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TMI Blog1986 (7) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... tacts for export shall not be included in the taxable turnover of the appellants. - Civil Appeal No. 220 of 1986, W.P. No. 27805 of 1982 - - - Dated:- 21-7-1986 - Bhagwati, V. Khalid and G.L. Oza, JJ. S.T. Desai and C.K. Viswanath Iyer, Senior Advocate (K.M.K. Nair Advocate, with them), for the appellant. B.R.L. Iyenger, Senior Advocate (M. Veerappa, Advocate, with him), for the respondents. [Judgment per: Bhagwati, C.J.]. - The short question that arises for determination in this appeal by certificate is whether shrimps, prawns and lobsters subjected to processing like cutting of heads and tails, peeling, deveining, cleaning and freezing cease to be the same commodity and become a different commodity for the purpose of the Central Sales Tax Act, 1956. Can they still go under the description of shrimps, prawns and lobsters or in other words, when we use the words 'shrimps, prawns and lobsters' do they mean only raw shrimps, prawns and lobsters as caught from the sea or do they also include processed and frozen shrimps, prawns and lobsters. This question which falls for determination in the present appeal arising out of the following facts. 2. The appellants are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to purchase-tax and other incidental taxes in respect of the purchases of shrimps, prawns and lobsters made by them during the month of May, 1982. These two orders made by the Assistant Commissioner of Commercial Taxes were followed by issue of notices of demand for Rs. 52,610.71 and Rs. 44,237.88 respectively against the appellants. The appellants thereupon filed a writ petition in the High Court of Karnataka challenging the assessment orders and the notices of demand issued against them and sought appropriate direction, order or writ restraining the respondents from imposing or collecting purchase-tax on purchase turn-over of shrimps, prawns and lobsters under the Karnataka Sales Tax Act, 1957. The writ petition was dismissed by the High Court, but having regard to the importance of the question involved, a certificate under Article 133 of the Constitution was granted by the High Court and that is how the present appeal by certificate has come before us. 4. It is clear on a plain reading of sub-section (3) of Section 5 of the Central Sales Tax Act 1956 that in order to attract the applicability of that provision, it is necessary that the goods which are purchased by an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Section 9 of this Amending Act made certain amendments in Entry 13a with retrospective effect, so that from 1st April, 1973 Entry 13a included in the Third Schedule "shrimps, prawns and lobsters other than processed or frozen shrimps, prawns and lobsters" and the Explanation to Entry 13a provided that "processing" shall include "all or any of the following, namely, cutting of head or tail, peeling, deveining, cleaning or freezing". But, Entry 13a in this form continued only upto 31st August, 1978 and with effect from 1st September, 1978, a further amendment was made by the Karnataka Taxation and Certain Other Laws (Amendment) Act, 1982 and after this amendment which was made with retrospective effect from 1st September, 1978, Entry 13a read: "Shrimps, prawns and lobsters other than frozen shrimps, prawns and lobsters". The amendment made by the 1982 Amendment Act excluded from the scope and ambit of Entry 13a, frozen shrimps, prawns and lobsters and brought within the net of taxation only purchases of shrimps, prawns and lobsters other than frozen shrimps, prawns and lobsters, provided they were last purchases within the State. 6. It is in the context of these provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shrimps, prawns and lobsters are not, but still both are, in commercial parlance, shrimps, prawns and lobsters. It is undoubtedly true that processed shrimps, prawns and lobsters are the result of subjecting raw shrimps, prawns and lobsters to a certain degree of processing but even so they continue to possess their original character and identity as shrimps, prawns and lobsters, notwithstanding the removal of heads and tails, peeling, deveining and cleaning which are necessary for making them fit for the table. Equally it makes no difference in character or identity when shrimps, prawns and lobsters frozen for the purpose of preservation and transfer to other places including far off countries in the world. There can therefore be no doubt that processed or frozen shrimps, prawns and lobsters are not a new and distinct commodity but they retain the same character and identity as the original shrimps, prawns and lobsters. 8. This view finds ample support from the decision of the Supreme Court of the United States in East Texas Motor Freight Lines v. Frozen Food Express - 100 L.Ed. 917 where the question was whether dressed and frozen chicken was a commercially distinct article fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity between the two. This argument, we are afraid, is not well-founded. It is based on a total misapprehension in regard to the true object and intendment of Entry 13a and it erroneously seeks to project that Entry in the interpretation and application of Section 5 sub-section (3) of the Central Sales Tax Act. In fact Entry 13a as amended, supports the argument that even processed or frozen shrimps, prawns and lobsters are known commercially and in the trade as 'shrimps, prawns and lobsters'. It is because Entry 13a as it stood prior to its amendment, would have, on the plain natural meaning of the expression 'shrimps, prawns and lobsters,' included processed and frozen shrimps, prawns and lobsters, that it became necessary for the State Legislature to amend Entry 13a with retrospective effect so as to exclude from the scope and ambit of that entry processed or frozen shrimps, prawns and cocktails. Now when the State Legislature excluded processed or frozen shrimps, prawns and cocktails from the ambit and coverage of Entry 13a, its object obviously was that the last purchases of processed or frozen shrimps, prawns and cocktails in the State should not be exigible to State sales ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd frozen shrimps, prawns and lobsters in fulfilment of the contracts for export. The only argument raised on behalf of Revenue was that the goods which were exported were not the same as the goods purchased by the appellants because raw shrimps, prawns and lobsters after processings ceased to be the same commodity and became a new distinct commodity. But, for reasons which we have already discussed, this argument cannot be sustained. The shrimps, prawns and lobsters purchased by the appellants did not lose their original character and identity when they were subjected to processing for the purpose of export. So far as commercial parlance or popular usage is concerned, they remained the same goods and hence the purchases of raw shrimps, prawns and lobsters by the appellants must be held to be purchases in the course of export and hence exempt from liability to tax under the Karnataka Sales Tax Act. 11. We, accordingly, allow the appeal, set aside the judgment of the High Court as also the Orders made by the Assistant Commissioner of Commercial Taxes and direct that the purchases of raw shrimps, prawns and lobsters made by the appellants for the purpose of fulfilling the existing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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