STATE OF KARNATAKA Vs. FALCON TYRES LTD

JUDGEMENT

(1.) THIS petition raises an issue which revolves around the short question as to whether rubber or for that matter latex can be construed as an agricultural produce which is exempted from tax under the provisions of the Karnataka Tax on entry of Goods Act 1979. There is no dispute about the fact that the respondents' company use this product for manufacturing purposes and the controversy that was generated at the earlier stages of the litigation centered round a question as to whether this item should be exempted from tax or not. The principal reason for this is because in Section 2 of the Act which contains the definition the term 'agricultural produce or horticultural produce' has been defined as follows:

(2.) THE learned Government Advocate submitted that the clear cut definition as emerges in Section 2 (1) of the Act unequivocally excludes rubber from alt other items that come under the head of 'agricultural produce' along with a few of the others that are enumerated therein. It is his submission that for all intent and purposes as far as the present Act is concerned, that it is this definition that will govern the expression 'agricultural produce'. He therefore contends that while reading entry No. 2 in the II schedule to the Act, there is absolutely no scope to include the item-rubber which has been specifically excluded in the defining section. His submission therefore was that irrespective of the invalid reason that is contained in the Tribunal's order that the conclusion is incorrect and unwarranted and that the order is liable to be set aside. Dealing with the line of reasoning adopted by the Tribunal, the learned government Advocate submitted that the basis of the error emerges. from the fact that the Tribunal appears to have been influenced by some of the earlier judicial decisions which relate to the definition of 'agricultural produce under the Karnataka Sales Tax Act. The learned counsel was keen to point out that as far as the present Act. is concerned, the legislature has deliberately included and excluded certain items and that therefore, while interpreting the provisions of the present Act, the legislative intention will have to be given effect to inconsonance with the definition as contained in the statute.

(3.) THE respondents' learned Counsel has advanced strong submissions while supporting the Tribunal's order that the Court must be guided by the fact that the present Act is effectively what he termed as an off-shoot of the Karnataka Sales Tax Act. He uses the expression 'parent Act', and his submission was that the Tribunal was fully justified in being guided by the earlier Division Bench decision of this Court which in terms had followed the ratio of the supreme Court decision while holding that rubber irrespective of the transition that latex may undergo, would still qualify for inclusion under the head of items comprising the expression 'agricultural produce'. The learned Counsel submitted that in this view of the mater, this Court should also be guided by the definition as it appears in the parent Act namely the Karnataka Sales Tax Act and consequently that no interference is called for.