1978 (2) TMI 196 - HC - VAT and Sales Tax

Court Reinstates Exemption for Tapioca Turnover, Emphasizing Human Consumption

The Court allowed the revision petition, overturning the decisions of the Sales Tax Appellate Tribunal and the Deputy Commissioner. It reinstated the ... Exemption under Third Schedule for vegetables used for human consumption - inclusive definition - ordinary user/potentiality for human consumption testExemption under Third Schedule for vegetables used for human consumption - inclusive definition - ordinary user/potentiality for human consumption test - Whether tapioca used as cattle feed was rightly denied exemption under the Third Schedule entry referring to 'Vegetables ... used for human consumption including tapioca' - HELD THAT: - The Court held that the inclusive portion of the Schedule entry expressly brings 'tapioca' within the class of 'vegetables used for human consumption' so as to qualify for the exemption irrespective of its actual use. An inclusive definition is designed to include items which might otherwise fall outside the main description; accordingly, the word 'tapioca' is not to be narrowly qualified by the phrase 'used for human consumption' so as to make actual human consumption a prerequisite. Alternatively, even if the qualifying words are read as applying to the items listed in the inclusive part, the correct test is ordinary user or the commodity's potentiality and capacity for human consumption, not the precise actual use in each instance. Vegetables ordinarily fit for human consumption do not lose the exemption simply because some portion in practice is diverted to animal feed; the exemption depends on the commodity's ordinary/potential use for human consumption. Applying these principles, the sale of tapioca as described in the assessment falls within the exempt category and the Tribunal and Deputy Commissioner were in error in denying the exemption.Revision allowed; orders of the Sales Tax Appellate Tribunal and Deputy Commissioner set aside and the Sales Tax Officer's order restoring the exemption reinstatedFinal Conclusion: The revision petition succeeds: tapioca is covered by the Third Schedule exemption either by reason of the inclusive definition or because its ordinary/potential use for human consumption satisfies the qualifying words; the orders denying the exemption are set aside and the Sales Tax Officer's order allowing the exemption is restored. Issues:1. Exemption claimed by the assessee in respect of tapioca turnover.2. Interpretation of entry 10 of the Third Schedule of the Sales Tax Act.3. Reopening of assessment by the Deputy Commissioner of Sales Tax.4. Justification of exemption for tapioca used as cattle feed.Analysis:1. The assessee claimed exemption from turnover tax in respect of tapioca for the assessment year 1970-71, under section 9 of the Sales Tax Act read with entry 10 of the Third Schedule. The total turnover was Rs. 6,31,608.23, with an exemption claimed of Rs. 92,349.00. The Sales Tax Officer initially granted the exemption, but it was later disallowed by the Deputy Commissioner of Sales Tax, leading to an appeal by the assessee.2. The interpretation of entry 10 of the Third Schedule was crucial in this case. The Court analyzed the wording of the entry, which included 'vegetables used for human consumption including tapioca.' The Court emphasized that the inclusive part of the entry brought tapioca within the definition of vegetables used for human consumption. The Court held that limiting tapioca's qualification for exemption based on its actual use for human consumption was unjustified. The Court referred to the purpose of an inclusive definition to bring items within its scope, regardless of their specific use.3. The Deputy Commissioner's decision to reopen the assessment and disallow the exemption was based on the grounds that tapioca was used as cattle feed and not for human consumption. However, the Court disagreed with this interpretation. The Court stated that the test for exemption should be based on the potentiality and capability of the commodities for human consumption, rather than their actual use. The Court highlighted that even if vegetables were occasionally used for feeding animals, their ordinary use for human consumption should determine their eligibility for exemption.4. Ultimately, the Court allowed the revision petition, set aside the decisions of the Sales Tax Appellate Tribunal and the Deputy Commissioner, and reinstated the Sales Tax Officer's order granting the exemption for tapioca turnover. The Court concluded that tapioca qualified for exemption under the inclusive definition of vegetables used for human consumption, irrespective of its specific use as cattle feed.