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of <h1>Court rules chicory roots not exempt from sales tax, transaction with farmers is a sale agreement</h1> The Court held that the chicory roots purchased by the applicant were not covered under entry 8 or entry 23 of Schedule I to the Gujarat Sales Tax Act, ... - Issues Involved:1. Whether chicory roots purchased by the applicant were covered under entry 8 or entry 23 of Schedule I to the Gujarat Sales Tax Act, 1969.2. Whether the agreement between the applicant and the farmers was a contract for work and labor or a sale and purchase agreement of chicory roots.Detailed Analysis:Issue 1: Classification of Chicory Roots under Schedule I of the Gujarat Sales Tax Act, 1969Contentions of the Assessee:- The assessee argued that chicory roots should be classified as 'edible tubers' under entry 8 or as 'tubers' under entry 23 of Schedule I to the Gujarat Sales Tax Act, 1969, and thus be exempt from tax.- It was contended that chicory roots are edible tubers and should be treated similarly to fresh vegetables.Contentions of the Revenue:- The Revenue argued that the chicory roots, when sliced, dried, and graded, do not qualify as 'fresh vegetables' or 'edible tubers' under entry 8 or entry 23.- The chicory roots' primary use as a coffee blend ingredient, after processing, disqualifies them from being considered under these entries.Tribunal's Observations:- The Tribunal concluded that the association of 'fresh vegetables' with 'edible tubers' implies that dried chicory roots do not fit within this category.- Similarly, for entry 23, the Tribunal noted that the tubers should be capable of germinating, which is not the case with processed chicory roots.Court's Analysis:- The Court referred to the doctrine of popular parlance, emphasizing the common understanding of terms in fiscal statutes over scientific or technical definitions.- The Court cited several precedents, including Ramavatar Budhaiprasad v. Assistant Sales Tax Officer and Commissioner of Sales Tax v. Jaswant Singh Charan Singh, supporting the principle that the popular meaning should prevail.- Applying this principle, the Court agreed with the Tribunal that dried chicory roots do not qualify as 'edible tubers' or 'tubers' under the specified entries.Issue 2: Nature of the Agreement between the Assessee and FarmersContentions of the Assessee:- The assessee argued that the agreement with farmers was a works contract, not a sale and purchase agreement.- It was contended that the property in chicory roots remained with the company from the beginning, making it a works contract.Contentions of the Revenue:- The Revenue argued that the agreement clearly indicated a sale and purchase transaction.- The form and terms of the agreement, including clauses about delivery, standards, and rejection rights, pointed towards a sale and purchase agreement.Tribunal's Observations:- The Tribunal analyzed the agreement's clauses and concluded that the transaction was for the sale and purchase of dried chicory roots.- The Tribunal noted that the company's rights to reject substandard goods and claim damages were indicative of a sale and purchase agreement.Court's Analysis:- The Court examined the agreement, noting that the company's right to reject goods and the obligation of farmers to deliver chicory roots as per specified standards indicated a sale and purchase transaction.- The Court emphasized that the intent and form of the agreement, along with the unilateral rights reserved by the company, supported the conclusion that it was a sale and purchase agreement.- The Court referred to the Supreme Court's decision in State of Gujarat v. Variety Body Builders, which highlighted the importance of the contract's main object in determining its nature.- The Court concluded that the agreement's main object was the transfer of property in goods, making it a sale and purchase agreement rather than a works contract.Conclusion:Both questions were answered in the affirmative, against the assessee and in favor of the Revenue. The chicory roots were not covered under entry 8 or entry 23 of Schedule I, and the agreement between the applicant and the farmers was a sale and purchase agreement, not a works contract.
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