1980 (7) TMI 252 - HC - VAT and Sales Tax

Court rules fried gram under Central Sales Tax Act as pulses, limiting tax rate to 4%

SK. Nataraja Mudaliar and Co. Versus State of Tamil Nadu

SK. Nataraja Mudaliar and Co. Versus State of Tamil Nadu - [1982] 51 STC 55 (Mad) Issues involved: Interpretation of the Central Sales Tax Act regarding the classification of fried gram for sales tax purposes.Summary:The judgment dealt with the interpretation of the Central Sales Tax Act in relation to the classification of fried gram for sales tax purposes. The petitioner, a firm engaged in the business of pulses, grams, and gram dhal, was assessed for additional tax on the turnover of fried gram. The main issue was whether fried gram should be taxed at 4% or 4.7% under the relevant provisions of the Central Sales Tax Act.The court analyzed the provisions of the Central Sales Tax Act, specifically Section 14 which lists declared goods, and Section 15 which imposes restrictions on the tax levied on such goods. It was noted that pulses were included as declared goods in 1976, limiting the State Government's authority to tax them at more than 4%. The State Government had introduced entry 80(b) in the First Schedule, seeking to levy additional tax on fried gram.The court examined the definitions and interpretations of 'pulses and grams' under the relevant laws. It was argued that fried gram should be considered a separate commodity from grams, but the court disagreed. Referring to legal precedents, the court held that fried or parched gram still falls under the category of pulses and grams as per the Central Sales Tax Act and State Act.Based on the analysis, the court concluded that fried gram should be taxed at 4% and not 4.7%. The State Government was prohibited from collecting additional sales tax exceeding 4% on the turnover of fried gram. Consequently, the writ petitions were allowed in favor of the petitioner without costs.