1980 (10) TMI 182 - HC - VAT and Sales Tax

Summary

Issues:
- Classification of fish meal as fertiliser or poultry feed for sales tax exemption under Notification No. 3470/X dated 16th July, 1956.

Analysis:
The judgment revolves around the classification of fish meal for sales tax exemption. The Commissioner of Sales Tax challenged the view that fish meal is exempt from sales tax as a fertiliser under Notification No. 3470/X dated 16th July, 1956. The assessing authority initially inferred fish meal to be poultry feed based on a sale to the Poultry Development Officer, Delhi. However, the appellate authority disagreed, noting that the fish meal was purchased from fertiliser manufacturers whose turnover was exempt. The revising authority upheld this finding, emphasizing that no certificate was provided to prove fish meal as poultry feed. The argument that the commodity sold was not proven to be fish meal was dismissed, as the department accepted it as such without dispute.

The argument put forth by the learned standing counsel, relying on a Supreme Court decision, emphasized that the purpose for which a commodity is sold should determine tax liability. It was contended that since fish meal was sold to the Poultry Officer, it should be considered poultry feed. However, the court rejected this argument, highlighting that a commodity can have multiple uses, and tax liability is based on its general meaning in the commercial world. The judgment cited a Supreme Court case regarding the interpretation of oil-seeds for tax purposes, emphasizing the popular understanding over dictionary definitions.

To determine the classification of fish meal, the court referred to agricultural handbooks and publications, which consistently described fish meal as manure or fertiliser suitable for all crops and soils. These sources indicated that fish meal is commonly understood as manure, supported by its description as organic fertiliser. The court concluded that the popular understanding of fish meal as manure prevails over its sale to the Poultry Officer, as the nature of the commodity does not change based on the buyer. Therefore, the revising authority's decision to classify fish meal as manure under the notification for sales tax exemption was upheld, leading to the dismissal of the revisions brought by the Commissioner of Sales Tax.

In conclusion, the judgment clarifies the classification of fish meal as manure for sales tax exemption, emphasizing its common understanding in the commercial world as supported by authoritative agricultural publications. The court's decision highlights the importance of popular meaning over specific usage in determining tax liability, ultimately affirming the exemption of fish meal from sales tax under the relevant notification.