Karnataka High Court
State Of Karnataka vs Chamundeswari Industries on 14 December, 1989
Equivalent citations: [1992]84STC518(KAR)
JUDGMENT S. Rajendra Babu, J.
1. This revision petition is directed against an order made by the Karnataka Appellate Tribunal holding that parched rice and puffed rice are rice and therefore do not attract purchase tax under the Karnataka Sales Tax Act, 1957, while the assessing authority and the appellate authority had held against the dealer.
2. The entries with which we are concerned are entry 138 of the Second Schedule and entry 9 of the Fourth Schedule to the Act. They read as under :
"138. Flour and husks of pulses, atta, maida, soji and bran of wheat; parched rice, beaten rice, soji and rice and rice bran; soji, maida, atta, grits, flakes and bran or maize."
"9. Cereals, that is to say, paddy and rice, wheat, jowar or milo, bajra, maize, ragi, kodon, kutki and barley."
The contention advanced on behalf of the dealer is that the "rice" referred to in the Fourth Schedule at entry 9 takes within its sweep the parched rice and the puffed rice and relied upon a decision of the Supreme Court in Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394. The Tribunal proceeded to accept the contention raised by the dealer on that basis.
3. A careful perusal of that decision will disclose that the Supreme Court came to the conclusion that rice and puffed or parched rice are one and the same keeping in view the various provisions of the Act referred to therein together with the history of exemption of parched rice and puffed rice and its cancellation and there was no separate entry in regard to parched rice or puffed rice under that Act. Under the scheme of the Karnataka Act, however, the entries are separately given in that entry 138 of the Second Schedule covers parched rice or beaten rice and entry 9 of Fourth Schedule covers rice as such. It is permissible for the Legislature to classify goods in any manner it likes and this position is clear in view of the fact that after the manufacturing process a new commodity comes into existence. This is how the Supreme Court has dealt with the point in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319 :
"It is true that the question whether goods to be taxed have been subjected to a manufacturing process so as to produce a new marketable commodity, is the decisive test in determining whether an excise duty is leviable or not on certain goods. No doubt, in the law dealing with the sales tax, the taxable event is the sale and not the manufacture of goods. Nevertheless, if the question is whether a new commercial commodity has come into existence or not, so that its sale is a new taxable event, in the sales tax law, it may also become necessary to consider whether a manufacturing process, which has altered the identity of the commercial commodity, has taken place. The law of sales tax is also concerned with 'goods' of various descriptions. It, therefore, becomes necessary to determine when they ceased to be goods of one taxable description and become those of a commercially different category and description."
The Karnataka Act itself clearly describes the goods in respect of which it brings them into the taxation net under one or the other entry. Therefore, it follows that the view of the Tribunal is plainly wrong and the scheme of taxation under the Andhra Pradesh Act with which the Supreme Court was concerned in Alladi Venkateswarlu's case [1978] 41 STC 394 is not obtainable with reference to the Karnataka Act. In the circumstances, we have got to allow the petition.
4. In the result, we allow the petition and set aside the order of the Tribunal restoring that of the assessing and first appellate authorities.
5. Petition allowed.