TROPICAL PLANTATIONS LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) THE question arising in all the connected Tax Revision Cases filed by the petitioner, which is a rubber plantation company, is whether it is entitled to exemption from sales tax on the sale of old and unyielding rubber trees. The issue was earlier decided by this Court against the petitioner and when matter was taken up in appeal before the Supreme Court, the Supreme Court set aside the judgment of this court, vacated the orders of the Tribunal and remanded the case back to the Sales Tax Appellate Tribunal for decision by them. In the proceedings pursuant to the remand by the Supreme Court, the Tribunal reaffirmed their earlier decision on all the questions referred to it by the supreme Court against which these revisions are filed. Since facts are identical in all the cases, petitioner has argued the case with reference to the common order of the Tribunal and orders of the lower authorities produced in ST Rev. 17 of 2008, which pertains to sales tax assessment for the year 1983-84. We have heard senior counsel Sri. Arshad hidayathullah appearing for the petitioner and Special Government pleader Sri. Vinod Chandran appearing for the respondent.

(2.) THE assessee is a plantation company which maintains multi-crop plantations, namely, coffee, tea and rubber. Rubber trees start yielding after 6 to 7 years of planting and the economic life of the rubber trees is 20 to 25 years. When the yield is reduced rubber trees are subject to slaughter tapping and sold and replantation is raised in the land. It is seen from the impugned orders that the assessee has extensive area of plantation and invariably every year the assessee sells old trees and raises fresh plantation in such area. For assessment year 1983-84, the assessee sold old rubber trees for Rs. 18,06 680/ -. In the sales tax returns the assessee did not concede the sale price as taxable turnover under the Kerala General Sales Tax Act, 1963, hereinafter called the "act". However, when the assessing officer proposed to assess the turnover of sale of rubber as representing sale of goods, the assessee claimed that rubber trees sold by it are "agricultural produce" which stands excluded from the definition of turnover contained in section 2 (xxvii) of the Act. However, the assessing officer rejected the claim on the ground that rubber tree is not an agricultural produce. When the assessment was taken in appeal the first appellate authority confirmed the disallowance by reference to the decision of Division bench of this Court in GEORGE P MATHEW V. STATE OF kerala, 43 STC 438. The assessee carried the matter in further appeal to the Tribunal and the Tribunal also dismissed the claim against which revision was filed before this Court. This Court though allowed the revision holding that rubber trees sold do not constitute timber, on appeal by the State, the Supreme Court set aside the judgment of the high Court and remanded the matter back to the Tribunal through judgment produced as Annexure D in ST Rev. 17 of 2008. In fresh proceedings after remand, the Tribunal again decided the matter against the assessee, which is confirmed by a Division Bench of this Court in the decision reported in TROPICAL PLANTATIONS LTD. V. STATE of KERALA, 9 KTR 68. The assessee filed appeal against the judgment of this Court before the Supreme Court and Supreme Court vide order produced as Annexure F in this case remanded the case again to the Tribunal to decide the following issues:

(3.) THE main question to be considered is whether old standing rubber trees sold by the assessee is "agricultural produce" which alone is entitled to exemption from payment of sales tax. Eventhough senior counsel appearing for the assessee contended that the Supreme Court in the judgment in appeal does not mention about this and so much so, the Tribunal was not entitled to go into the question, Spl. Government pleader referred to the third issue referred to in the judgment of the supreme Court and contended that the Tribunal is bound to decide the legality and correctness of the assessment order and this issue therefore has to be necessarily decided by the Tribunal. We are in agreement with the argument of Special Government Pleader because the basic claim of the assessee which is found in the assessment order itself is that it is entitled to exemption on sale of old standing rubber trees, because it is an "agricultural produce" which is excluded from the definition of "turnover contained in Section 2 (xxvii) of the Act. On going through definition clauses of "sale", "goods", "dealer" and "turnover" and the charging section contained in the Act we notice that all goods whether produced by agriculture, manufacture or otherwise, are subject to tax, except when it is covered by exemption clause contained in the provisions of the Act or by virtue of notification issued under Section 10 of the Act. It is pertinent to note that agricultural or horticultural produce are granted exemption when sales are made by the growers of the same. However under the Explanation to Section 2 (xxvii) of the Act, tea, coffee, rubber, cardamom and timber are excluded from the scope of agricultural or horticultural produce for the purpose of exemption. Since the entire case depends upon the interpretation of definition clause "turnover" contained in Section 2 (xxvii) of the Act, the same with relevant explanation is extracted hereunder for easy reference: 2 (xxvii ). "turnover" means the aggregate amount for which goods are either bought or sold, supplied or distributed by a dealer, either directly or through another, on his own account or on account of others, whether for cash or for deferred payment or other valuable consideration, provided that 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. Explanation (1):- "agricultural or horticultural produce" shall not include: