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TMI Blog2003 (9) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... hase tax under section 5A of the Act on the purchase turnover of cattles, sheep and pigs. 3.. The petitioner is a State Government undertaking carrying on the business in the sales of livestock and meat and is an assessee on the files of the Assistant Commissioner, Special Circle III, Ernakulam. In the assessment for the years under consideration the petitioner in its returns, inter alia, claimed non-liability to tax under section 5A of the Act in respect of the purchase turnover of goat, sheep, pig, etc. This claim was made on the basis that the conversion of animals into meat by slaughtering does not involve any manufacturing process attracting the provisions of section 5A(1)(a) of the Act. The assessing authority had rejected the said contention based on the decision of the Supreme Court in Deputy Commissioner of Sales Tax v. A.B. Ismail [1986] 62 STC 394. In the appeals filed by the petitioner before the Deputy Commissioner (Appeals), AIT and ST, Ernakulam, the petitioner contended that the live goat, sheep, pig and its meat are one and the same commodity and since meat is exempted from payment of tax under the Notification S.R.O. No. 342 of 1963, the petitioner is not liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94 and held that it does. However, the counsel submits that the present case is covered by an earlier decision of the Supreme Court in Chiranjit Lal Anand v. State of Assam [1985] 60 STC 89. The counsel submits that meat is an exempted commodity under S.R.O. No. 342 of 1963, that what the petitioner had purchased are the cattles, goat, sheep, pig, etc., by weight only for the purpose of converting them into meat and therefore such purchase should be understood only as purchase of meat. The counsel in support of the above has relied the purchase bills and the certificate issued by sellers, most of them are Government owned corporations. Counsel submits that the decision of the Supreme Court in Chiranjit Lal Anand's case [1985] 60 STC 89 applies to the facts of the present case. The counsel also relied on the decision of the Supreme Court in Daffadar Bhagat Singh Sons v. Joint Excise and Taxation Commissioner [1976] 37 STC 527. The counsel also submitted that all the authorities, while holding that section 5A of the Act is attracted, failed to consider a fundamental question as to whether the main part of section 5A, i.e., the sale or purchase of the goods is liable to tax under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in A.B. Ismail's case [1986] 62 STC 394 has clearly held that the purchase of livestock like goat and sheep and its conversion by slaughtering the animals amounts to manufacture and that in the process all the conditions of section 5A are attracted. The Government Pleader also submitted that the Supreme Court in subsequent decisions had also followed the decision in A.B. Ismail's case [1986] 62 STC 394. The Government Pleader further submitted that the question regarding the exigibility of tax under section 5A was considered by the Supreme Court in Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98; (1993) 1 KTR 231 and further the scope and object of the said section was considered by the Supreme Court again in Aspinwall and Co. Ltd. v. Commissioner of Income-tax [2002] 125 STC 101. The Government Pleader further submitted that there is no merit in the contention of the petitioner that the authorities and the Tribunal had not considered the applicability of the main part of section 5A. He took us to the assessment orders and the orders of the two authorities and submitted that the petitioner has not put forward any such case before the said authorities and hence there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 5A of the Act. 8.. A division Bench of this Court had occasion to consider this question in A.B. Ismail v. State of Kerala [1978] 42 STC 217. The petitioner in that case purchased goats and sheep for slaughtering them. The assessing authority took the view that when the petitioner is killing these goats and sheep it is consuming them in the manufacture of other goods for sale within the State, for, according to him, when a live goat is cut and killed, what is produced is not a live goat, but only lifeless mutton. The assessing authority took the view that the process involved in the processing of goat into mutton is a manufacturing process, but according to the petitioner he is not doing anything more than processing the mutton. The question arose whether section 5A is attracted in the said process. The division Bench, after considering the ingredients of section 5A and the decision of this Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers [1978] 41 STC 364, the decisions of the American Supreme Court in AnheuserBusch Brewing Association v. United States [1907] 207 US 556, decisions of this Court in J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso be inferred. The important ingredient of this section, of course, is the bringing into existence of other goods, after consumption and manufacture, which are distinct from the original goods; lifeless mutton is, by any standard, "other goods" different from "goats and sheep". The Supreme Court thereafter observed that the High Court rested its conclusion based on the decision Pio Food Packers' case [1978] 41 STC 364 and also relied on three other decisions already noted. Thereafter it was observed as follows: "We are constrained to hold that the approach of the High Court to the facts of the case was incorrect and reliance on the decisions referred to above was wrong. In the American case the question was whether chicken killed and dressed after plucking its feathers and throwing out its entrails and kept in cold storage was a manufactured product, different from chicken. The court there held that a chicken killed and dressed is still a chicken. We respectfully agree with this conclusion. A chicken killed and a dressed chicken are both chicken and both are known to the ordinary man as well as commercial world as chicken. By removal of the feathers and entrails the dressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meat on hoof" to the Central Reserve Police Units within the State of Assam and the dealer was assessed for the purchase of meat on hoof which is a name used mainly by the military for a "live goat". The contention of the dealer was that since meat was exempted from sales tax by the Assam Act, "meat on hoof" should also be exempted from assessment. The Supreme Court after considering the contention in the peculiar facts of that case, held that meat on hoof would also come within the exemption and set aside the assessment, disagreeing with the High Court. The Supreme Court then observed that in their view, the