NATWARLAL Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioners have by this petition prayed that circular dated January 10, 1996 (annexure P-2), may be held to be ultra vires and order dated August 7, 1996 (annexure P-4), dated August 8, 1996 (annexure P-5) issued by respondent No. 5 and order dated August 9, 1996 (annexure P-7), issued by respondent No. 6 may be quashed. THE petitioners have also prayed that the respondents may be directed to cancel Form No. 27C issued by them.

(2.) THE petitioners are carrying on the business of tendu leaves popularly known as bidi leaves. THE petitioners were assessed to income-tax, Tendu leaves are natural forest produce which are available in abundance in the States of Maharashtra, Madhya Pradesh, Orissa, Bihar and other States, All the State Governments have nationalised the trade in this commodity. It is alleged that the general features of trade in tendu leaves consist of the purchase of tendu forest units from the State Governments and, thereafter, by processing the same, they are being marketed. THE business of processing of tendu leaves comprises obtaining the rights of collection and purchase of raw tendu leaves from the concerned forest department. THEre are other processes undertaken, like collection of tendu leaves, pruning, prevention of diseases, plucking of green leaves, arrangements of pudas at collection centres, drying the same by solar energy, classification/gradation of bidi leaves, putting them in the bags and, thereafter, their transportation. This, according to the petitioners, amounts to processing. THErefore, it is contended that a certificate in Form No. 27C should be issued. THE respondent, State of Madhya Pradesh, has declined to grant certificate on the condition that this procedure does not amount to "processing" within the meaning of Section 206C of the Income-tax Act, 1961.

(3.) LEARNED counsel has now brought our attention to the decision of this court given in the case of CSTv. Purshottamdas Somabhai [1980] 13 VKN 1, wherein a Division Bench of this court has found that this is a processing. But then the Supreme Court in Delhi Cold Storage Pvt. Ltd. [1994] 191 ITR 656 has taken the different view. Therefore, the decision in Purshottamdas Somabhai [1980] 13 VKN 1 is no more good law.