2001 (12) TMI 858 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability to pay tax on purchase turnover of goods like prawns, lobster, groundnut, etc.
2. Classification of mineral water for tax purposes.
3. Assessment of turnover under section 5A.

Analysis:

Issue 1:
The Court addressed the contention regarding the liability to pay tax on the purchase turnover of goods like prawns, lobster, groundnut, etc. The Tribunal found that the items purchased were not sold as such but were cooked and sold as cooked food, making them taxable. Citing a Supreme Court decision, it was established that purchase tax is attracted when goods are consumed in the manufacture of other goods or consumed otherwise, and in this case, the goods remained the same after processing. The Court upheld the Tribunal's decision, dismissing the revision.

Issue 2:
Regarding the classification of mineral water for tax purposes, the assessee argued that mineral water should be considered a beverage and taxed under a specific entry. However, the department viewed it as falling under the residuary entry due to the absence of a separate provision for mineral water at the time. The Court analyzed the nature of mineral water, emphasizing its health benefits from natural springs, and compared it to the definition of a beverage as per a Malayalam-English Dictionary. Concluding that mineral water is not typically perceived as a beverage in the country, the Court rejected the assessee's argument, stating that mineral water does not fall under the category of beverages.

Issue 3:
The Tribunal's decision on turnover assessed under section 5A was challenged based on a Supreme Court ruling related to the Income-tax Act. The assessee contended that no manufacturing process occurred when preparing cooked food and, therefore, it should not be considered a distinct commodity. However, the Court highlighted that under section 5A of the Kerala General Sales Tax Act, 1963, the assessment considers not only manufacturing but also consumption. Referring to the relevant legal provisions, the Court found no grounds to interfere with the Tribunal's order and dismissed the tax revision case.

In conclusion, the Court's judgment upheld the taxation on the purchase turnover of processed goods, clarified the classification of mineral water, and affirmed the assessment of turnover under section 5A, ultimately dismissing the revision petition.