6 per cent, applicable to commodities other than foodgrains.

Final Judgment:
The petition succeeded. The court quashed the impugned order to the extent that it taxed 'gram chhilka' and directed the respondents to refund the sales tax amount, if any, recovered from the petitioner for the assessment year 1967-68. The petitioner was also awarded the costs of the petition.