Cashew kernel tax exemption turns on broad meaning of "tax levied" under the Karnataka Sales Tax Act.

Explanation VI to Schedule II of the Karnataka Sales Tax Act was treated as an exemption provision relieving cashew kernel from tax where tax had already been levied on cashew under the Act. The phrase "tax levied" was construed broadly to include tax under both the purchase tax and sales tax provisions, not merely sales tax alone. On that interpretation, once tax had been paid on cashew, the kernel pressed out of it was not liable to further tax at the sale point. The assessee's sale of cashew kernels was therefore not liable to sales tax under the Act, and the revision failed.

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Issues: Whether Explanation VI to Schedule II of the Karnataka Sales Tax Act, 1957 exempted cashew kernel from sales tax where tax had been levied on cashew under the Act, including tax levied under section 6 or section 5(3)(a).

Analysis: Explanation VI provided that where a tax had been levied in respect of cashew under item 88, the kernel pressed out of the said cashew would not be liable to tax under the Act. The expression "tax levied" was held to be of general import and not confined to sales tax alone. It covered tax levied under the purchase tax provision as well as tax levied under the sale tax provision. The provision was treated as an exemption clause intended to relieve kernel from tax at the sale point once tax had been paid on cashew.

Conclusion: The assessee's sale of cashew kernels was not liable to sales tax under the Act, and the revision failed.

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