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TMI Blog1966 (8) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tax Act, 1959. Section 2(r) of the Act defines "turnover", and the proviso says that the proceeds of the sale by a person of agricultural or horticultural produce, other than tea, grown within the State by himself or on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover. Explanation (1) runs thus: "'Agricultural or horticultural produce' shall not include such produce as has been subjected to any physical, chemical or other process for being made fit for consumption, save mere cleaning, grading, sorting or drying." The case of the petitioner is that in order to make the arecanuts fit for market or consumption, he has been adopting the usual method o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore the only question for consideration is whether the petitioner can claim exemption on the ground of the proceeds of the sale being those of agricultural produce. Prior to this Act, a similar question arose before Rajagopalan, J., in The State of Madras v. Saravana Pillai[1956] 7 S.T.C. 541. In that case, the assessee gathered the arecanuts while they were still raw. They were then peeled and the kernels were thereafter sliced, boiled and dried. The question was whether the cured arecanuts continued to be horticultural produce within the meaning of the proviso to section 2(i). Here I must mention that there was no explanation then similar to explanation (1). It was observed at page 545 thus: "We are of opinion that, where any ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a processing had brought about a change to the original produce as to alter its character to such an extent, as to justify the conclusion that the produce after treatment was a different produce and not the same agricultural produce. The learned Additional Government Pleader for the respondent contends that in the process of dehusking the arecanuts undergo physical change and therefore the assessee is liable to pay tax, even though at the inception they were agricultural produce exempted from tax. Therefore the further question that arises for consideration is whether arecanuts merely by reason of dehusking undergo any physical or other process and thereby lose their character as agricultural produce. An interesting question arose in Eas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n minimum processes ordinarily employed by an agriculturist to make it really marketable or more marketable or to make it fit to be taken to market, it could not be said that the produce ceased to be an agricultural or horticultural produce. The proviso to section 2(r) of the Act is conceived in the interests of the agriculturists, though the explanation has put a limit to it. It excludes from any tax liability under the Act sale of agricultural and horticultural produce, the primary condition to be satisfied being that it must be produce of the land which either belongs to the seller or of the land in which he has an interest as specified by the section. Now the general rule of construction is that exemptions from tax granted by a statut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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