1984 (4) TMI 262 - HC - VAT and Sales Tax

Issues Involved:
1. Interpretation of the term "copra" in the context of the Bombay Sales Tax Act, 1959.
2. Whether copra powder falls within the ambit of "copra" for taxation purposes.
3. Applicability of Karnataka High Court's decision to the present case.
4. Interpretation of fiscal statutes in favor of the taxpayer.
5. Consistency in the interpretation of Central and State legislations.
6. Maintainability of the writ petition despite the existence of alternate remedies.

Detailed Analysis:

1. Interpretation of the term "copra" in the context of the Bombay Sales Tax Act, 1959:
The principal issue is whether the term "copra" as found in entry No. 6(viii) in Schedule B, Part II, of the Bombay Sales Tax Act, 1959, includes copra powder. The relevant entry reads: "Coconut (i.e., copra excluding tender coconuts (Cocos nucifera)." The petitioner, a partnership firm, manufactures copra oil and copra powder by crushing desiccated copra, a process that does not alter the substance of copra.

2. Whether copra powder falls within the ambit of "copra" for taxation purposes:
The Sales Tax Officer held that copra powder is a different substance than copra and taxed it under residuary entry No. 22 of Schedule E at 5 + 3 per cent. The petitioner contends that copra powder should be taxed at 4 per cent as mentioned in Schedule B, Part II. The Court noted that the respondents treated copra powder as "copra" until 1978 when the Commissioner of Sales Tax took a different view.

3. Applicability of Karnataka High Court's decision to the present case:
The Karnataka High Court in Sri Lakshmi Coconut Industries v. State of Karnataka [1980] held that "copra" does not lose its identity when crushed. The Court agreed with this interpretation, stating there is no substantial change in the substance of copra when it is made into copra powder.

4. Interpretation of fiscal statutes in favor of the taxpayer:
The Court emphasized that if two interpretations of a fiscal statute are possible, the one in favor of the taxpayer should be accepted. This principle is reinforced by the interpretation of the term "that is to say" in the entry, which is used to exhaustively enumerate the goods, not to amplify the meaning.

5. Consistency in the interpretation of Central and State legislations:
The Court highlighted the importance of maintaining consistency in law. The relevant entry in the CST Act and the BST Act are in pari materia. The Court adhered to its policy of not differing from the view of another High Court on the interpretation of a Central statute, citing precedents like Maneklal Chunilal & Sons Ltd. v. Commissioner of Income-tax and Commissioner of Income-tax v. Chimanlal J. Dalal & Co.

6. Maintainability of the writ petition despite the existence of alternate remedies:
The Court addressed the preliminary point about the maintainability of the writ petition. Although alternate remedies under the BST Act were not exhausted, the Court allowed the petition due to the time-barred appeal, the general public importance of the legal question, and the Department's unlikely change in stance.

Conclusion:
The petition is allowed, and the impugned orders dated 29th December, 1983, are quashed and set aside. The Department may make a fresh assessment in light of the Court's observations. No order as to costs was made due to the importance of the legal question and the test case nature of the matter.

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