1987 (6) TMI 380 - HC - VAT and Sales Tax

Summary

Issues:
1. Rejection of accounts and addition to taxable turnover.
2. Imposition of tax on "chilli powder" and "coriander powder" at 8 percent.

Analysis:
The petitioner, an assessee under the Kerala General Sales Tax Act, challenged the assessment for the year 1982-83, where returns and books of accounts were rejected, and 5 percent was added to the taxable turnover. The claim for exemption on "chilli powder" and "coriander powder" turnover was denied, and tax was imposed on the packing material purchase value. The Deputy Commissioner reduced the addition to 1 percent, and the Appellate Tribunal upheld the addition but deleted the turnover related to packing materials. However, the Tribunal maintained the tax on "chilli powder" and "coriander powder." The petitioner contended that the 1 percent addition and the 8 percent tax on the powders were incorrect.

The Court rejected the petitioner's submissions, upholding the rejection of accounts and the addition to the turnover by all three authorities. The Appellate Tribunal's decision to add 1 percent to the turnover was deemed competent as a final fact-finding authority. The crucial issue was the imposition of 8 percent tax on "chilli powder" and "coriander powder." The Tribunal held that the powders were distinct commodities from the original spices, justifying the fresh tax imposition under entry 27 of the First Schedule.

The Court affirmed that when chilli and coriander were processed into powders, new and distinct commodities emerged, no longer retaining the identity of the original spices. Citing previous court decisions, the Court established that commodities at different stages of processing could be taxed as commercially different articles. Therefore, "chilli powder" and "coriander powder" were considered distinct from chilli and coriander, justifying the 8 percent tax imposition. The tax revision case was dismissed, upholding the Tribunal's decision.