Agricultural produce exemption ends once sugarcane is commercially converted into jaggery; dealer status also applies.

A person who organised the manufacture of sugarcane into jaggery and sold the finished commodity was treated as a dealer under the General Sales Tax Act because the activity involved commercial sales of a processed product, not mere disposal of agricultural produce. The exemption for agricultural produce applied only to sale of the produce in its original form; once sugarcane was converted into jaggery, the commodity lost that character and the exemption did not apply. The assessment was therefore upheld and the petition failed.

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Issues: (i) whether the assessee was a dealer within the meaning of the General Sales Tax Act; (ii) whether jaggery sold after conversion from sugarcane was agricultural produce entitled to exemption under the Act.

Issue (i): Whether the assessee was a dealer within the meaning of the General Sales Tax Act.

Analysis: The assessee did not merely sell agricultural produce in its original form. He organised the conversion of sugarcane into jaggery and carried out sales of that manufactured commodity during the year. The existence of prior sales of sugarcane also showed a market and a commercial activity connected with the sales.

Conclusion: The assessee satisfied the definition of dealer under Section 2(b) of the Act.

Issue (ii): Whether jaggery sold after conversion from sugarcane was agricultural produce entitled to exemption under the Act.

Analysis: The exemption for agricultural produce applies to sale of the produce as such. Once sugarcane was subjected to a manufacturing process and converted into jaggery, the commodity sold was the manufactured product and not agricultural produce in its original form.

Conclusion: The assessee was not entitled to the exemption under Section 2(i) of the Act.

Final Conclusion: The assessment was upheld and the petition failed.

Ratio Decidendi: Agricultural produce exemption does not extend to a commodity that has been commercially manufactured from the produce, and a person organising such manufacture and sale can fall within the definition of dealer.

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