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TMI Blog1995 (12) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... , W.P. Nos. 4663, W.P. Nos. 4976, W.P. Nos. 6333, W.P. Nos. 9855, W.P. Nos. 9856, W.P. Nos. 9857, W.P. Nos. 9860, W.P. Nos. 9861, W.P. Nos. 9862, W.P. Nos. 9863, W.P. Nos. 9864, W.P. Nos. 9866, W.P. Nos. 9867, W.P. Nos. 9916 of 1982, W.P. Nos. 327, W.P. Nos. 2229, W.P. Nos. 2233, W.P. Nos. 2234, W.P. Nos. 2237, W.P. Nos. 2400, W.P. Nos. 2401, W.P. Nos. 2402, W.P. Nos. 2403, W.P. Nos. 4326, W.P. Nos. 4330, W.P. Nos. 5579, W.P. Nos. 5580, W.P. Nos. 10968, W.P. Nos. 10969 of 1983, W.P. Nos. 170, W.P. Nos. 175, W.P. Nos. 1100 of 1984, C.A. No. 4212 of 1992 decided on December 15, 1995 H.N. Salve, Senior Advocate (S. Ganesh and K.J. John, Advocates, with him), for the appellants in C.A. Nos. 5626 to 5662 of 1985, 2371 and 2372 of 1991 and 5535 of 1995. N. Sudhakaran, Advocate, for the intervener in C.A. No. 4212 of 1992. A.K. Ganguli, Senior Adovcate (Ms. Aruna Mathur, Ajay Kapur and A. Mariarputham, Advocates for Arputham, Aruna Co., Advocates, with him), for the respondent (State of Tamil Nadu) in C.A. Nos. 5626 to 5662 of 1985. M. Veerappa, Advocate, for the respondent (State of Karnataka) in C.A. Nos. 2371 and 2372 of 1991. S. Ganesh, T.V.S.N. Chari a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kernels. The last sale or purchase of cashew in this case took place before the sale or purchase occasioning the export of cashew kernel out of the territory of India and, therefore, should also be deemed to be in the course of the export trade. There may be some processing of the cashew purchased by the dealers before the cashew-nuts were sold but that will not make the goods which were sold, in any way different from the goods that were purchased. Both were cashew or cashew-nuts. In our view, the distinction sought to be drawn between the provisions of sub-section (3) of section 5 of the Act and article 286(1) of the Constitution is misconceived. Under article 286(1), the court has to examine whether any tax is being imposed by the State Legislature on the sale or purchase of goods "in the course of the import of the goods into or export of the goods out of the territory of India". In order to resist imposition of sales tax by the State, the assessee will have to establish the identity of the goods purchased with the goods to be exported out of the territory of India. In order to fulfil an export obligation, if an exporter purchases goods and as a result of some processing, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in this case is whether the cashew-nut kernels which were exported are "those goods" which were purchased by the assessee in the penultimate transaction. In other words, whether the raw cashew-nuts which were purchased were "those goods" which were exported. This was precisely the question that was answered in the negative in Shanmugha Vilas case [1953] 4 STC 205 (SC); [1954] SCR 53. Therefore, no distinction can be drawn between the cases now under appeal and the decision of this Court in Shanmugha Vilas case [1953] 4 STC 205; [1954] SCR 53 on the plea that the scope of sub- section (3) of section 5 of the Central Sales Tax Act was wider than article 286 of the Constitution. It is true that sub-section (3) by a legal fiction has widened the scope of export sale, but the basic concept remains the same. In order to get immunity from taxation by the State Legislature, the goods exported must be the same goods which were purchased. The question raised in these appeals is whether the purchase of raw goods made by the appellants after which the cashew kernels were extracted and exported to foreign countries could be subjected to the State Sales Tax Act in view of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodities. They are separate articles of commerce quite distinct from the raw cashew-nuts. Indeed, it is significant that the respondents place orders for 'cashew- nuts' but orders are placed with them for 'cashew-nut kernels'." On the basis of these facts, Das, J., concluded at page 247 of STC (111 of SCR) that- "In the circumstances, 'the goods' exported are not the same as the goods purchased. The goods purchased locally are not exported. What are exported are new commodities brought into being as a result of manufacture. There is a transformation of the goods. The raw cashews are consumed by the respondents in the sense that a jute mill consumes raw jute, or a textile mill consumes cotton and yarn. The raw cashews not being actually exported the purchase of raw cashews cannot be said to have been made 'in the course of' export so as to be entitled to immunity under clause (1)(b)." It was argued, and some of the High Courts have also taken the view, that this judgment is confined to the facts of this case. But this, in our opinion, will be a wrong view to take. By that judgment as many as eight appeals were disposed of. The High Court on remand had made a report on how th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emical changes which resulted in the acquisition of new properties including the loss of its fluidity. The Tribunal as well as the High Court had taken the view that vanaspati was not groundnut oil, but a product of groundnut oil, manufactured out of groundnut oil and therefore not entitled to the benefit of the deduction under rule 18(2). This Court upheld the contention made on behalf of the appellant that hydrogenated groundnut oil was no lesser groundnut oil than either refined or even unrefined oil. The fact that the quality of the oil had been improved did not negative its continuing to be oil and the materials before the departmental authorities and the court held that it continued to be oil and was nothing more. The court took the view: ".........No doubt, several oils are normally viscous fluids, but they do harden and assume semi-solid condition on the lowering of the temperature. Though groundnut oil is, at normal temperature, a viscous liquid, it assumes a semi-solid condition if kept for a long enough time in a refrigerator. It is therefore not correct to say that a liquid state is an essential characteristic of a vegetable oil and that if the oil is not liqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63 (SC) it was held that when pineapple fruit was processed into pineapple slices for the purpose of being sold in sealed cans, there was no consumption of the original pineapple fruit for the purpose of manufacturing and the case did not fall within section 5A(1)(a) of the Kerala General Sales Tax Act, 1963. The language of clause (a) of section 5A(1) of the Kerala General Sales Tax Act was "consumes such goods in the manufacture of other goods for sale or otherwise". All that this Court laid down was that when pineapple was sliced and canned for sale, the slices did not cease to be pineapple. It was pointed out in that case that there was no essential difference between pineapple fruit and canned slices. It was held that clause (a) of section 5A(1) truly spoke of goods consumed in the manufacture of other goods for sale. This Court merely held that if pineapple is sliced and made ready for sale in the market, the slices did not lose the character of being pineapple. There again it was a case of a fruit which was merely sliced and made ready for sale by adding preservatives and by canning. This case also does not in any way affect the principles laid down in the case of Shanmugha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... big scale by a trader, the character of the goods sold will not change. The goods that were purchased were those goods which were exported. In the cases under appeal, it has been noted in the order dated April 15, 1982, by the Deputy Commercial Tax Officer that cashew-nut was commercially a different commodity from raw cashew-nut as oil was extracted and thereafter kernels were exported under separate contracts. It also appears from the said order of April 15, 1982 that an amount of Rs. 18,419 has been added back to the turnover on account of sale of cashew husk. Therefore, a purchaser of raw cashew-nut can extract oil and sell it in the domestic market, he can also sell the husk locally, he can also extract the kernels after going through an elaborate process and sell them with or without further processing to the exporter for fulfilling his export commitments. Since raw cashew-nuts can be used for so many purposes and the process of extracting the kernels so elaborate, it cannot be said that the goods (raw cashew-nuts) purchased in the penultimate sale were the same goods (cashew-nut kernels) which were sold for export. We are of the view that cashew-nut kernels are not the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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