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TMI Blog2008 (11) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the purchaser had paid tax or not is immaterial since coffee seeds are taxable at the point of first sale? Whether the consequent deletion of penalty levied under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 (the TNGST Act) is valid in law? Held that:- The Tribunal ought not to have gone into the question whether there was discrimination on the ground of exemption on agricultural products of other States and agricultural products grown in our State. The question Nos. 1 to 3 therefore, will have to be answered in favour of the Revenue. As regards question No. 4, we find that apart from stating that the sale of coffee seeds for ₹ 3.25 lakhs was not accounted for by the assessee, there is no finding of wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an inspection on August 4, 1994 and it was found that the assessee had sold their coffee seeds to K.R. Ramanujam Co., Salem, for a sum of Rs. 3,25,000. The inference was that they have suppressed the turnover and therefore, the assessment order passed on January 27, 1995 has been revised by levying tax on the suppressed turnover of Rs. 3,25,000 and penalty was also levied under section 16(1) of the TNGST Act. Before the appellate authority, the question raised was whether the sales effected for a sum of Rs. 3.25 lakhs, was assessable at first sale at the hands of the assessee as first sellers or at the hands of the first purchasers. No other question was raised. The appellate authority dismissed the appeal. Against that order, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t uncured coffee sold by the assessee was different in nature and was no longer raw coffee and that the coffee seeds had undergone a process beyond mere cleaning, sorting and drying. Section 2(r) reads thus: 'turnover' means the aggregate amount for which goods are bought or sold, or delivered or supplied or otherwise disposed of in any of the ways referred to in clause (n), by a dealer either directly or through another, on his own account or on account of others whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce, other than tea and rubber (natural rubber, latex and all varieties and grades of raw rubber) grown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. In Aspinwall and Co. Ltd. v. Commissioner of Income-tax [2002] 125 STC 101; [2002] 251 ITR 323, the Supreme Court answering a question as to whether the activity of curing coffee amounts to manufacturing and whether the assessee would be entitled to relief under section 32A of the Income-tax Act, described curing operation and drew conclusion therefrom as to what manufacturing activity would be. The apex court observed thus: (at page 104 of STC) 7. It was noticed that the Tribunal had inspected the factory premises to have a first-hand knowledge of the operations carried on by the assessee-company. The inspection was made by the Tribunal in the presence of both the parties through their representatives. The factual observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he process is a manufacturing process when it brings out a complete transformation in the original article so as to produce a commercially different article or commodity. That process itself may consist of several processes. The different processes are integrally connected which results in the production of a commercially different article. If a commercially different article or commodity results after processing then it would be a manufacturing activity. The assessee after processing the raw berries converts them into coffee beans which is a commercially different commodity. Conversion of the raw berry into coffee beans would be a manufacturing activity. 17. For the reasons stated above, we are of the opinion that the High Court was wro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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