1994 (2) TMI 59 - SC - VAT and Sales Tax

Whether sales of turmeric powder and pepper powder obtained from whole turmeric and whole pepper are exigible to sales tax under West Bengal Sales Tax Act, 1954? Held that - So far as whole black and white pepper and pepper powder is concerned, they are the same goods, whether applying the functional test or the test of common parlance/commercial parlance. The analogy of paddy and rice or of wheat and wheat powder is not apt. Nobody consumes paddy as it is. Similarly, no one eats whole wheat. They are consumed after milling them into rice or flour, as the case may be. But so far as the pepper is concerned, it is used equally in whole as well as powdered form. It is for this reason perhaps that the entry in Notification No. 885-F.T. dated May 1, 1955 speaks of Black and white pepper whole, broken, ground or powdered or of any other form or description whatsoever . It is equally significant that the Notification No.1915-F.T. dated May 10, 1963 refers to these commodities as specified in Notification No. 885-F.T. dated 1st May, 1955 . Black and white pepper as specified in Notification No. 885 means black and white pepper, whether whole, powdered, broken or in any other form. So far as turmeric and turmeric powder is concerned, the position is not identical, applying the functional test. But inasmuch as turmeric is also described in Notification No. 885 in the same manner as black and white pepper and also because Notification No. 1915 refers to it with reference to the said earlier Notification, we are inclined to say that turmeric and turmeric powder must also be treated as same goods. Appeal allowed.

Summary

Issues:
1. Whether sales of turmeric powder and pepper powder obtained from whole turmeric and whole pepper are exigible to sales tax under the West Bengal Sales Tax Act, 1954.

Detailed Analysis:

Issue 1:
The primary issue in this case is whether the sales of turmeric powder and pepper powder, derived from whole turmeric and whole pepper, are subject to sales tax under the West Bengal Sales Tax Act, 1954. The appellant argued that since whole turmeric and whole pepper had already been taxed at the point of sale, the subsequent sale of turmeric powder and pepper powder should not be subject to tax. The department, however, contended that the powders were distinct goods from the whole turmeric and pepper, thus liable to tax. The Tribunal upheld the Revenue's view.

Analysis:
The appellant contended that turmeric powder and pepper powder were essentially the same goods as whole turmeric and whole pepper, citing precedents where similar items in different forms were considered the same goods. Conversely, the State of West Bengal argued that the powders were distinct goods, drawing parallels with cases where the transformation of goods led to the emergence of new products. The Court analyzed the nature of the goods and their commercial usage to determine their taxability.

Judgment:
The Court held that whole black and white pepper and pepper powder were the same goods, considering both functional and commercial parlance tests. The Notifications specifying these commodities referred to them regardless of their form, indicating their equivalence. Similarly, although turmeric and turmeric powder differed functionally, they were treated as the same goods due to the language used in the Notifications. The Court rejected the State's argument based on the use of "that is to say" in the Notifications, emphasizing that it did not signify a distinction between the goods and their forms. Consequently, the appeals were allowed, setting aside the Tribunal's judgment with no order as to costs.