Madras High Court
Caris Pure Processing Private Limited vs The Commercial Tax Officer on 28 November, 2018
Equivalent citations: AIRONLINE 2018 MAD 2114, (2019) 1 WRITLR 161
Author: K.Ravichandrabaabu
Bench: K. Ravichandrabaabu
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 28.11.2018
ORDERS RESERVED ON 14.11.2018
ORDERS DELIVERED ON 28.11.2018
CORAM
THE HON'BLE Mr.JUSTICE K. RAVICHANDRABAABU
W.P.No.2881 of 2018
and
WMP Nos.3552 to 3554 and 31776 of 2018
Caris Pure Processing Private Limited,
Rep. by its Director Mrs.Shanthi Prince,
No.23C, Kohinoor Complex,
Vettuvankeni,
ECR, Injambakkam,
Chennai 600 041. ...Petitioner
vs
The Commercial Tax Officer,
Sholinganallur Assessment Circle,
141, Burma Colony, First Main Road,
Perungudi,
Chennai 600 096. ...Respondent
Prayer:Writ petition filed under Article 226 of the Constitution of India for
issuance of a writ of certiorari to call for the records of the respondent
pertaining to Proceedings No.TNVAT/33590929027/2014-15, dated
14.07.2017 and Proceedings No.TNVAT/33590929027/2015-16 dated
01.08.2017 and the consequential notice dated 27.10.2017 and quash the
same.
http://www.judis.nic.in
2
For petitioner : Mr.Richardson Wilson
For Respondent : Mr.Mohammed Shathiq
Special Government Pleader (T)
Assisted by Mrs.G.Dhana Madhri, GA (T)
ORDER
The petitioner is aggrieved against the order of assessment dated 14.07.2017 passed in respect of assessment year 2014-15, order of assessment dated 01.08.2017 passed in respect of assessment year 2015- 16 and demand notice dated 27.10.2017.
2. The case of the petitioner, in short, is as follows:
a) The petitioner is in the business of supplying cleaned and cut chicken for sale to commercial buyers and for retail. Poultry meat is handled in two ways. The first is for restaurants and hotels, wherein the live chicken is slaughtered, cleaned, cut as per specification and sent to the restaurant, hotel in bulk. In this case, there is no processing or packing involved. The second mode of handling is in respect of chicken meant for distribution to retail outlets like super markets and stores. In this mode, the chicken, after being cut and cleaned, is frozen at -18°c and then packaged. In this second method also, there is no processing http://www.judis.nic.in 3 involved except packaging and branding.
b) Under the TNVAT Act 2006, sale of meat, after cleaning and cutting, falls under Entry 54 of Part B of Schedule IV and is exempted from tax by Section 15 of the said Act. Only the 'processed meat, poultry and fish' carry a taxable rate of 5%. In so far as the supply of frozen chicken to retailers, the petitioner is paying 5% VAT, since the exemption granted under Entry 54 of Part B of Schedule IV does not exempt processed, branded and packed goods. The meat sold to the retailers, eateries and hotels are not 'packed', 'processed' or 'branded'. It is simply cleaned, cut and supplied on the same day. Hence, it is covered by the exemption in Entry 54 of Part B of Schedule IV.
c) The respondent issued show cause notice on 22.03.2017 for the assessment years 2014-15, 2015-16 and called upon the petitioner to show cause as to why the turnovers should not be redetermined and penalty imposed by contending that the cleaning, cutting and selling of meat to the restaurants, eateries, hotels is also "processed meat". The respondent has not applied his mind to understand that meat is never sold as an un-cleaned dead livestock in any butcher's shop. The dead http://www.judis.nic.in 4 livestock, poultry is cleaned, organs are removed, chopped into pieces and only then sold as 'meat'. Cutting and removing organs do not constitute 'processing' within the meaning of TNVAT Act. When a commodity is being assessed to tax, it is important to note whether the processing has changed the nature of commodity.
d) The petitioner through their reply dated 10.04.2017 and 27.04.2017 explained that the meat supplied to the restaurants, hotels and eateries are not processed meat and thus, they are exempted from payment of VAT Act. The respondent rejected the objections and passed the impugned assessment orders. The respondent has also imposed penalty of 150%, apart from assessing difference of tax payable.
