9911796707
TMI Blog1997 (1) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... hed. 2.. Relevant facts which are almost admitted and necessary for proper adjudication of the appeals are that, the respondents herein who are traders in various agricultural produces including cereals such as ragi and its product ragi flour were assessed for payment of tax on the ragi flour under the provisions of the Karnataka Sales Tax Act, 1957 (hereinafter called the Act ). It was contended that under section 8 of the Act read with Fifth Schedule, entry 40-A, the respondents were exempt from payment of tax subject to the conditions mentioned therein. It was submitted that as ragi included ragi flour, the writ petitioners were not liable to pay sales tax. It was submitted on behalf of the appellants that ragi and ragi flour were two distinct goods and that ragi flour had not been exempted from payment of tax. Relying upon Alladi Venkateswarlu s case [1978] 41 STC 394 (SC) the learned single Judge held: In the case on hand, ragi is mentioned in entry 40A of the Fifth Schedule to the Act along with certain other cereals. It is an item on which tax is not payable under the Act. There is no other entry in the Act which refers to ragi or ragi flour. In exactly identical situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emembered that wheat flour-and similarly maida and suji-are different commodities from wheat. Three decisions of this Court(2) have held that rice (it is also derived from paddy just as flour is derived from wheat by the process of milling) is different from paddy. We shall refer to these decisions at some detail a little while later. Indeed, in one of the decisions, this Court has, by way of illustration, explained that wheat is different from wheat flour. The principle of all these three decisions is that where certain goods are consumed to bring into existence different goods-different in commercial and common parlance-both of them must be treated as different goods. The meaning and content of the expression consuming has also been explained in these decisions. If so, there appears to be no warrant for reading flour, maida and suji into the expression wheat in section 14(i)(iii). If the dealers contention is correct then it should mean that rice is included in paddy-in which case it was not necessary for Parliament to mention rice separately under sub-clause (ii) of clause (i) of section 14. [The counsel for the States may probably be right when they suggest that flour, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e doubt for which purpose the word includes is generally employed.......but, in the context of single point sales tax, subject to special conditions when imposed on separate categories of specified goods, the expression was apparently meant to exhaustively enumerate the kinds of goods on a given list. The purpose of an enumeration in a statute dealing with sales tax at a single point in a series of sales would, very naturally, be to indicate the types of goods each of which would constitute a separate class for a series of sales. Otherwise, the listing itself loses all meaning and would be without any purpose behind it. In this connection, it would be equally relevant to bear in mind the following statement of law from the very same decision: .............Sales tax law is intended to tax sales of different commercial commodities and not to tax the production or manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of sales tax. Where commercial goods, without change of their identity as such goods, are mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read. It passes through the first stage of production when wheat is grown by the farmer, the second stage of production when wheat is converted into flour by the miller and the third stage of production when flour is utilised by the baker to manufacture bread out of it. The miller and the baker have consumed wheat and flour respectively in the course of their business. We have to understand the word consumes in section 6(i) of the Act in this economic sense........... At every stage of production, it is obvious there is consumption of goods even though at the end of it there may not be final consumption of goods but only production of goods with higher utility which may be used in further productive processes......... Applying the above test, it has to be held that the assessees had consumed the paddy purchased by them when they converted it into rice which is commercially a different commodity. 6.. In Rajasthan Roller Flour Mills s case [1993] 91 STC 408 (SC) it was concluded: .........it must be held that when wheat is consumed for producing flour or maida or suji, the commodities so obtained are different commodities from wheat. The wheat loses its identity. It gets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the said principle is good and sounddoes not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals [1991] 83 STC 234 (SC) and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave [1969] 2 SCR 253; AIR 1970 SC 755 that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms ..... X X X X Extracts X X X X X X X X Extracts X X X X
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