2007 (4) TMI 651 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the GTL is a non-taxable item either as per serial No. 40 or serial No. 86 of Schedule I.
2. Whether purchase tax is payable under section 13(1)(a) of the West Bengal Sales Tax Act on the purchase of GTL from the cultivators and/or farmers.

Issue-wise Analysis:

I. Whether the GTL is a non-taxable item either as per serial No. 40 or serial No. 86 of Schedule I:

The petitioner argued that GTL should be exempt from tax under the West Bengal Sales Tax Act, 1994, either as "plant" under serial No. 40 or as "vegetable" under serial No. 86 of Schedule I. The petitioner contended that GTL is a part of the tea plant and thus should be considered as a "plant." Alternatively, they argued that GTL should be classified as a "vegetable" because it is a green product.

The Tribunal held that the expression "plant" in serial No. 40 of Schedule I means the plant as a whole. If any part of a plant is separated and sold separately, it cannot be treated as a plant. The Tribunal cited the case of Gopal Dutta v. West Bengal Commercial Taxes Appellate and Revisional Board [1999] 114 STC 313, which emphasized that expressions in a taxing statute should be understood in their common parlance or commercial sense. The Tribunal concluded that GTL, when separated from the tea plant and sold as a separate item, does not come within the meaning of "plant" in serial No. 40 of Schedule I.

Regarding the classification of GTL as a "vegetable" under serial No. 86, the Tribunal referred to the Supreme Court's decision in Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, Akola [1961] 12 STC 286, which interpreted "vegetable" to mean items grown in the kitchen garden or farm and used for the table. The Tribunal held that GTL does not fit this description and thus cannot be classified as a "vegetable."

II. Whether purchase tax is payable under section 13(1)(a) of the West Bengal Sales Tax Act on the purchase of GTL from the cultivators and/or farmers:

The petitioner argued that farmers and/or cultivators who sell GTL do not fall within the definition of "dealer" under the 1994 Act, as they are not engaged in business activities. The Tribunal, however, held that the cultivators and/or farmers are engaged in cultivating GTL for commercial purposes, not for their own consumption. Therefore, they fall within the definition of "dealer" under section 2(10) of the West Bengal Sales Tax Act, 1994, which defines a dealer as any person who carries on the business of selling or purchasing goods.

The Tribunal referred to the case of Hesanadhi Jay Industries v. Commercial Tax Officer [2000] 120 STC 419, where it was held that cultivators are not dealers in the context of selling jute sticks. However, the Tribunal distinguished this case from the present one, stating that in the current case, the cultivators are selling GTL as a commercial commodity to tea manufacturers, making them dealers under the Act.

Conclusion:

The Tribunal dismissed the application, holding that GTL is neither covered by serial No. 40 nor by serial No. 86 of Schedule I and is thus a taxable commodity under the West Bengal Sales Tax Act, 1994. Furthermore, the Tribunal held that the cultivators and/or farmers selling GTL are dealers within the meaning of the Act and are liable to pay purchase tax.