1993 (9) TMI 334 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of "watery coconut" as fresh fruit or vegetable.
2. Taxability of "watery coconut" under the U.P. Sales Tax Act.
3. Classification of "watery coconut" as oil-seed under Section 14 of the Central Sales Tax Act, 1956.
4. Appropriate tax rate applicable to "watery coconut."

Issue-wise Detailed Analysis:

1. Classification of "watery coconut" as fresh fruit or vegetable:
The dealer contended that "watery coconut" should be classified as fresh fruit or vegetable, which would exempt it from sales tax under the U.P. Sales Tax Act. However, the Sales Tax Tribunal, Jhansi, dismissed this argument, holding that "watery coconut" is not fresh fruit or vegetable and is taxable as unclassified goods. This view was upheld by the assessing officer and the Assistant Commissioner (Judicial), who both rejected the dealer's contention.

2. Taxability of "watery coconut" under the U.P. Sales Tax Act:
The assessing officer made provisional assessments for the dealer's turnover of "watery coconuts" for various months in 1989, treating them as unclassified items and taxing them at 8%. The dealer had not paid any tax on the turnover, believing that "watery coconuts" were exempt as fresh fruits or vegetables. The Sales Tax Tribunal upheld this assessment, leading to the present revision petitions.

3. Classification of "watery coconut" as oil-seed under Section 14 of the Central Sales Tax Act, 1956:
The dealer's counsel argued that even if "watery coconut" is not a fresh fruit or vegetable, it should be classified as an oil-seed under Section 14 of the Central Sales Tax Act, 1956. According to Section 14(vi)(viii), coconut (excluding tender coconuts) is considered an oil-seed. The counsel cited several judgments, including Sri Krishna Coconut Co. v. Commercial Tax Officer and Tagoob Mohammad v. Commercial Tax Officer, to support the argument that "watery coconut" is not a tender coconut and should be classified as an oil-seed. The learned Standing Counsel, however, contended that "watery coconuts" are tender coconuts and thus excluded from the definition of oil-seeds.

4. Appropriate tax rate applicable to "watery coconut":
Section 15 of the Central Sales Tax Act restricts the tax rate on declared goods, including oil-seeds, to 4%. The dealer argued that "watery coconut" should be taxed at this rate, not the 8% applied by the assessing officer. The court examined various precedents and interpretations, including the Andhra Pradesh High Court's decision in Sri Krishna Coconut Co. and the Supreme Court's observation in Sri Siddhi Vinayaka Coconut & Co. v. State of Andhra Pradesh, which recognized "watery coconut" as distinct from tender coconut and thus falling within the scope of oil-seeds.

Conclusion:
The court concluded that "watery coconut" is a declared commodity under Section 14 of the Central Sales Tax Act and should be taxed at a rate not exceeding 4% as prescribed by Section 15. The Sales Tax Tribunal's decision to tax "watery coconut" at 8% was erroneous. The court set aside the Tribunal's order and directed it to pass a fresh order on the assessee's appeals in light of this judgment. The revision petitions were allowed, and each party was ordered to bear its own costs.