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TMI Blog2008 (3) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... "cereal" in entry 9 of the Second Schedule to the KGST Act. Accordingly, we reject these revision petitions and confirm the orders passed by the Sales Tax Appellate Tribunal, Additional Bench, Kozhikode. - - - - - Dated:- 31-3-2008 - DATTU H.L. C.J. AND JOSEPH K.M. , JJ. ORDER:- The order of the court was made by H.L. DATTU C.J. In all these tax revision cases, the one and only question that arises for our consideration and decision is, whether maize and flattened maize (maize poha) are one and the same commodity so as to be covered by the term maize under the heading cereal in entry No. 9 of the Second Schedule to the Kerala General Sales Tax Act, 1963 or a different commodity liable to be assessed as an unclassified item taxable under the residuary entry? These revision petitions pertain to the orders of assessment passed by the assessing authority for the assessment years 1991-92, 1997-98, 1998-99, 1999-2000 and 2000-01. The assessments had been completed by the assessing authority for the assessment year 1991-92. The assessing authority was of the view, that maize and maize poha are commercially different commodities and therefore, they are not covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith by the assessee for all these years is the same as maize will depend on various factors such as the process employed by the revision petitioner in converting the maize into flattened maize, the character and use of the product, viz., flattened maize and as to whether flattened maize is known in common parlance and in commercial world as a different commodity from maize. Since the item maize is occurring in the Second Schedule to the Act, the aforesaid aspects have to be considered in the background of the provisions of section 14 of the Central Sales Tax Act and also keeping in mind the principles laid down by the Supreme (1)Helmi Enterprises v. State of Kerala. Court in Rajasthan Flour Mills case [1993] 91 STC 408 and other decisions on the point. 7.. In these circumstances, we are of the view that the matter must be considered by the Tribunal afresh in the light of the decisions of the Supreme Court and in the light of the observations made in this judgment. We accordingly set aside the common order of the Tribunal for all the three assessment years and remit the matter for fresh consideration in the light of the principles laid down by the Supreme Court in Rajasthan Flour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is justified in classifying the same under the residuary entry, i.e., entry 177 of the First Schedule. We therefore, set aside the order of the Deputy Commissioner (Appeals) in STA 370/2002 dated December 31, 2002. Aggrieved by the aforesaid finding and conclusion reached by the Tribunal, the assessee is before us in these tax revision cases. The assessee has framed the following questions of law for our consideration and decision. They are: (i) Is not the order of the Appellate Tribunal improper and unsustainable in the facts and circumstances of the case? Is not the order of the Appellate Tribunal vitiated by a perverse appreciation of evidence? (ii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that maize and maize poha are different commodities and that maize poha is not a commodity declared under sections 14 and 15 of the CST Act especially when maize cannot be consumed as such? (iii) Whether, on the facts and circumstances of the case, the Appellate Tribunal is justified in holding that maize poha does not come within the entry maize under entry No. 9 of the Second Schedule to the KGST Act especiall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her contend that maize is converted into maize poha by employing some labour work, i.e., steaming and flattening, without adding any salt, sugar or any other ingredients for its processing. The maize poha obtained is not cooked and cannot be directly used as food and further frying process is necessary before its use. Therefore, maize poha retains identity as cereal and is not different from maize. Learned counsel also relies upon the test result of maize manufactured by M/s. Miki Food Products, Camby issued by the Assistant Collector (Tech), Central Excise, Ahemadabad wherein it is stated, that maize poha does not possess any essential characteristic of prepared food as maize corn flakes and is not edible. In view of the report by the technical expert, learned counsel contends that maize and maize poha are one and the same commodity and therefore, requires to be taxed at the rate of one per cent treating it as a cereal falling under entry 9 of the Second Schedule to the KGST Act. Learned counsel further submits that the view of the Tribunal is that a manufacturing process is involved while converting maize into maize poha and this finding of the Tribunal, according to the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said commodity under the residuary entry and tax the same at the rate of 12.5 per cent. The one and only question that arises for our consideration and decision, as we have already noticed is, whether the Sales Tax Tribunal was justified in holding that maize and maize poha are commercially different commodities and therefore it would not come under the heading cereal under entry 9 of the Second Schedule to the KGST Act. Section 5 of the KGST Act is the charging provision. Sub-section (1) lays down that every dealer, other than a casual trader or agent of non-resident dealer, whose total turnover is not less than two lakhs and every casual trader or agent of a non-resident dealer whatever may be his total turnover for the year shall pay tax on his taxable turnover for that year. Clause (i) of sub-section (1) of section 5 lays down that in the case of goods specified in First and Second Schedule to the Act, levy of tax shall be at the rate or rates specified therein and only at the points specified against such goods. Second Schedule to the KGST Act enumerates declared goods in respect of which a single point of tax is leviable under sub-section (1) or sub-section (2) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me separately taxable goods or entities for purposes of sales tax and so long as they retain their identity as goods of a particular type, they cannot be taxed again in a series of sales. In such cases, where one commercial commodity is transformed into another, it becomes separate for purposes of sales tax. The object of single point of taxation is the commercial commodity of each variety and not the sale of the substance out of which it is to be made. The court has further observed: (page 326) It is true that the question whether the goods to be taxed have been subjected to a manufacturing process so as to produce a new marketable commodity, is the decisive test in determining whether an excise duty is leviable or not on certain goods. No doubt, in the law dealing with the sales tax, the taxable event is the sale and not the manufacture of goods. Nevertheless, if the question is whether a new commercial commodity has come into existence or not, so that its sale is a new taxable event, in the sales tax law, it may also become necessary to consider whether a manufacturing process, which has altered the identity of the commercial commodity, has taken place. The law of sales