PEIRCELESLIE INDIA LTD Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) This revision petition under section 23(1) of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act) is directed against the order dated 12th June, 1978 passed is S.T.A. No. 153 of 1976 by the Karnataka Appellate Tribunal, Bangalore, confirming the levy of purchase tax under section 6 of the Act in respect of the turnover of raw cashewnuts for the assessment year 1st October, 1970 to 30th September, 1971.

(2.) The petitioner, which is a company, is a dealer carrying on business in cashewnuts, chemical, fertilisers, copper sulphate, gunny bags and other commodities. The petitioner is also having its cashew factory and coffee curing works. For the period from 1st October, 1970 to 30th September, 1971 the petitioner-company declared the total and taxable turnover at Rs. 3,85,90,385.96 and Rs. 71,50,695.93 respectively. The assessing authority rejected the declared turnover and estimated that same at higher figures. In this petition, however, we are concerned with that part of the turnover relating to the purchase of raw cashewnuts that has been taxed under section 6 of the Act. The assessing authority has determined the value of the purchase of cashew under section 6 of the Act of Rs. 35,24,149.54 and levied thereon tax at 6 per cent. The assessing authority also levied tax on the sale of cashew kernels at 2 per cent. on a sum of Rs. 13,56,548.61. The assessing authority held that the raw cashewnuts purchased by the petitioner within the State from parties who are not registered dealers are used in the manufacturing process to produce chasew kernels which were sold within the State and in the course of inter-State trade or commerce. On appeal the first appellate authority, viz., the Deputy Commissioner of Commercial Taxes (Appeals), Mangalore Division, Mangalore, confirmed the tax levied by the assessing authority. The petitioner took up the matter in second appeal before the Karnataka Appellate Tribunal, Bangalore, which has by the impugned order party allowed the appeal holding that the levy of tax on the sales of cashew kernels on a sum of Rs. 13,56,548.61 was not correct in view of the explanation VI to the Second Schedule to the Act. However, the levy of tax under section 6 of the Act on the purchase of raw cashewnuts of the value of Rs. 35,24,149.54 was confirmed.

(3.) The short question which arises for consideration in this petition is, whether "cashew and it kernel" in item 88 of the Second Schedule are two different commodities or in substance only one commodity.