DEPUTY COMMISSIONER OF AGRICULTURAL INCOME-TAX AND SALES TAX LAW ERNAKULAM COCHIN Vs. KOTTAMULLAI TEA CO LTD

JUDGEMENT

(1.) THE questions raised on behalf of the revenue are : " A. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the sale proceeds of the shade trees (timber) of the respondent (company) is not exigible to tax under the Kerala General Sales Tax Act, 1963 ? B. Is not the reasoning and conclusion of the Appellate Tribunal, holding that the sale proceeds are not exigible to tax under the Kerala General Sales Tax Act, 1963, vitiated in not giving due effect to section 2 (vi), 2 (viii), 2 (xxi) and 2 (xxvii) of the Act ? and C. Are not the decisions reported in State of Gujarat v. Raipur Manufacturing Co. Ltd. ([1967] 19 S. T. C. 1 (S. C.)) and Southern India Tea Estates Company Limited v. State of Kerala ([1967] 20 S. T. C. 397) distinguishable ?"

(2.) THE Sales Tax Appellate Tribunal found that the assessee was not carrying on the business of selling and therefore was not a dealer within the meaning of that term as defined in the Kerala General Sales Tax Act, 1963 (hereinafter called the Act ). That in order to become a "dealer" as defined in most of the Sales Tax Acts, at any rate, as it stood sometime ago, a person must carry on the business of selling or buying is clearly established. We need refer only to the decision of the Supreme Court in State of Gujarat v. Raipur Manufacturing Co. Ltd. ([1967] 19 S. T. C. 1 (S. C.)) and the decision of this court in Southern India Tea Estates Company Limited v. State of Kerala ([1967] 20 S. T. C. 397 ). Velu Pillai, J. , in dealing with the question whether a purchaser of rubber when he sells the latex prepared from the rubber produced was carrying on the business of selling held after referring to a number of decisions that such a person cannot be said to be carrying on the business of selling and ruled therefore that the turnover represented by the sales effected were not exigible to tax. If matters stood as they were when this decision was rendered we would have dismissed these tax revision cases holding with the Tribunal that the assessee was not a dealer under the Act. Since then, however, amendments have been made to the Act and the Act now contains provisions which seem to us to indicate that the sale proceeds of "timber" can be assessed to sales tax.

(3.) THE only other definition that we have referred to is that contained in section 2 (xxvii) of the term "turnover". Here again though the proceeds of the sale by a person of agricultural or horticultural produce, grown by himself or grown on any land in which he has an interest, whether as owner, usufructuary mortgagee, tenant or otherwise shall be excluded from his turnover, clause (ii) of explanation (1) to that definition states that "agricultural or horticultural produce shall not include tea, coffee, rubber, cardamom or timber". If therefore the wood from the shade trees is timber, the sale proceeds of such trees would be turnover within the meaning of section 2 (xxvii ).