1978 (6) TMI 154 - HC - VAT and Sales Tax

Summary

Issues:
Assessability to sales tax of the turnover of a meat-vendor based on the nature of the transaction involving slaughtering of goats and sheep for sale as mutton.

Analysis:
The judgment of the Kerala High Court revolved around the assessability of sales tax on the turnover of a meat-vendor who slaughtered goats and sheep for sale as mutton. The Sales Tax Appellate Tribunal viewed the transaction as involving a manufacturing process, where live animals were processed into meat for sale. The key question was whether this transaction attracted section 5A of the Kerala General Sales Tax Act. Section 5A dealt with the levy of purchase tax on goods consumed in the manufacture of other goods for sale or otherwise. The court referred to a recent Division Bench ruling that discussed the three key elements of the section: consumption of goods, manufacturing process, and production of other goods.

The court analyzed whether slaughtering goats and sheep for sale as meat constituted consumption followed by the manufacture of other goods. In its assessment, the court considered various judicial precedents. The court cited the American Supreme Court case of Anheuser-Busch Brewing Association, where it was held that dressing a chicken did not transform it into a manufactured product. Additionally, the court referred to the Joseph v. State of Kerala case, which determined that prawn pulp made from raw prawns did not involve consumption or manufacture. Another relevant case cited was the Pulpally Devaswom's case, which established that cutting spontaneously grown trees for sale did not amount to consumption for manufacturing other goods.

The court further deliberated on the commercial perspective, stating that meat prepared from slaughtered animals was still considered meat in the commercial sense. The court likened it to dressed chicken remaining chicken and emphasized that the meat prepared for sale was akin to "meat on hoof" transformed into marketable meat. Ultimately, the court concluded that the meat-vendor was not assessable to sales tax under section 5A of the Act. The court allowed the tax revision petition, set aside the Tribunal's orders, and ruled in favor of the assessee.