2009 (4) TMI 873 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of exemption notification for vegetable seeds and classification of groundnut kernel.

Interpretation of exemption notification:
The appellant, a registered dealer in groundnut kernel, challenged the tax assessment for the year 1988-89, claiming exemption as a vegetable seed. The Joint Commissioner revised the order of the first appellate authority, leading to the appeal. The notification exempted vegetable seeds, fruit plants, flower seeds, and flower plants from taxation, with the condition that the seeds sold should be for cultivation purposes. The appellant failed to prove that the groundnut kernel was sold for cultivation. The Joint Commissioner, after considering various dictionaries and legal precedents, concluded that groundnut kernel is classified as an oil-seed, not a vegetable seed suitable for reproduction. Therefore, the exemption notification for vegetable seeds does not apply to transactions involving groundnut kernel.

Classification of groundnut kernel:
The appellant argued that groundnut kernel should be considered a vegetable seed to qualify for the exemption. However, the Joint Commissioner determined that groundnut is commonly known as an oil-seed used for manufacturing groundnut oil, not as a vegetable seed. The definition of "vegetable" from dictionaries and legal judgments supported this classification. Despite being edible, groundnut kernel does not fit the popular understanding of a vegetable grown in a kitchen garden or farm for dining purposes. Consequently, the groundnut kernel was deemed an oil-seed, not a vegetable seed, and the appeal was dismissed for lack of merit.

This judgment clarifies the interpretation of exemption notifications for vegetable seeds and the classification of groundnut kernel as an oil-seed rather than a vegetable seed, based on legal principles and common understanding.