t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from wheat and those cannot be treated as declared goods in the manner wheat as a cereal does. The restrictions of section 15 must be limited to the goods specifically mentioned in section 14 of the Act. In Gopuram Gram Mill Co. v. State of Andhra Pradesh [1994] 95 STC 358 (SC), the question before the court was whether gram or gulab gram which has undergone the process of parching or frying would be a gram or gulab gram as specified in sub-item (i) of item (vi-a) of section 14 of the Central Sales Tax Act, 1956. The apex court following the observation made in Rajasthan Flour Mills case [1993] 91 STC 408 has stated that item (vi-a) of section 14 of the Central Sales Tax Act, 1956 refers to pulses that is to say, and that expression that is to say has been held by this Court in Rajasthan Flour Mills case [1993] 91 STC 408 to mean, to make clear and fix the meaning of what is to be explained or defined. The words, it was said, are not used as a rule to amplify the meaning and in the context of a single point sales tax, they exhaustively enumerate the kind of goods in a given list. That judgment also holds that the provisions of sections 14 and 15 of the Central Act, being rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect?' It was answered in the following words: 'It is clear that there is a distinction between paddy as found in item 8 of the Second Schedule, and rice , as mentioned under item 66 of the First Schedule. Apparently, the removal of the husk makes this difference. It is true that the First Schedule, which contains as many as 136 items, includes a number of separate fairly detailed entries. Entry 58 is for bran or husk of rice and entry 59 is for deoiled bran of rice . It appears, therefore, that rice in husk is paddy . When it is removed from husk, the husk and rice become separately taxable. But, there are no separate entries for rice and rice reduced into an edible form by heating or parching without any addition (1)Here italicised. of ingredients or appreciable changes in chemical composition. The term rice is wide enough to include rice in its various forms whether edible or inedible. Rice in the form of grain is not edible. Parched rice and puffed rice are edible. But, the entry rice seems to us to cover both forms of rice. At any rate, it is wide enough to cover them.' The Bench also relied upon the earlier decision in Tungabhadra Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a single point taxation is either the retention of the identity of the goods or its identity as a commercial commodity in trade. In the instant revision petitions, we are asked to give an answer, whether maize and maize poha are one and the same commodity or different commercial commodities as concluded by the Tribunal. It is the contention of the learned counsel for the assessee that the flattened maize (maize poha) is the same as maize and therefore liable to be taxed at the rate of one per cent during the relevant assessment years. Per Contra, it is the stand of the learned counsel for the Revenue, that, maize when it is subjected to heat and steaming, a commercially different commodity would emerge and therefore, flattened maize (maize poha) dealt with by the assessee will not fall under entry 9 of the Second Schedule to the KGST Act and therefore, requires to be classified as unclassified item and liable to be taxed at the general rate. Maize normally known as corn in most parts of the world is a cereal grain that was domesticated in Mesoamerica and then spread throughout the American continents. Maize spread to the rest of the world after European contact with the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one is a processed product and the other is the raw material; In the process of flattening, the maize is heated and steamed, then processed for flattening and made it as maize flakes and it is used to mix with milk as fluid snacks; maize is the raw material used for flattened maize, so the quality and nutritive value differs; the processed maize which is cooked and if added with other nutritive additives, the quality and price will increase. However, learned counsel appearing for the assessee relies on certain observations made by the Commissioner, Central Excise and Customs, Ahmedabad, in the appeal filed by Miki Food Products, Kansari, Kamby. The issue that was involved in the appeal was whether the maize flake (makai pouva) is classifiable under the sub-heading 1904. 10 of Chapter 19 of the Central Excise Tariff Act, 1985 or otherwise. The department in the said appeal had contended that the maize flake is a prepared food obtained by swelling or roasting the cereal products. The stand of Mike Food Products was that the produce, i.e., maize flake manufactured by them is not an excisable product, as it is not covered under the description of sub-heading 1904.10. While considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her side. Under entry 9 of the Second Schedule to the KGST Act, defined cereal as paddy, rice jowar, milo, bajra, maize, ragi, kodon, kutki and barli. It is a single point of levy and it is on the first sale in the State by a dealer who is liable to tax under section 5 of the Act. According to settled legal principles, the sales tax is levied on the sale of different commercial commodities and not the production or manufacture of a particular substance out of which the commodity has been made out and as soon as the commercial commodities come into existence, they become separate taxable goods for the purpose of sales tax. It is also well-settled that residuary entry can be applied only when on a construction of a specific heading it is not possible to come to the conclusion that the goods are covered by the specific entry. It is also well settled that an entry in taxing statute should be construed in its popular sense, meaning thereby the sense with which the people dealing with the subject-matter is conversant. Maize is a corn and it is included under the heading cereal . The maize is heated and steamed then processed for flattening and made it as maize poha or flattene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries undergoes an elaborate process to give it the shape of coffee beans. The court observed the same amounts to manufacturing activity. Reference is made to Bangalore Wood Industries v. Asst. Commissioner of Commercial Taxes [1994] 92 STC 603 (Karn), Sterling Foods v. State of Karnataka [1986] 63 STC 239 (SC), State of Karnataka v. B. Raghurama Shetty [1981] 47 STC 369 (SC), Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Kunhalavi Co. [1987] 66 STC 100 (Ker). In all the aforesaid decisions cited at the bar, the question before the court was levy of purchase tax under different State statutes, and the court's have answered the meaning of the expression goods consumed in the manufacture of other goods . In our view, these decisions would in no way assist the Revenue for answering the issue raised in these tax revision cases. The learned counsel for the assessee has brought to our notice the decision of the West Bengal Taxation Tribunal in the case of Ram Bilash Agarwal v. C.T.O., Durgapur Range [2004] 137 STC 510. The Tribunal following the decision of the apex court in Alladi Venkateswarlu's case [1978] 41 STC 394 has held that poha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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