Commercial distinction between raw cashewnuts and cashew kernel supports purchase tax on raw nut turnover.

Raw cashewnuts and cashew kernel were treated as commercially distinct commodities for purchase tax purposes under the Karnataka Sales Tax Act. The schedule entry referring to "cashew and its kernel" did not make them one and the same commodity, and prior Supreme Court authority had already recognised processed edible kernels as different from raw nuts. Explanation VI was read as an exemption provision relieving the kernel from tax at the sale stage where tax had already been paid on cashew, not as a declaration of identity between the two articles. Because the assessee purchased raw cashewnuts from non-registered dealers for manufacture of kernels, the statutory conditions for levy of purchase tax were satisfied.

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Issues: Whether raw cashewnuts and cashew kernel are two commercially distinct commodities for the purpose of levy of purchase tax under section 6 of the Karnataka Sales Tax Act, 1957.

Analysis: The schedule entry referring to "cashew and its kernel" did not compel the conclusion that both were one and the same commodity. The prior Supreme Court authorities had already treated raw cashewnuts and edible kernels obtained after processing as commercially different commodities. The later insertion of Explanation VI was understood as an exemption provision intended to relieve the kernel from tax at the sale stage where tax had already been paid on cashew, and not as a declaration that both articles were one commodity. Since the petitioner purchased raw cashewnuts from non-registered dealers and used them in manufacture of kernels, the statutory conditions for purchase tax were satisfied.

Conclusion: Raw cashewnuts and cashew kernel are commercially different commodities, and the levy of purchase tax on the raw cashewnut turnover under section 6 was justified.

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