Originally, the impugned orders of assessment were not served on the petitioner. Only a notice of attachment dated 27.10.2017 was received by the petitioner on 10.12.2017. Thereafter, on the representation of the petitioner, xerox copies of the assessment orders were served on 02.01.2018. Hence, the present writ petition.
3. The respondent filed a counter affidavit. The case of the http://www.judis.nic.in 5 respondent is as follows:
The petitioner is engaged in the business of supplying cleaned and cut chickens as well as processed chicken. The returns filed by the dealer was perused with reference to Form-WW return and Audited balance sheet. There was vast difference between the turnover in the monthly returns filed and the one reported in Form-WW Return. Therefore, it was proposed to assess the book turnover. The petitioner paid tax at 5% on the sale of processed poultry sold in packages to retailers. But they have not paid any tax on the processed poultry sold in trays to hotels/restaurants. There is a separate entry for processed poultry under Entry 108 of Part B of the First Schedule (Commodity code 2108), taxable at the rate of 5%. The petitioner is trading only in processed poultry and not live poultry. They purchased machinery for that purpose and availed input tax credit on the tax paid thereon on the purchase of machinery as "capital goods". The dealer had processed the live poultry and claimed incorrect exemption on the sale of processed poultry. Therefore, the entire turnover is liable to tax at 5%. Show cause notice was issued and the reply submitted by the petitioner was perused. As no documentary evidences were produced in support of their contention, final orders were issued also by imposing penalty, as the petitioner had suppressed their http://www.judis.nic.in 6 turnover and not reported them while filing returns. The right course for the petitioner as against the impugned orders is to file statutory appeal before the First Appellate Authority, which they have not done. Therefore, the present writ petition is not maintainable. The contention of the petitioner is that there is no process involved, is not correct, because they clean the poultry and cut them into pieces according to the requirements and then, transfer it to their customers. Even though the supply to the restaurants, etc., in a tray is not packed, the process is one and the same and hence, the product is taxable, since it is supplied in tray for the sake of convenience.
4. A rejoinder is filed by the petitioner, wherein it is stated as follows:
The impugned orders were not served on the petitioner in the manner known to law so as to file a regular statutory appeal. In any case, since an important question of interpretation of law has arisen in this case, the alternate regular statutory appeal will not be efficacious. The other brands such as Nilgiris, Venki's, Suguna, Godrej, Shanti Chicken were doing the very same business of cutting and cleaning the chicken but no tax is levied on them for their business, since it is treated as exemption http://www.judis.nic.in 7 under Entry 15. Therefore, there is discrimination against the petitioner alone and the law is being misapplied with regard to the petitioner alone. Hence, there is a malice in law and therefore, the alternate remedy before the Statutory Tribunal is not efficacious.
5. Mr.Richardson Wilson, learned counsel for the petitioner made his submissions. A written submission is also filed on behalf of the petitioner. The sum and substance of the submissions made on behalf of the petitioner are as follows:
The unprocessed meat and poultry is exempted under Section 15 of the Tamil Nadu VAT Act 2006 read with Schedule IV, Part B, Entry 54 of the Act. The respondent has assessed the goods to tax under Entry 108 of Part B of Schedule I, which are goods taxable at 5%, while Entry 108 deals with "processed meat, poultry or fish". Thus, the issue that arises for consideration is what is the meaning and purport of the word "processed" and how the two entries i.e. Entry 54 and Entry 108 are to be harmoniously construed. There is no "processing" involved in the sales of meat, which are de-feathered, cleaned and cut and sold in trays or buckets to restaurants. The petitioner is also dealing with chicken, which are processed in the sense preservatives are added, the chickens were packed http://www.judis.nic.in 8 and sold under the branded names to super markets and retail stores. In those cases, the petitioner is paying 5% tax. The argument of the respondent is squarely contrary to the judgments in the cases of State of Tamilnadu vs. Eastern Aquatic Traders, 1985 (58) STC 151 Mad, Sterling Foods vs State of Karnataka, AIR 1986 SC 1809 and Deputy Commissioner vs Poi Food Packers, AIR 1980 SC 1227. In all those cases, it was held that processing should mean that the commodity before processing and the commodity after processing is a distinct and different one. If the argument of the respondent is to be accepted that mere cutting and cleaning is processing, then Entry 54 becomes redundant. It is well settled that the Courts would not accord an interpretation to the words appearing in a statute in a manner so as to make another part of the statute redundant. When two parts of a statute are at an apparent conflict with each other, the Courts would always accord a meaning so as to harmoniously construe both provisions, so as to give effect to both provisions and not make one provision redundant or otiose. In the impugned orders, the respondent has not even considered the explanation offered by the petitioner, in so far as the revised Form WW is concerned. If the revised Form WW is considered, there is no discrepancy at all between the books of accounts and the form. http://www.judis.nic.in 9 Therefore, there is no case made out for wilful non disclosure of revenue.
