Agricultural produce exclusion fails where coconuts are taken only under a lease without real interest in the land.

Turnover from coconuts obtained under a lease of tope lands was not excludable under section 2(r) of the Tamil Nadu General Sales Tax Act, 1959, because the exclusion applies only where the agricultural produce is grown within the State by the assessee himself or on land in which he has a real interest. The assessee had only a contractual right to pluck and remove the usufruct on payment of lease amounts, with no material showing personal cultivation, physical exertion, expenditure, or any real interest in the land. On that basis, the arrangement did not satisfy the statutory conditions for exclusion, and the assessment and penalty were upheld.

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Issues: Whether the turnover from sale of coconuts obtained under lease of tope lands was excludable from assessable turnover under section 2(r) of the Tamil Nadu General Sales Tax Act, 1959, on the footing that the produce was grown by the assessee himself within the State.

Analysis: The exclusion under section 2(r) applies only where the agricultural produce is grown within the State by the assessee himself, or where it is grown on land in which he has a real interest. On the facts found, the assessee had no interest in the land and merely secured a contractual right to pluck and remove the usufruct from the trees on payment of lease amounts. There was no material to show personal cultivation, physical exertion, or expenditure by the assessee in growing the produce. The arrangement therefore did not satisfy the statutory requirements for exclusion from turnover. The reasoning was consistent with the earlier view that a mere right to the usufruct is not an interest in land.

Conclusion: The turnover was not excludable under section 2(r) of the Tamil Nadu General Sales Tax Act, 1959, and the assessment orders and consequential penalty were upheld.

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