1984 (3) TMI 351 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether "certified seeds" fall under the definition of "cereals" and are thus subject to single-point tax.
2. Validity and interpretation of the Commissioner's circular dated 9th December 1981.
3. Applicability of multi-point tax on seeds under the Karnataka Sales Tax Act, 1957.

Issue-wise Detailed Analysis:

1. Whether "certified seeds" fall under the definition of "cereals" and are thus subject to single-point tax:

The core question was whether the term "cereals" in the Second and Fourth Schedules to the Karnataka Sales Tax Act, 1957, includes "seeds." The court examined various definitions and meanings of "cereals" and "seeds" from dictionaries and the Seeds Act, 1966.

The court noted that "cereals" are grains primarily grown for human consumption and are known as food crops. In contrast, "seeds" are specifically grown and collected for sowing and planting to produce new crops. The court emphasized that the common understanding and commercial parlance should guide the interpretation of these terms.

It was concluded that "seeds" undergo processing and treatment, making them unfit for human consumption and distinct from "cereals." The court held that "certified seeds" are not "cereals" and thus are subject to multi-point tax under section 5(1) of the Act.

2. Validity and interpretation of the Commissioner's circular dated 9th December 1981:

The assessees challenged the circular issued by the Commissioner of Commercial Taxes, which clarified that "cereals" mean edible grains fit for human consumption and do not include seeds treated with poisonous preservatives.

The court found that the circular accurately reflected the legal position and did not interfere with the judicial discretion of the departmental officers. The circular was deemed a valid clarification to ensure uniform interpretation among tax officers.

3. Applicability of multi-point tax on seeds under the Karnataka Sales Tax Act, 1957:

The court examined the relevant provisions of the Karnataka Sales Tax Act, 1957, and the amendments made to align with the Central Sales Tax Act, 1956. It was noted that the term "cereals" was exhaustively enumerated in the Fourth Schedule, and only those specifically listed were subject to single-point tax.

The court rejected the argument that the same goods taxed under section 5(1) before the amendments should continue to be taxed at a single point. The court held that seeds, being distinct commodities from cereals, are subject to multi-point tax as per section 5(1) of the Act.

Conclusion:

The court dismissed all the writ petitions, upholding the applicability of multi-point tax on certified seeds and validating the Commissioner's circular. The court also rejected the assessees' application for a certificate of fitness to appeal to the Supreme Court, stating that the decision did not involve a substantial question of law of general importance.