6. Mr.Mohammed Shathiq, learned Special Government Pleader appeared and argued for the respondent. A written submission is also filed on behalf of the respondent. The sum and substance of the submissions made on behalf of the respondent are as follows:
a) The writ petition is not maintainable, as the petitioner is having statutory appellate remedy against the impugned orders of assessment.
The impugned orders were passed after complying with the principles of natural justice. The impugned orders were also served on the petitioner on 15.07.2017 and 01.08.2017 respectively. The same were received by an employer of the petitioner company with acknowledgement, after affixing the company seal. The petitioner was again served with copies of orders on 20.12.2017. Having received the same, the petitioner did not file an appeal before the Appellate Authority. Thus, the petitioner cannot invoke the extraordinary writ jurisdiction of this Court. In fact, the findings rendered in Sterling Foods vs State of Karnataka reported in AIR 1986 SC 1809 , relied on by the petitioner is in favour of the Revenue in so far as the issue involved in this case is concerned. http://www.judis.nic.in 10
b) On merit, it is stated that "processed poultry" falls under Entry 108 of Part B of Schedule I, TNVAT Act and is liable to pay tax at 5%. To attract Entry 108 of Part B of Schedule I, what is required is processing and not manufacture. The test of emergence of a new commodity is relevant to decide whether an activity is manufacture or not and therefore, it has no relevance to decide whether it constitutes process. All the three decisions relied on by the petitioner dealt the issue whether the activity involved therein would constitute manufacture. The above case laws have also brought out the distinction between processing and manufacture. Therefore, those case laws are not applicable to the present case.
c) The Full Bench decision of the Gauhati High Court in (1986) 62 STC 21, Shri Nalini Ranjan Sirkar vs Superintendent of Taxes, which was followed by the Andhra Pradesh High Court in 72 STC 139 (AP), The State of Andhra Pradesh vs. Brite Poultry Farm, rejected the contention that chicken would constitute meat. Poultry under Entry 54 is intended to cover live chicken. The expression poultry would cover live poultry as evidenced from the following expressions "live stock" and "other than race horses". Therefore, chicken slaughtered and cut to specification would be governed by Entry 108 only. The petitioner has admitted the http://www.judis.nic.in 11 activities of processing in the website. The petitioner, having understood their activity carried out to be processing, is not entitled to claim exemption.
7. Heard the learned counsel appearing for the petitioner and the learned Special Government Pleader appearing for the respondent. I have perused the materials placed before this Court and also given my careful consideration to the submissions made on behalf of the parties.
8. The orders under challenge are assessment orders passed in respect of the assessment years 2014-15 and 2015-16. It is contended by the respondent that as against these impugned orders, statutory appellate remedy is available to the petitioner and therefore, the present writ petition is not maintainable. On the other hand, it is contended by the petitioner that the issue involved in this case is in respect of interpretation of two statutory provisions viz., Entry No.108 of Part B of Schedule I and Section 15 of TNVAT Act, 2006 read with Schedule IV, Part B, Entry 54 of the said Act. It is thus contended by the petitioner that since the activities carried on by the petitioner, as claimed by the respondent, are not in dispute, the only question to be considered and decided in this writ http://www.judis.nic.in 12 petition is as to whether, on those admitted activities of the petitioner, the subject matter goods would fall under Entry 54 of Part B of Schedule IV under the TNVAT Act, 2006, as claimed by the petitioner or would fall under Entry 108 of Part B of Schedule I of the said Act, as claimed by the respondent. Therefore, it is contended that since such interpretation of law is required to be done in this matter, such exercise is exclusively within the domain of this Court and therefore, this writ petition is maintainable.
