K M MUHAMED Vs. SALES TAX OFFICER KOZHIKODE

JUDGEMENT

(1.) In this writ petition to quash Ext P-1, the notice of provisional assessment and of demand for the payment of sales tax under R.13 and 14 framed under the General Sales Tax Act, 1125, referred to hereafter as the Act and Ext. P-5, the notice of provisional assessment and of demand for the payment of surcharge under R.8 framed under the Kerala Surcharge on Taxes Act, 1957, issued to the petitioners, the jurisdictional point arising for determination is, whether the petitioners who are growers of rubber in their estate and who collect and convert latex into rubber sheets and sell them, are dealers within the meaning of the Act. Under S.3 (1) (a) of the Act, sales tax is payable only by a dealer and under S.2 (d) a dealer is any person who carries on the business of buying or selling goods. If a person who grows trees and sells the produce therefrom, is by such sale alone a dealer, there is no point in having defined a dealer, as one carrying on the business of selling. The short question is, whether the petitioners can be said to carry on the business of selling, when they collect latex from rubber trees grown by them, convert it into rubber sheets and sell them. The conversion of latex into rubber sheets is but a process, the minimum process, to render the produce marketable, as observed in Deputy Commissioner of Agricultural Income Tax & Sales Tax v. Sherneilly Rubber & Cardamom Estate Ltd., 1961 KLT 25 . Whether after conversion into sheets, rubber still continues to be agricultural produce, does not arise in the application of the definition of dealer in S.2 (d) of the Act. The exclusion of rubber from the definition of agricultural or horticultural produce in S.2 (a) of the Act does not impinge on the definition of dealer in S.2 (d), as the emphasis in it, is on the business of selling and not on the nature of the produce sold. In my view, the sale of rubber sheets can be regarded as no more than incidental to the main business of growing rubber trees and collecting their yield.

(2.) This was the view held in Konduri Buchi Rajalingam v. State of Hyderabad, AIR 1954 Hyd. 1 (F.B.) where M. A. Ansari, J. as he then was, observed:

(3.) The learned Government Pleader next relied on the proviso in the definition of turnover in S.2 (k) of the Act, the relevant part of which reads as follows:-