1988 (8) TMI 396 - HC - VAT and Sales Tax

Summary

Issues:
1. Entitlement for exemption under Notification No. F. 5(31)FD/CT/ 72-16 dated 28th July, 1972 for the assessee employing servants for preparation of namkins.
2. Classification of fried and salted groundnut as the same commodity, i.e., oil-seed.

Analysis:
1. The case involved a revision under section 15 of the Rajasthan Sales Tax Act, 1954, addressing the entitlement of the assessee for exemption under a specific notification. The assessing authority initially held that the namkin products sold by the assessee were prepared by employees, not personally by the assessee, thus denying the exemption. However, the Board of Revenue, in revision, ruled in favor of the assessee, stating that the term "prepared by themselves" in the notification does not require personal preparation and includes preparation with employee assistance. The court agreed with the Board's interpretation, emphasizing the absence of specific restrictive language in the notification, ultimately deciding in favor of the assessee on this issue.

2. The second issue pertained to whether fried and salted groundnuts could be considered oil-seeds for tax exemption purposes. The court referred to established legal principles, including precedents from various cases, to determine the common parlance understanding of the term "oil-seeds." The court cited cases where commodities lost their original properties through processing, leading to their exclusion from the oil-seed category. Applying this reasoning, the court held that fried and salted groundnuts, being significantly altered in the frying process and not commonly used for oil extraction, do not qualify as oil-seeds. Consequently, the sales of fried and salted groundnuts were deemed taxable, contrary to the Board of Revenue's decision.

In conclusion, the revision was partly allowed, with the first issue decided in favor of the assessee regarding exemption under the notification, and the second issue decided in favor of the Revenue, denying tax exemption for sales of fried and salted groundnuts. The assessing authority was directed to rectify the assessments accordingly, with no costs imposed on either party.