9. It is true that as against the impugned orders, statutory appellate remedy is available to the petitioner. It is also true that neither the jurisdiction of the respondent is questioned nor any complaint of violation of the principles of natural justice is made. At the same time, it is to be noted that the relevant facts viz., the activities being carried out by the petitioner in bringing the subject matter goods are not disputed. Therefore, as rightly pointed out by the learned counsel for the petitioner, the only question to be answered is whether the subject matter product would fall within the purview of Entry 54 of Part B of Schedule IV or Entry 108 of Part B of Schedule I. Therefore, this Court is convinced that answer to the said question could be made only on interpretation of those two provisions and therefore, this Court is inclined to sustain the http://www.judis.nic.in 13 submission made by the petitioner with regard to the maintainability of the writ petition.
10. Now let me consider the merits of the matter. The petitioner is aggrieved against the assessment orders passed in respect of the assessment years 2014-15 and 2015-16. The undisputed facts arising out of this writ petition are as follows:
a) The petitioner is in the business of supplying cleaned and cut chicken for sale to commercial buyers and for retail.
b) The petitioner makes two types of supply, one for the restaurants and hotels, wherein the live chicken is slaughtered, cleaned and cut as per specification and sent in bulk in trays. In the other method, the chicken, after being cut and cleaned, is frozen in a blast freezer and then packaged and given a brand name by adding some preservatives.
c) Insofar as the second type of sale is concerned, admittedly, the petitioner is paying 5% of VAT, as required under Entry 108 of Part-B of Schedule-I of the Tamil Nadu Value Added Tax Act, 2006.
http://www.judis.nic.in 14
d) Insofar as the first type of sale is concerned, the petitioner is not paying any tax and on the other hand, claims exemption under section 15 of the said Act, on the contention that such sale of chicken falls under Entry 54 Part-B of Schedule-IV of the Tamil Nadu Value Added Tax Act, 2006.
11. Based on the above admitted facts, the dispute between the parties is in respect of sale made through the first method namely, slaughtering live chicken, cleaning and cutting as per specification and sending it to the commercial buyers in trays. According to the petitioner, the above said sale does not involve any 'processing' activity within the meaning of the Tamil Nadu Value Added Tax Act, 2006, and the word 'processing' used in the petitioner Company's name is only symbolic. Therefore, the petitioner claims that the sale of chicken, after cleaning and cutting without involving any process is exempted under Entry 54 of Part-B of Schedule-IV of the said Act. On the other hand, it is the contention of the respondent that the activity, namely slaughtering, cleaning and cutting the poultry/live chicken would certainly fall within the meaning of 'processing' and therefore, once it is a processed poultry, it would fall under Entry 108 of Part-B of Schedule-I. http://www.judis.nic.in 15
12. Therefore, based on the above facts and circumstances, this Court has to first see whether the admitted activities of slaughtering, cutting and cleaning of the poultry are to be construed as a "process" and consequently, based on such finding, whether the sale by the petitioner by the first method would fall under Entry 54 of Part-B of Schedule -IV or Entry 108 of Part-B of Schedule-I.
13. For the purpose of understanding the relevant provisions, they are extracted as hereunder.
(i) Section 15 of the Tamil Nadu Value Added Tax Act,2006 reads as follows:
"Exempted sale:- Sale of goods specified in the Fourth Schedule or the goods exempted by notification by the Government by any dealer shall be exempted from tax."
(ii) Entry 108 in Part-B of the First Schedule of the Tamil Nadu Value Added Tax Act, 2006, reads as follows:
Goods which are taxable at the rate of 5 per cent.
Sl.No. Description of goods Author's Note
108 Processed meat, poultry 4% w.e.f. 1.1.2007 by Act 32 of 2006
and fish 5% w.e.f. 12.7.2011 by Act 30 of 2011
(iii) Entry 54 in Part-B of the Fourth Schedule of the Tamil Nadu http://www.judis.nic.in 16 Value Added Tax Act, 2006, reads as follows:
Goods exempted from tax by section 15.
Sl.No. Description of goods
54 Meat, fish including dry fish, prawn and other aquatic
products (other than branded, processed and packed items), eggs, poultry and livestock (other than race horses).
