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TMI Blog1978 (11) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... anand pashu ahar (hereinafter referred to as "the ahar" for the sake of convenience). The ahar is produced out of cotton-seed oilcakes. The assessee made an application under section 62 for the determination of the question whether or not the ahar was taxable goods and, if so, what was the rate of tax in respect of the same. The Deputy Commissioner of Sales Tax, who heard the matter, came to the conclusion that the ahar, which is used as cattle-feed, retained the characteristics of oilcakes and that, therefore, the sale of the said product was not exempt from tax under entry 21 of Schedule I. The Deputy Commissioner of Sales Tax further found that the ahar was also not a mechanically produced cattle-feed and that, therefore, it was not covered by entry 25 in the Schedule to the Government notification dated 29th April, 1970, issued under section 49. The Deputy Commissioner of Sales Tax was of the view that the ahar, being in substance and reality, oilcake was covered by entry 11 of Schedule IIPart B, and that it was, therefore, taxable at the rate set out in the said entry. The assessee, feeling aggrieved by the determination of the Deputy Commissioner of Sales Tax, carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is left, which is about 65 per cent, is crushed with the help of expeller, which gives cotton-seed oil on the one side and cotton-seed oilcakes on the other. This cotton-seed oilcake is known as popadi khol. Popadi khol also contains some percentage of cotton-seed oil. With the help of solvent plant, the part of cotton-seed oil in this popadi khol is also extracted. As a result, what is obtained is cotton-seed oilcake, which contains about 40 per cent of protein." Another important aspect in the process of manufacture of the ahar, to which reference does not appear to have been made in the pamphlet, but to which the attention of the Deputy Commissioner of Sales Tax as well as of the Tribunal was drawn on behalf of the assessee, may be referred to, in the words of the Tribunal, as follows: "....................in order to convert the cotton-seed oilcakes into anand pashu ahar, certain quantity of salt is mixed with the oilcakes and a special treatment of citric acid wash is given for which there is a special plant. By giving this citric acid treatment, gossypol particles are removed and the cattlefeed so processed and sold becomes free from toxic effects and is a harmless ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de-oiled cakes Do. Do." Entry 25 of the Schedule to the notification dated 29th April, 1970, issued by the State Government under section 49 reads as under: "25. Sales of mechanically produced cattle-feed. Whole of tax. Nil." Under section 5 no tax is payable on the sales or purchases of any goods specified in Schedule I subject to the conditions of exceptions, if any, set out against each of the goods specified in column 3 of the said schedule. If, therefore, the ahar is covered by entry 21 of Schedule 1, on its sales or purchases, no tax would be payable. To be covered by entry 21, the ahar, in the first place, must be cattle-feed. Cattle-feed, which is mechanically produced is, however, specifically excluded from the coverage of the said entry by the words of exclusion contained in the bracketed () portion. The entry makes it clear, at the same time, that the word "cattle-feed" includes fodder and concentrates but it excludes cotton-seeds, oilcakes and de-oiled cakes. On an integral reading of entry 21, it would appear that cattle-feed including fodder and concentrates, which is not mechanically produced, but excluding cotton-seeds, oilcakes and de-oiled cakes, will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .). In the process of interpretation of the abovesaid three entries and of judging their interaction and, if need be, of their harmonisation, this fundamental principle must always be borne in mind. We are herein concerned with distinct commercial commodities, each one of which has received recognition at the hands of the legislature by its enumeration in one schedule or the other. "Cattle-feed" is one of such commodities. It finds place in two schedules. Entry 21 of Schedule I takes in cattle-feed which is not mechanically produced, whereas entry 25 of Schedule II-Part A takes in mechanically produced cattle-feed. The former kind of cattle-feed is exempt from tax, whereas the latter bears the levy of sales tax. Thus far, there should be and there is no difficulty in the process of interpretation. Another distinct commercial commodity, namely, oilcakes, is mentioned in entry 21 of Schedule I with a view to excluding it from the coverage of the term "cattle-feed". It is clear, therefore, that oilcakes, even though they might be used as cattle-feed, are not intended to be covered by entry 21 of Schedule I and that, consequently, they are not intended to be exempted from the levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale or purchase of which no tax is payable under section 5 or section 49 or a notification issued thereunder. This extended definition excludes from the category of taxable goods not only those goods to which exemption attaches by virtue of exemption granted under section 5 but also those goods which are the subject-matter of a transaction of sale or purchase which is exempted from payment of the whole or any part of any tax payable under the Act by virtue of the provisions of section 49. The taxable goods, which would have otherwise borne levy of tax, become, so to say, non-taxable goods once they are the subjectmatter of the transaction of sale or purchase which has been exempted from the payment of the whole of tax payable under the Act. Against this background, let us turn to entry 25 of the Government notification. Under the said entry, sales or purchases of mechanically produced cattle-feed, which would have otherwise borne the levy of sales tax under entry 25 of Schedule II-Part A, are exempted from the payment of the whole of tax. It would thus appear that although under the parent legislation it was intended that sales or purchases of mechanically produced cattle-feed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 4 of the order of the Tribunal and the original letter on record was shown to us at the hearing of the reference by the counsel appearing on behalf of the revenue. It is against the aforesaid background that the Tribunal was required to address itself to the principal question, namely, whether cotton-seed oilcakes, which were subjected to the said process, changed their identity and whether the ahar, which emerges and which is admittedly used as cattle-feed, was a separate commercial commodity, which can be properly called cattle-feed. The Tribunal, with respect, failed to do so in the proper perspective. In the first place, the Tribunal appears to have been swayed by the fact that the ahar is produced out of cotton-seed oilcakes and it appears to have proceeded on the footing that since no evidence was produced either before the Deputy Commissioner of Sales Tax or before it to the effect that the addition of salt and citric acid wash treatment changed the essential characteristics of oilcakes, the oilcakes retained the characteristics of oilcakes and that, therefore, the product, which emerged after the application of the said process continued to be oilcakes and it is not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the discoveries that certain mineral elements in trace amounts were essential for the animals' nutrition, there has been widespread addition, at low cost, of small quantities of salts of all trace elements (iron, copper, manganese, zinc, and cobalt) to formula feeds for all types of livestock. Now, as earlier pointed out, the ahar is produced after subjecting the cottonseed oilcakes to the process of addition of salt and citric acid wash treatment with a view to removing gossypol particles. The discussion contained in the two Encyclopaedias, to which we have just referred, would show that treatment prima facie appearing to be similar to that applied to oilcakes, in the instant case, brings into existence a high-protein cattle-feed or high-protein supplement in feeding cattle. The Tribunal, therefore, was required to consider, inter alia, whether a distinct commercial commodity, namely, cattle-feed, had, in fact, emerged as a result of the application of such process to oilcakes, without being unduly influenced by the fact that oilcakes were the original product, which was itself subjected to tax under entry 11 of Schedule II-Part B, and that the ahar was loosely described as o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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