Trade parlance test confirms millet products remain covered by concessional sales tax treatment under the Tamil Nadu Act.

The Madras HC examined whether samai arisi, thinai arisi, irungu chola arisi, irungu chola kurunai and kudiraivali arisi fell within the proviso to section 3(1) of the Tamil Nadu General Sales Tax Act, 1959 and were therefore taxable at 1 per cent. Applying ordinary trade parlance in the State, it held that adding the words arisi and kurunai did not create a different commercial commodity, because these grains did not change identity in the way paddy becomes rice on dehusking. The disputed items were treated as the same foodgrains covered by the proviso, and the reassessment at 2 per cent was unsustainable.

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Issues: Whether samai arisi, thinai arisi, irungu chola arisi, irungu chola kurunai and kudiraivali arisi fell within the proviso to section 3(1) of the Tamil Nadu General Sales Tax Act, 1959 so as to attract the concessional rate of 1 per cent, or whether they were taxable at 2 per cent as distinct products.

Analysis: The proviso to section 3(1), as applicable to the relevant assessment year, specifically included samai, thinai, cholam and kudiraivali among the foodgrains taxable at 1 per cent. The decisive question was whether the addition of the words arisi and kurunai took the goods outside the proviso. Applying the ordinary commercial understanding prevailing in the State, the Court held that there was no distinction in trade parlance between these grains in husked and dehusked form. Unlike paddy and rice, which change identity on dehusking, these grains continued to be known as the same commodity.

Conclusion: The disputed items fell within the scope of the proviso to section 3(1) and were entitled to the concessional rate of 1 per cent. The reassessment at 2 per cent was therefore unsustainable.

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