1979 (7) TMI 228 - HC - VAT and Sales Tax

Issues Involved:
1. Assessability of chemical fertilizers under the Tamil Nadu General Sales Tax Act, 1959.
2. Applicability of exemption under G.O. Ms. No. 976, Revenue, dated 28th March, 1959.
3. Classification of fertilizer mixtures under Item 21 of the First Schedule.

Detailed Analysis:

Assessability of Chemical Fertilizers
The primary issue in this case is the assessability of chemical fertilizers under the Tamil Nadu General Sales Tax Act, 1959. The Joint Commercial Tax Officer assessed the turnover related to the sale of "fertilizer mixture" at the rate of 3.5%. The assessee argued that the mixture sold was a combination of inorganic chemical fertilizers mixed with deoiled cake and other fillers, which did not contain any organic fertilizer. They contended that since the inorganic chemical ingredients had already been subjected to a single point tax by the suppliers, the mixture should not fall under Item 21 of the First Schedule, thus making the exemption under section 3(1) applicable.

Applicability of Exemption Under G.O. Ms. No. 976, Revenue, Dated 28th March, 1959
The assessee claimed exemption under G.O. Ms. No. 976, Revenue, dated 28th March, 1959, arguing that the inorganic mixture had already suffered tax and the mere mixing operation did not amount to a manufacturing process. The Sales Tax Appellate Tribunal rejected this contention, holding that even a mixture of pure inorganic chemicals with fillers like gypsum, chinaclay, and deoiled cake would fall under Item 21 of the First Schedule, thus not attracting the exemption under G.O. Ms. No. 976.

Classification of Fertilizer Mixtures Under Item 21 of the First Schedule
The Tribunal relied on previous decisions, including State of Tamil Nadu v. Rallis India Limited and Shaw Wallace & Company Limited v. State of Tamil Nadu, to conclude that the mixture fell under Item 21 of the First Schedule. The Supreme Court in Shaw Wallace & Co. Ltd. v. State of Tamil Nadu affirmed that mixtures produced by the assessee were different from their component parts, with different properties and uses, thus not qualifying for exemption on the ground that tax had been paid on the components at an earlier stage.

The court noted that the expression "that is to say" in Item 21 was meant to exhaustively enumerate the kinds of goods on a given list. Consequently, unless the fertilizer mixture sold by the assessee came within the enumerated category, it would not fall for consideration of single point levy of tax.

Remand for Further Consideration
The court observed that the Sales Tax Appellate Tribunal had not considered whether the mixture was of sub-items (1) to (15) or fell under sub-item (16). The Tribunal was directed to reconsider the matter in light of the court's reasoning. Specifically, if the mixture contained sub-items (1) to (15) and an organic manure, it would fall under sub-item (16) and come within the scope of Item 21. If it contained sub-items (1) to (15) with any other foreign substance not being an organic manure, it would not fall within the scope of Item 21.

Conclusion
The matter was remanded to the Sales Tax Appellate Tribunal for fresh consideration based on the court's detailed reasoning and conclusions. The revision petition was allowed, and there was no order as to costs.

Summary:
The High Court of Madras remanded the matter to the Sales Tax Appellate Tribunal to reconsider the assessability of a fertilizer mixture under Item 21 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The court directed the Tribunal to determine whether the mixture fell under sub-items (1) to (15) or sub-item (16) and to consider the applicability of exemptions under G.O. Ms. No. 976, Revenue, dated 28th March, 1959. The revision petition was allowed with no order as to costs.

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