14. Before we go into the question as to which entry is attracted to the disputed commodity, let us first understand the basic fact that the word "poultry" is defined in the commercial parlance as follows:
Poultry :- Chickens, Turkeys, Ducks and geese; domestic fowl. Thus, it is evident that the chicken, in this case, would fall under the common term 'poultry'. The petitioner claims exemption under Entry 54 in Part B of IV Schedule by contending that the poultry referred to therein is an exempted goods from tax by Section 15. On the other hand, the Revenue claims that such poultry, if processed, would fall under Entry 108 in Part B of I Schedule, thus attracting 5% tax liability. It is to be noted at this juncture that in both entries, no doubt, the term 'poultry' finds a place.
15. A careful perusal of description of goods made under the above said two entries would show that the term 'poultry' referred to under both entries does not convey the same meaning or description. On http://www.judis.nic.in 17 the other hand, while the Entry 54 in Part B of IV Schedule refers to the poultry as such, Entry 108 in Part B of I Schedule refers the poultry as a processed one. In other words, it is to be noted that while Entry 54 deals with live poultry, Entry 108 deals with the poultry, which has undergone the process such as slaughtering, defeathering, cleaning and cutting so as to enable the consumer of the same to carry it to the next stage of cooking. Certainly, the petitioner is not entitled to take shelter under the word "meat" referred to under Entry 54 especially, when the word "poultry" is specifically referred to therein, apart from the word 'meat', while describing the goods under such Entry. Even otherwise, 'meat' referred to under Entry 54 is a meat other than branded, processed and packed. Thus, it is evident that if an act of process takes place in respect of the poultry, such poultry will not fall under Entry 54, since, as already stated supra, the term 'poultry' referred to therein would certainly indicate poultry as such or live poultry and not the processed one. Therefore, if the poultry is processed, the same would certainly fall under Entry 108 of Part B of I Schedule only and not under Entry 54 of Part B of IV Schedule.
16. Now let me consider as to whether the admitted activities carried on by the petitioner viz., slaughtering, defeathering, cleaning and http://www.judis.nic.in 18 cutting the poultry would be construed as an act of processing.
17. There is no dispute to the fact that the petitioner is engaged in slaughtering, defeathering, cleaning and cutting into pieces of the chicken as required. There is no dispute to the fact that for doing such activities, the petitioner has engaged sophisticated machineries, which is evident from their own website stating that the petitioner Company is utilising the latest in modern poultry processing technology in 2.5 acres of green lush property boasting a capacity of 50,000 birds per day and each bird is processed in compliance with stringent ISO, HACCP and Halal standards to provide the most hygienic products. It is also referred to therein that the customers are assured that the birds are in climate controlled facilities throughout the process. Curiously, the very name of the petitioner Company is also relevant to be noted at this juncture called "Caris Pure Processing Company Pvt Ltd".
18. If a commodity is subjected to some activities, viz., in this case, defeathering, cleaning and cutting, certainly those activities would fall under the meaning of process. Not necessary that such commodity should result in a different product after undergoing such activities of http://www.judis.nic.in 19 processing. Such consideration is required only when it is called upon to decide as to whether any manufacturing activities are going on or not by carrying out such process. Here, it is nobody's case that the petitioner is manufacturing any product. On the other hand, the only question in this case is as to whether the activities carried on by the petitioner would fall under the meaning "processing" or not. In my considered view, the above said activities carried on by the petitioner on the poultry, that too, with the aid of the sophisticated machineries, would certainly fall under the purview of 'processing' and consequently, supply of such chicken which undergone such process, would certainly fall under Entry 108 in Part B of I Schedule and not under Entry 54 in Part B of IV Schedule.
19. At this juncture, it is useful to refer to the recent decision of the Apex Court made in Noida vs CIT reported in 2018(9) SCC 351, wherein the Apex Court, while considering the strict interpretation of taxing statutes, has observed at paragraph No.46 as follows:
"46. This Court in Rajasthan Rajya Sahakari Spg. & Ginning Mills Federation Ltd. v. CIT (2014) 11 SCC 672] again reiterated that there has to be strict interpretation of taxing statutes and further the fact that one class of legal entities is given some benefit which is specifically stated in the Act does http://www.judis.nic.in 20 not mean that the legal entities not referred to in the Act would also get the same benefit. The following was laid down in para 23: (SCC p. 678)“ "23. We are also of the view that in all the tax matters one has to interpret the taxation statute strictly. Simply because one class of legal entities are given some benefit which is specifically stated in the Act does not mean that the legal entities not referred to in the Act would also get the same benefit. As stated by this Court on several occasions, there is no equity in matters of taxation. One cannot read into a section which has not been specifically provided for and therefore, we do not agree with the submissions of the learned counsel appearing for the appellant and we are not prepared to read something in the section which has not been provided for. The judgments referred to hereinabove support the view which we have expressed here.” Therefore, it is clear that the benefit given to the petitioner under Entry 54 of Part B of Schedule IV has to be confined only in respect of such of those goods specifically referred to therein and not to the other clause of goods, which does not find a place under such entry.
