RADHAKRISHNA GROUNDNUT OIL MILL Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE assessee was a registered dealer in groundnut, and he was also a registered manufacturer of groundnut oil. THE assessment with which we are concerned was for the assessment year 1950-51. THE assessee objected to the inclusion in his taxable turnover of the purchase price of the groundnuts on the ground, that he was not liable to pay any sales tax under the Act until that groundnut had been sold. That contention was repelled by the Tribunal. Dealer is no doubt defined by Section 2 of the Act as "any person who carries on the business of buying or selling goods." We are unable to accept the interpretation placed upon that section by the learned counsel for the petitioner, which would really convert the definition into something like this : "Dealer means a person who carries on the business of buying and selling the very goods he bought". We see no basis in the scheme of the Act or in the wording of the section for such an interpretation. Under rule 4(2) of the Madras General Sales Tax Turnover and Assessment Rules, dealing in groundnut are taxable at the purchase point. It was on the purchase point that the assessee was taxed. When exactly he sold the groundnut, he had purchased or when exactly he converted that groundnut into oil did not matter, so long as the condition required by rule 4(2) was satisfied, that the groundnut was purchased by the dealer, i.e., assessee, in the course of his business. As we have pointed out before, his business was that of a dealer in groundnut and a manufacturer of groundnut oil. It was in the course of that business that he bought the groundnut and became liable to tax. But it should also be remembered that what is taxable under Section 3 is the turnover for the year.

(2.) THERE was, therefore, no need for further investigation, whether the groundnut so bought during the assessment year, on the basis of which the taxable turnover was fixed, was proved to have been sold, either wholly or in part. This question was also discussed in T.R.C. No. 49 of 1953 (Since reported as State of Madras v. Eastern Supplies Ltd. when the scope of Section 4(2) and the scope of the charging Section 3 were discussed and there is no need to set out those reasons over again now. Following our previous decision, we hold there is no substance in the contention of the assessee, that rule 4(2) of the Sales Tax Turnover and Assessment Rules did not authorise the imposition of a sales tax on the turnover on the purchase price until there was proof that what had been bought was also sold.The next contention of the assessee was that, what rule 4(2) referred to was groundnut and that it did not include groundnut kernel. We are unable to accept this contention either. That was also rejected by the Tribunal. Groundnut kernel is certainly part of groundnut, and whether the groundnut bought by the dealer was sold as groundnut or was sold as groundnut kernel or was subsequently converted into oil and sold as oil, what was taxable was the purchase. We agree with the Tribunal in holding that the expression groundnut, even as the expression in clause 2(b) "cashew" included the kernel in this case, the groundnut kernel.

(3.) THE learned counsel for the petitioner contended that groundnut was declared by Parliament in 1952 to be essential commodity, and that therefore, the levy of any tax even on the purchase of groundnut was opposed to Article 286(3). Article 286(3) would apply to any law made by a Legislature of a State subsequent to the date on which the Constitution came into force. Even apart from that, the ban of Article 286(3) will fall only after Parliament declared by law any goods as essential for the life of the community. We are concerned with the assessment year 1950-51. During that period, there was no declaration by Parliament by law that groundnut was an essential commodity, essential for the life of the community. THE contention from either point of view has to be rejected.