Agricultural produce exemption survives transport cutting where casuarina trees retain original character and are not processed for consumption.

Casuarina trees cut into shorter pieces solely for transport purposes retained their original agricultural character and remained sold in the form in which they were produced. The statutory exemption under the proviso to section 2(1) of the Madras General Sales Tax Act continued to apply because the produce had not been subjected to any physical or chemical process to prepare it for consumption, apart from permitted cleaning, grading or sorting. The amendment made by the Madras General Sales Tax (Andhra Amendment) Act, 1956, did not alter this essential test. The turnover from the sale of such cut casuarina was therefore excludible from tax.

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Issues: Whether casuarina trees cut into shorter pieces for transport retained the character of agricultural produce sold in the form in which it was produced, so as to qualify for exemption under the proviso to section 2(1) of the Madras General Sales Tax Act.

Analysis: The proviso excluded from turnover the sale proceeds of agricultural or horticultural produce grown by the seller, provided the produce was sold in the form in which it was produced and had not been subjected to any physical or chemical or other process to prepare it for consumption, save mere cleaning, grading or sorting. The addition made by section 2(iii) of the Madras General Sales Tax (Andhra Amendment) Act, 1956, did not alter the essential test. Cutting casuarina trees into two, three or four pieces only for convenience of transport did not change their form or original character. The fact that such cutting was not itself cleaning, grading or sorting was immaterial because the produce had not lost its original form or character.

Conclusion: The sale of cut casuarina remained within the statutory exemption, and the assessee was entitled to exclude the turnover from tax.

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