20. Learned counsel for the petitioner heavily relied on the following case laws in support of his contention that cutting and cleaning http://www.judis.nic.in 21 cannot be construed as processing the chicken. Let me consider the case laws cited on behalf of the petitioner one by one.
a) The first decision is reported in [1985] 58 STC 15, The State of Tamilnadu vs Eastern Acquatic Traders. It is a decision of the Division Bench of this Court. The assessee therein claimed exemption under Section 5(3) of the Central Sales Tax Act, while exporting the frog legs, after cutting, cleaning and freezing. The question before the Division Bench was as to whether the processing of frog legs by cutting, cleaning and freezing has brought into existence a different and distinct commodity in order to deny exemption under Section 5(3) of the Central Sales Tax Act. In other words, the question before the Division Bench was not as to whether the activities of the cutting, cleaning would come under the purview of the process or not. Therefore, the Division Bench, after taking note of such issue, found that the frog legs, which have been cut, cleaned and freezed, did not cease to be frog legs after the above process. The Division Bench, in fact, has recorded that the process of cutting, cleaning and freezing of the frog legs had in fact taken place. In other words, each of those activities are found to be a process. In this case, the question is as to whether defeathering, cutting and cleaning of the poultry are activities of processing the chicken for further consumption or not. Hence, http://www.judis.nic.in 22 the further question as to whether such processes brought into a different commodity, does not arise in this case. Therefore, I find the above decision, which is factually distinguishable, is not helping the petitioner in any manner.
b) The next decision relied on is reported in AIR 1986 SC 1809, Sterling Foods vs State of Karnataka. The Appellant before the Supreme Court in that case were carrying on business as dealers in shrimps, prawns, lobsters and other sea food products. Here again, the appellants therein relied on Section 5(3) of the Central Sales Tax Act, 1956 claiming total exemption from tax in respect of the purchase of shrimps, prawns and lobsters on the ground that the same had been purchased in the course of export. Before the export, the raw shrimps, prawns and lobsters were subjected to processing like cutting of heads and tails, peeling, deveining, cleaning and freezing. Therefore, the question that arose before the Apex Court for its determination in the said appeal was whether the shrimps, prawns and lobsters subjected to such processing ceased to be the same commodity and become a different commodity for the purpose of the Central Sales Tax Act, 1956. Under such circumstances, the Apex Court has pointed out that the shrimps, prawns http://www.judis.nic.in 23 and lobsters therein did not lose the original character and identity when they are subjected to processing for the purpose of export and they remained the same goods and hence, the purchase of raw shrimps, prawns and lobsters must be held to be purchase in the course of export and exempt from liability of tax. Thus, from the above facts and circumstances, it is seen that the issue involved in Sterling Foods' case as well as the case before the Division Bench of this Court in Eastern Acquatic Traders' case, is one and the same arising out of Section 5(3) of the Central Sales Tax Act. Here again, the Apex Court has recorded that shrimps, prawns and lobsters have undergone the process of cutting, peeling, deveining, cleaning and freezing. Therefore, it is evident that those activities are undoubtedly to be held as processing the goods. Under such circumstances, the above decision of the Apex Court is also not helping the petitioner in any manner.
