1975 (11) TMI 155 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of whether fried groundnut kernel qualifies as an oil-seed under the Tamil Nadu General Sales Tax Act.

Analysis:
The case revolved around determining whether fried groundnut kernel falls under the definition of an oil-seed as per item 6 of the Second Schedule to the Tamil Nadu General Sales Tax Act. The assessing officer subjected a turnover related to the sale of fried groundnut to multi-point tax at 2.5%, which was upheld by the Appellate Assistant Commissioner but overturned by the Tribunal. The Tribunal held that even after frying, the characteristics of groundnut kernel as an oil-seed were not lost. This decision was challenged by the revenue through a revision petition.

The crux of the matter lay in the interpretation of item 6 of the Second Schedule, which categorizes different items for taxation purposes. The contention put forth by the assessee was that groundnut, including fried groundnut kernel, should be taxed at the first point of purchase in the State at 1.5%. However, the court disagreed with this interpretation, emphasizing that the exclusion of cardamom and groundnut from the definition of oil-seeds in item 6(a) was not indicative of them not being considered oil-seeds. The legislative intent was to levy different rates and stages of tax for different items, including groundnut.

Further reference was made to sections 14 and 15 of the Central Sales Tax Act to support the argument that groundnut should be considered an oil-seed for taxation purposes. The court highlighted that only goods falling under section 14(vi) of the Central Sales Tax Act were intended to be covered under item 6 of the Second Schedule. Therefore, groundnut, as mentioned in item 6(c), should be construed as an oil-seed and not merely a general groundnut.

The court also relied on precedents, such as the City Oil Mill case and the Avadh Sugar Mills Ltd. case, to establish the criteria for classifying a commodity as an oil-seed. It was emphasized that an oil-seed must retain its property of germination and be primarily used for oil extraction to qualify as an oil-seed. Applying these principles, the court concluded that fried groundnut kernel could not be considered an oil-seed as it loses its germinating property and oil content through frying. Therefore, it was held liable for multi-point tax at 2.5%.

In conclusion, the court set aside the Tribunal's decision, confirming the assessment order and ruling in favor of the revenue. The petitioner was awarded costs, including counsel's fee.