1976 (10) TMI 132 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether tobacco seed oil and tobacco seed oilcake are exempt from sales tax under the Fourth Schedule of the Andhra Pradesh Sales Tax Act.
2. Interpretation of the term "tobacco" as defined in the Central Excises and Salt Act, 1944, and its applicability to the Andhra Pradesh Sales Tax Act.

Detailed Analysis:

Issue 1: Exemption from Sales Tax
The primary question addressed is whether tobacco seed oil and tobacco seed oilcake are exempt from sales tax under the Fourth Schedule of the Andhra Pradesh Sales Tax Act, read with section 8 of the Act. Section 8 provides that a dealer dealing in goods specified in the Fourth Schedule is exempt from tax concerning such goods. Item 7 of the Fourth Schedule lists "tobacco."

The petitioners argued that tobacco seed oil and tobacco seed oilcake fall under the term "tobacco" and should thus be exempt. They relied on a previous decision in Sikkakollu Subba Rao & Co. v. State of Andhra Pradesh, where it was held that "tobacco" includes tobacco seeds, and thus, tobacco seeds would be exempt from sales tax.

However, the Government Pleader referred to the decision in Amara Purushotham Mamidi Obaiah & Co. v. State of A.P., where it was held that while tobacco seed is a product of tobacco, tobacco seed oil and tobacco seed oilcake cannot be considered as such. This decision was based on the earlier wording of the Fourth Schedule, which was "tobacco and all its products," later amended to just "tobacco."

Issue 2: Interpretation of "Tobacco"
The term "tobacco" in the Fourth Schedule is to be interpreted as per its definition in the Additional Duties of Excise (Goods of Special Importance) Act, 1957, which in turn refers to item 4 of the First Schedule to the Central Excises and Salt Act, 1944. Item 4 defines "tobacco" as any form of tobacco, whether cured or uncured, and includes the leaf, stalks, and stems of the tobacco plant but excludes any part of a tobacco plant while still attached to the earth.

The petitioners argued that tobacco seed oil and tobacco seed oilcake are forms of tobacco, merely derived by crushing tobacco seeds, which should fall within the inclusive definition of "tobacco."

The court, however, noted that the Division Bench in Amara Purushotham Mamidi Obaiah & Co. v. State of A.P. found that tobacco seed oil and tobacco seed oilcake are not products of tobacco. The court emphasized that the definition of "tobacco" in the Central Excises and Salt Act does not include seeds once they are separated from the plant. This interpretation was supported by previous case law, including decisions on cotton and cotton seeds, where it was held that once separated, seeds do not retain the identity of the original plant.

The court also pointed out inaccuracies in the interpretation by the Division Bench in Amara Purushotham Mamidi Obaiah & Co. v. State of A.P., specifically regarding the use of the term "includes" in the definition of "tobacco." The court clarified that "includes" is meant to enlarge the meaning but not to cover items not explicitly mentioned, such as seeds.

Conclusion:
The court concluded that tobacco seed oil and tobacco seed oilcake do not fall under the definition of "tobacco" as per the Central Excises and Salt Act, 1944, and thus are not exempt from sales tax under the Andhra Pradesh Sales Tax Act. The court dismissed the petitions, holding that neither tobacco seed oil nor tobacco seed oilcake could be considered "tobacco" for the purposes of tax exemption.

Petitions Dismissed.