c) The next decision relied on by the petitioner is reported in AIR 1980 SC 1227, Deputy Commissioner of Sales Tax (Law) vs Pio Food Packers. In that case, the question before the Apex Court was that as to whether the turn over of pineapple fruit purchased for preparing pineapple slices for sale in sealed canes is covered by Section 5A(1)(a) of http://www.judis.nic.in 24 the Kerala General Sales Tax Act, 1963 or not. The assessee therein contended that by the conversion of pineapple fruit into its products like pineapple slices, no new commodity was created. Therefore, under the above circumstances, the Apex Court found that there was no distinction between pineapple fruit and the canned pineapple slices and the only difference is that the sliced pineapple is more convenient form and by reason of being canned, it is capable of storage without spoiling. While observing so, the Apex Court has categorically found that although a degree of processing is involved in preparing pineapple slices from the original fruit, the commodity continues to possess its original identity, notwithstanding the removal of inedible portions. Therefore, it is to be noted that the activity of processing is found to have taken place in the case before the Apex Court as well. Out of such processing, no different commodity had emerged, is, certainly not an issue, which is relevant for considering the present case before this Court. Therefore, the above decision of the Apex Court is also not helping the petitioner in any manner.
21. On the other hand, the learned Special Government Pleader appearing for the respondent relied on the very same Sterling Foods' case reported in AIR 1986 SC 1809 to contend that the activities http://www.judis.nic.in 25 carried on by the petitioner are clearly coming under the purview of process. At paragraph Nos.8 and 9, the Apex Court has observed as follows:
"8. This conclusion on principle was not disputed by the High Court in its judgment and the High Court conceded that even after processing such as cutting of heads and tails, peeling, deveining, cleaning and freezing, shrimps, prawns and lobsters subjected to such processing continued in common parlance to be called “shrimps, prawns and lobsters”. But the High Court took the view that Entry 13-a after the amendment effected in it with retrospective effect from September 1, 1978, made a distinction between raw shrimps, prawns and lobsters and processed or frozen shrimps, prawns and lobsters. In view of this distinction made in entry 13-a, if was not possible to hold that processed or frozen shrimps, prawns and lobsters were the same commodity as raw shrimps, prawns and lobsters. The argument was that when the State legislature itself made a distinction between these categories of commodities by making purchases of one category amenable to sales tax under Entry 13-a and leaving out of the scope of taxation under Entry 13-a the other category, how could it be said that both these categories represent the same commodity and there is no difference in character and identity between the two. This argument, we http://www.judis.nic.in 26 are afraid, is not well founded. It is based on a total misapprehension in regard to the true object and intendment of entry 13-a and it erroneously seeks to project that entry in the interpretation and application of Section 5 sub-section (3) of the Central Sales Tax Act. In fact Entry 13-a as amended, supports the argument that even processed or frozen shrimps, prawns and lobsters are known commercially and in the trade as “shrimps, prawns and lobsters”. It is because Entry 13-a as it stood prior to its amendment, would have, on the plain natural meaning of the expression “shrimps, prawns and lobsters”, included processed and frozen shrimps, prawns and lobsters, that it became necessary for the State legislature to amend Entry 13-a with retrospective effect so as to exclude from the scope and ambit of that entry processed or frozen shrimps, prawns and lobsters. Now when the State legislature excluded processed or frozen shrimps, prawns and lobsters from the ambit and coverage of Entry 13-a, its object obviously was that the last purchases of processed or frozen shrimps, prawns and lobsters in the State should not be exigible to State sales tax under Entry 13-a. The state legislature was not at all concerned with the question as to whether processed or frozen shrimps, prawns and lobsters are commercially the same commodity as raw shrimps, prawns and lobsters or are a different commodity and merely because the State legislature made a distinction between the two for the purpose of determining exigibility to State sales tax, it http://www.judis.nic.in 27 cannot be said that in commercial parlance or according to popular sense, processed or frozen shrimps, prawns and lobsters are recognised as different commodity distinct from raw shrimps, prawns and lobsters. The question whether raw shrimps, prawns and lobsters after suffering processing retain their original character or identity or become a new commodity has to be determined not on the basis of a distinction made by the State legislature for the purpose of exigibility to State sales tax because even where the commodity is the same in the eyes of the persons dealing in it the State legislature may make a classification for determining liability to sales tax. This question, for the purpose of the Central Sales Tax Act, has to be determined on the basis of what is commonly known or recognised in commercial parlance. If in commercial parlance and according to what is understood in the trade by the dealer and the consumer, processed or frozen shrimps, prawns and lobsters retain their original character and identity as shrimps, prawns and lobsters and do not become a new distinct commodity and are as much “shrimps, prawns and lobsters”, as raw shrimps, prawns and lobsters, sub-section (3) of Section 5 of the Central Sales Tax Act would be attracted and if with a view to fulfilling the existing contracts for export, the assessee purchases raw shrimps, prawns and lobsters and processes and freezes them, such purchases of raw shrimps, prawns and lobsters would be deemed to be in course of export so as http://www.judis.nic.in 28 to be exempt from liability to State sales tax.
