Commercial sense test governs tax classification of processed chicory roots; agreement for processed supply was treated as a sale contract.

Dried, sliced, sized and graded chicory roots meant for powder and coffee blending were held outside the Gujarat Sales Tax Act entries for edible tubers and other exempt tubers because classification depends on the popular or commercial sense of the commodity, not its botanical description. The article also states that an agreement to buy chicory roots after harvesting, processing and grading to specification, with rejection and damages clauses, was a contract of sale and purchase. Its dominant object was transfer of goods as chattels, while the property clause functioned only as a security mechanism, not a works contract.

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Issues: (i) Whether dried chicory roots purchased by the assessee fell within entry 8 or entry 23 of Schedule I to the Gujarat Sales Tax Act, 1969 as edible tubers or tubers exempt from tax; (ii) Whether the agreement between the assessee and the growers was a works contract or a contract of sale and purchase.

Issue (i): Whether dried chicory roots purchased by the assessee fell within entry 8 or entry 23 of Schedule I to the Gujarat Sales Tax Act, 1969 as edible tubers or tubers exempt from tax.

Analysis: The relevant entries exempted fresh vegetables and edible tubers, and also bulbs, tubers and plants other than orchids. The commodity contracted for was not untreated chicory root, but dried, sliced, sized and graded chicory roots meant for use in powder form and blending with coffee. Applying the popular parlance or commercial sense test, the expression "edible tubers" could not be extended to such processed dried chicory roots, nor could they be treated as tubers fit for growing fresh plants. The ordinary understanding of the commodity in the market and the purpose for which it was supplied were decisive.

Conclusion: The dried chicory roots did not fall within entry 8 or entry 23 and were not exempt from tax.

Issue (ii): Whether the agreement between the assessee and the growers was a works contract or a contract of sale and purchase.

Analysis: The agreement, read as a whole, showed that the company agreed to buy the chicory roots after they were harvested, washed, sliced, dried and graded to its specifications, with power to reject substandard produce and claim damages. The property clause operated only as a security arrangement to ensure exclusive supply and delivery, not as an immediate transfer of ownership in the goods during cultivation. The dominant object of the arrangement was transfer of dried chicory roots as a chattel to the company, not rendition of work and labour for a stipulated consideration. On the form and the substance of the document, the transaction bore the character of sale and purchase.

Conclusion: The agreement was not a works contract but a contract of sale and purchase.

Final Conclusion: Both questions were answered against the assessee and in favour of the Revenue, leaving the assessment orders undisturbed.

Ratio Decidendi: For classification under a taxing entry, the commodity must be understood in its popular or commercial sense, and the true nature of a written arrangement must be determined from its covenants and dominant object, not from labels or isolated clauses.

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