principle enunciated in that decision has to be applied only to the facts of that case because the goods involved in that case were "meat on hoof" and meat was exempted from assessment under the Act. It would not, therefore, be proper to rely upon the said decision, rendered purely on the facts of that case, in deciding the present cases. The Supreme Court ultimately held as follows: "Here goats and sheep undergo a process, viz., slaughtering, and then comes into existence meat, hides and skins by consuming the goat in the said process, the end-product being something entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was carrying on the business of supply of various items of ration to the Central Reserve Police Units within the State of Assam for a number of years. In response to a tender notice issued by the Superintendent of Police, Jorhat, the petitioner had submitted a tender to supply various items of ration in army scale including "meat on hoof". Clause 5(d) of the tender provided that, contractor shall be bound to supply different varieties of meat on hoof as per certain ratio of the monthly requirement. It was contended by the petitioner in a petition under article 226 of the Constitution of India before the High Court that meat on hoof is a peculiar abbreviation used mainly by the military which is nothing but a live goat, it was stated that it was a device to satisfy certain religious sentiments of the people in the military that the aforesaid phrase had been used, that the sole purpose for which the meat on hoof was supplied was for meat and that was the consideration for which the price was fixed. The petitioner had relied on a notification in the Assam Gazette with regard to the scale of meat. Paragraph 14(a) and (b) of the said scale reads as follows: "14(a) The scale of mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the appellants and the army authorities, the appellants had to supply, among other things, "meat " and "meat on hoof". In that case under the Punjab Act no tax was payable on the sale of meat, fish and eggs except when sold in tins, bottles or cartons. The question arose as to whether "meat on hoof" was taxable under the Punjab General Sales Tax Act. The High Court was of the view that "meat on hoof" was taxable inasmuch as "meat on hoof was preserved meat, the preservation being the natural carton consisting of the skin of the animal". In appeal, the Supreme Court observed that the skin covering the flesh of the animal preserved its life; to think that the skin was a carton for the flesh, which could be used for food after the animal was slaughtered, was against common sense. It was further observed that whether what was sold by the appellants in that case to the army authorities as meat on hoof was really meat or live animals would depend on a correct reading of the contract between the parties, and since all the terms of the contract were not before the court, the matter was remanded. The Supreme Court thereafter observed as follows: "We have already noticed the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the petitioner had received from the Coconut Research Station, Koothattukulam livestock namely, pig, cattle, poultry and goats having a total weight of 328 kgs. Annexure D2, invoice issued by the Coconut Research Station, Kumarakom gives the date of supply, particulars of requisition, description of article supplied or service rendered, number of articles or quantity of work done and the amount. In the particular column, reference is made to the letter regarding pig purchase. In the description column, the number of pigs are mentioned. However, its value is determined based on the weight of pigs. Annexure D3 shows that the petitioner had received from R.A.R.S., Pattambi eight numbers of cattle having a total weight of 1,211 kgs. Annexure D4 shows that bullocks and buffalos are purchased. Annexure D5 also is an acknowledgment which shows certain livestocks having the total weight of 560 kgs., were purchased. Annexure D6 shows that four pigs having a total weight of 560 Kgs., at the rate of Rs. 5.50 per kg., were purchased from the veterinary surgeon, piggery unit, Thalayolaparambu. A certificate issued by the veterinary surgeon, occurring in page No. 9 of annexure D6(2) states tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd pig had suffered tax at the hands of the sellers, which is a circumstance to be satisfied for attracting section 5A of the Act. The petitioner in support of his contention had relied on a decision of the division Bench of this Court in Kerala Premo Pipe Factory's case [1984] 57 STC 84 wherein it was held that section 5A of the Act was intended to drag into the net of taxation transactions of purchase where such transactions were not liable to suffer tax in the hands of the seller and the goods did not return to the commercial stream for the purpose of being taxed. The division Bench also held in that case, it is very clear, the person who sold to the petitioner was liable to pay tax under the Act and therefore such person would not be liable to tax. In S.K. Arts case [1987] 64 STC 411 a division Bench of this Court was concerned with the correctness or otherwise of the imposition of tax under section 5A of the Act on the purchase of certain finished goods from unregistered dealers. In that case the Tribunal relying on Explanation 4 to the definition of "sale" in section 2(xxi) of the Act held that export sales effected must be deemed to be sales that took place within the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether he is a person by whom tax will be payable under the Act. The effect of registration is that it enables the dealer to collect the tax payable by him from the purchaser. There is also a corresponding embargo on unregistered dealers collecting any amount by way of tax. Non-registration need not necessarily imply non-liability to pay tax under section 5. The authorities have therefore, necessarily to address themselves to this question whether the selling dealer is liable to tax under section 5 before imposing the liability under section 5A." 15.. In view of the aforesaid decision, we had perused the orders of the three authorities to find out as to whether the petitioner had any such case before the three authorities. We do not find that any such contention was taken by the petitioner before any of the authorities. The only contention that is taken by the petitioner before the authorities and the Tribunal is that meat is an exempted commodity and that the petitioner had purchased goat, sheep, and pig only for meat. In other words, the only contention taken is that sheep, goat and pig and the meat of the live animals obtained after cutting and slaughtering the said animals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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