1970 (3) TMI 156 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutionality of the second limb of item 6 of Schedule III of the Andhra Pradesh General Sales Tax Act.
2. Tax exemption status of neem oil and tobacco seed oil under G.O. Ms. No. 581, Revenue, dated 14th March, 1960.
3. Classification of "tobacco seed," "tobacco seed oil," and "tobacco seed oil-cake" as "tobacco and all its products" under item 7 of Schedule IV of the Act.

Detailed Analysis:

Issue 1: Constitutionality of the Second Limb of Item 6 of Schedule III
This issue was not pressed by the petitioners' counsel because it was already covered by the decision in Radhakrishna and Co. v. State of Andhra Pradesh [1969] 24 S.T.C. 320, where it was determined that the second limb of item 6 of Schedule III of the Act is not repugnant to section 15(a) of the Central Sales Tax Act or Article 14 of the Constitution. Therefore, this point was not considered further in the judgment.

Issue 2: Tax Exemption Status of Neem Oil and Tobacco Seed Oil
The petitioners did not press this issue either, as it was clarified that G.O. Ms. No. 581, dated 14th March, 1960, granted exemption only for purchases by the Sarvodaya Sangh, Warangal, of oil-seeds used in soap manufacture, and not for general purchases of neem oil and tobacco seed oil. Consequently, this point was also not considered further in the judgment.

Issue 3: Classification of "Tobacco Seed," "Tobacco Seed Oil," and "Tobacco Seed Oil-Cake"
The primary issue that remained for consideration was whether "tobacco seed," "tobacco seed oil," and "tobacco seed oil-cake" fall within the scope of "tobacco and all its products" under item 7 of Schedule IV of the Act, thereby qualifying for tax exemption.

Tobacco Seed:
- The court examined the meaning of "tobacco" and concluded that it refers to the entire plant, not just the leaves.
- The term "tobacco" includes all parts of the plant, such as roots, stems, stalks, flowers, and seeds.
- The court referred to the definition of "tobacco" in the Central Excises and Salt Act, 1944, which includes leaf, stalks, and stems but not seeds. However, the court noted that the definition is illustrative, not exhaustive.
- The court cited previous judgments, including I.L.T. Development Co., Ltd. v. State of Madras and Kotak and Co. v. State of Andhra Pradesh, to support its view that seeds are distinct commodities once separated from the plant.
- The court concluded that tobacco seeds are products of the tobacco plant and are therefore exempt from tax under item 7 of Schedule IV.

Tobacco Seed Oil and Tobacco Seed Oil-Cake:
- The court determined that these products are obtained by a mechanical process from the seeds, not directly from the tobacco plant.
- Consequently, they are considered products of the tobacco seed rather than the tobacco plant itself.
- The court concluded that tobacco seed oil and tobacco seed oil-cake are not exempt from tax under item 7 of Schedule IV.

Conclusion:
- The court issued writs of certiorari quashing the orders of the Commercial Tax Officers assessing the petitioners on the turnover relating to tobacco seeds and directed refunds of the taxes collected in relation to tobacco seeds.
- Writs of prohibition were issued to prevent further assessments on tobacco seeds.
- The petitions challenging the tax on tobacco seed oil and tobacco seed oil-cake were dismissed as these items were not considered products of the tobacco plant and thus not eligible for tax exemption.
- The court ordered that each party bear its own costs.

Ordered accordingly.