9. Here in the present case, it was not disputed on behalf of revenue that the purchases of raw shrimps, prawns and lobsters were made by the appellants for the purpose of fulfilling existing contracts for export and after making such purchases the appellants subjected raw shrimps, prawns and lobsters purchased by them to the process of cutting of heads and tails, peeling, deveining, cleaning and freezing and exported such processed and frozen shrimps, prawns and lobsters in fulfilment of the contracts for export. The only argument raised on behalf of revenue was that the goods which were exported were not the same as the goods purchased by the appellants because raw shrimps, prawns and lobsters after processing ceased to be the same commodity and became a new distinct commodity. But, for reasons which we have already discussed, this argument cannot be sustained. The shrimps, prawns and lobsters purchased by the appellants did not lose their original character and identity when they were subjected to processing for the purpose of export. So far as commercial parlance or popular usage is concerned, they remained the same goods and hence the purchases of raw shrimps, prawns and lobsters by the appellants must be held to be purchases in the course of export and hence exempt from liability to tax under the Karnataka Sales Tax Act."
(emphasis supplied) http://www.judis.nic.in 29
22. Learned counsel for the petitioner contended that if an interpretation to Entry 108 of Part B of Schedule I and Entry 54 of Part B of Schedule IV is given in the line of the stand taken by the Revenue, there would be an apparent conflict between those two entries. I do not think that the learned counsel is justified in making such contention especially when both entries are very clear on its own field in describing the goods under each entry without there being any ambiguity. As already stated supra, while Entry 54 simply refers the poultry as such, Entry 108 clearly refers the poultry as processed one. Therefore, this clear distinction made between those two entries in respect of poultry is enough to hold that there is no ambiguity nor any conflict arises between those two provisions of law. Consequently, none of the above two provisions would become redundant or otiose, as both are operating on its own field on the goods referred to therein with absolute clarity.
23. It is further contended by the learned counsel for the petitioner that the petitioner alone is being discriminated while the other similarly situated dealers are not brought into tax while selling the same goods. First of all, it is to be stated that the petitioner is not entitled to alleged discrimination merely because a similarly situated person is not subjected http://www.judis.nic.in 30 to tax, especially when the statute provides for imposition of such tax on all similarly situated persons. If similarly situated persons are not brought to tax, such exclusion would have to be construed only as an illegality and thus based on such illegal exclusion, assuming if any, the petitioner cannot claim exemption, as if they are being discriminated. Needless to say that the Revenue has to apply the same yardstick to all the similarly situated persons assuming that the allegation made by the petitioner is true.
24. Considering all these aspects, I hold that the activities carried on by the petitioner viz., defeathering, cleaning and cutting the chicken would certainly fall under the purview of processing and consequently, such sale would fall under Entry 108 of Part B of Schedule I and not Entry 54 of Part B of Schedule IV, as claimed by the petitioner. Accordingly, I find that the Assessing Authority has rightly brought the turnover to tax by bringing such sale under Entry 108. Thus, I find no error on either applying the Entry 108 of Part B of Schedule I or interpreting the Entry 54 of Part B of Schedule IV. The Assessing Officer has found that the dealer has not been able to satisfactorily explain the reason for difference in turnover between books of accounts and returns with any supporting proof and that the audited financial statements do not support the claim of the http://www.judis.nic.in 31 petitioner for exemption. Hence, I find that the imposition of penalty on the petitioner under Section 27(3)(c) of TNVAT Act, is also sustainable. Accordingly, the writ petition fails and the same is dismissed. No costs. The connected miscellaneous petitions are closed.
28.11.2018 Speaking/Non Speaking Index :Yes/No vri To The Commercial Tax Officer, Sholinganallur Assessment Circle, 141, Burma Colony, First Main Road, Perungudi, Chennai 600 096.
http://www.judis.nic.in 32 K.RAVICHANDRABAABU,J.
vri PRE DELIVERY ORDER IN W.P.NO.2881 OF 2018 28.11.2018 http://www.judis.nic.in