1988 (4) TMI 396 - HC - VAT and Sales Tax

Summary

Issues:
Determining whether watery coconuts are liable to purchase tax or sales tax under the Orissa Sales Tax Act, 1947.

Analysis:
The judgment involved five reference cases under section 24(1) of the Orissa Sales Tax Act, 1947, addressing the liability of watery coconuts to purchase tax or sales tax. The dealers argued that coconuts, being declared goods under section 3-B of the Act, should not be subjected to sales tax. The legislative history of declarations under section 3-B was examined, highlighting the notification that included coconut as an item under "oil-seeds" subject to purchase tax. The notification differentiated between copra excluding tender coconuts, implying that only specific types of coconuts were intended to be taxed.

The judgment referred to previous cases and High Court decisions regarding the classification of coconuts as oil-seeds. Various High Courts had differing opinions on whether coconuts and copra should be considered oil-seeds. The terminology used in the Central Sales Tax Act was compared to the Orissa notification to determine the scope of the term "oil-seed" and its application to coconuts. The dictionary meanings of "cocos nucifera" and "copra" were also considered in the context of the case.

The nature of coconuts dealt with by the dealers was described as fully grown coconuts with developed kernels, not falling under the category of tender or dried coconuts. The judgment cited observations from the Karnataka High Court and the Andhra Pradesh High Court regarding the characteristics and uses of coconuts at different stages. The Supreme Court's distinction between watery coconuts and dried coconuts was discussed, emphasizing the commercial differences between the two commodities.

Ultimately, the court concluded that the Orissa Act's notification under section 3-B excluded only tender coconuts containing mostly water and no kernel from the category of oil-seeds. Based on the object and purpose of the Act, the judgment favored the dealers, ruling that watery coconuts were not liable to purchase tax or sales tax. The reference was answered in favor of the dealers, and each party was left to bear their own costs.

In a concurring opinion, Justice G.B. Patnaik agreed with the decision to answer the reference in favor of the dealers, concluding the analysis of the case.