1980 (5) TMI 30 - SC - VAT and Sales Tax

Whether the turnover of pineapple fruit purchased for preparing pineapple slices for sale in sealed cans is not covered by Section 5-A(1)(a) of the Kerala General Sales Tax Act, 1963? Held that - When pineapple fruit is processed into pineapple slices for the purpose of being sold in sealed cans there is no consumption of the original pineapple fruit for the purpose of manufacture. The case does not fall within Section 5-A(1)(a) of the Kerala General Sales Tax Act. The High Court is right in the view taken by it. Appeal dismissed.

Summary

Issues:
Interpretation of Section 5A(1)(a) of the Kerala General Sales Tax Act, 1963 regarding the turnover of pineapple fruit purchased for preparing pineapple slices for sale in sealed cans.

Analysis:

1. The appeal before the Supreme Court challenged the judgment of the Kerala High Court regarding the turnover of pineapple fruit purchased for preparing pineapple slices for sale in sealed cans, contending that it was not covered by Section 5A(1)(a) of the Kerala General Sales Tax Act, 1963.

2. The respondent, a food packer, claimed that the turnover representing the purchase of pineapple fruit was not covered by Section 5A(1)(a) as the pineapple was converted into various products. The Sales Tax Officer disagreed, stating that the manufacturing process involved fell within Section 5A(1)(a). The Tribunal and High Court upheld the assessee's position regarding most products but questioned whether the preparation of pineapple slices fell within Section 5A(1)(a).

3. The question at hand was whether the pineapple fruit was consumed in the manufacture of pineapple slices. The process involved washing, slicing, adding sugar as a preservative, sealing in cans, and sterilization.

4. Section 5A(1)(a) requires the consumption of a commodity in the manufacture of another commodity, where the original commodity must undergo a change to be recognized as a new and distinct article. The court analyzed various precedents to determine if a new commercial article had been created through processing.

5. Precedents cited included cases where a new commodity emerged through processing and cases where the original commodity retained its identity despite processing. The court emphasized that a distinct commercial article must arise from processing to constitute manufacture.

6. In the present case, the court found no essential difference between the original pineapple fruit and the canned pineapple slices. Both were recognized as pineapple, with the only variation being the presentation and preservation method. The court concluded that the pineapple slices retained the original identity of the fruit.

7. Citing a U.S. Supreme Court case, the court highlighted that a change in a commodity does not necessarily constitute manufacturing unless a new and distinct article emerges. The court rejected the argument that higher pricing of pineapple slices indicated a different commercial commodity, emphasizing that the consumer distinction was based on form rather than essential identity.

8. Ultimately, the court held that the processing of pineapple fruit into slices for sale in sealed cans did not involve the consumption of the original fruit for manufacturing purposes under Section 5A(1)(a) of the Act. The High Court's decision was upheld, and the appeal was dismissed with costs.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the court's reasoning in interpreting the relevant provisions of the law.