Kerala High Court
Ambika Provision Stores vs State Of Kerala on 30 June, 1987
Equivalent citations: [1987]67STC170(KER)
Author: K.S. Paripoornan
Bench: K.S. Paripoornan
JUDGMENT K.S. Paripoornan, J.
1. The petitioner herein is an assessee under the Kerala General Sales Tax Act. The respondent is the Revenue. The matter relates to the assessment year 1982-83. The returns and the books of accounts were rejected. The assessing authority added 5 per cent to the taxable turnover. He also rejected the claim of exemption for the turnover of "chilli powder" and "coriander powder". The assessing authority also imposed tax on the purchase value of the packing material. In appeal, the Deputy Commissioner (Appeals) reduced the addition from 6 per cent to 1 per cent of the taxable turnover. In all other respects, the order of assessment was confirmed. In second appeal the Appellate Tribunal held that the turnover relating to packing materials should be deleted. But the Tribunal maintained that the turnover estimated on "chilli powder" and "coriander powder" is justified. The assessee has come up in revision.
2. We heard counsel for the revision petitioner (assessee). It was submitted that the Appellate Tribunal erred in sustaining the addition of 1 per cent to the additional taxable turnover. It was further contended that the imposition of tax on "chilli powder" and "coriander powder" at the rate of 8 per cent was unauthorised.
3. We see no force in the submissions made by counsel for the revision petitioner. The rejection of accounts was upheld by all the three authorities. The Appellate Assistant Commissioner as well as the Appellate Tribunal, sustained the estimated turnover by adding 1 per cent. As a final fact finding authority, it was competent for the Appellate Tribunal to do so. We find no error justifying interference with the fixation of the said quantum regarding the additions. The more crucial aspect pressed before us was that the Appellate Tribunal erred in holding that "chilli powder" and "coriander powder" can be taxed at 8 per cent. It was contended that both chilli and coriander have suffered tax and when these commodities were turned into chilli powder and coriander powder, they do not lose their identity and do not become commercially different commodities justifying a fresh imposition of tax. Under entry 27 of the First Schedule, tax at the rate of 8 per cent is leviable at the first point of sale on spices (including chillies and coriander seeds) not falling under any other items in the Schedule. The assessee urged that the two commodities- chillies and coriander-have suffered tax and they cannot be taxed again when they are sold as chilli powder and coriander powder. The Appellate Tribunal held that the chillies and coriander, and their powder are commercially distinct and different commodities. The powder of such commodities does not possess the same identity. The processing of the original commodities brings into existence a commercially distinct and different commodity, which is again taxable. In this view of the matter, the Appellate Tribunal upheld the levy of tax at 8 per cent on the said turnover of "chilli powder" and "coriander powder". The assessee has assailed the same in revision.
4. It is true that chilli and coriander are liable to tax at 8 per cent single point; but it should be stated that when chilli was turned into chilli powder and coriander into coriander powder, the original commodities underwent a change, giving rise to chilli powder and coriander powder. They can no longer be regarded as chilli and coriander. A new and distinct commodity emerged out of the manufacturing process. These two new or commercially different commodities are taxable again under entry 27 of the First Schedule of the Act at 8 per cent. The same commodity at different stages could be treated and taxed as commercially different articles. This position is settled by a series of decisions of courts [see Sri Siddhi Vinayaka Coconut & Co. v. State of Andhra Pradesh [1974] 34 STC 103 (SC) at page 110, Ganesh Trading Company v. State of Haryana [1973J 32 STC 623 (SC) and Achamma Sebastian v. State of Kerala 1967 KLT 832 (FB)]. We are of the view that "chilli powder" and "coriander powder" are distinct and different from chilli and coriander, both in common parlance and in commercial circles. In this view of the matter, the Appellate Tribunal was justified in holding that the turnover relating to the said items is taxable at 8 per cent. There is no merit in this tax revision case. The tax revision case is dismissed in limine.