1991 (8) TMI 311 - HC - VAT and Sales Tax

Court rules flour not 'wheat' under CST Act, tax notification valid.

Rajasthan Roller Flour Mills Association Versus State of Rajasthan

Rajasthan Roller Flour Mills Association Versus State of Rajasthan - [1993] 90 STC 132 (Raj) Issues Involved:1. Whether flour and fine-flour (maida and suji) are considered 'wheat' under Section 14(i)(iii) of the CST Act.2. Whether the notification dated June 27, 1990, contravenes the provisions of Sections 14 and 15 of the CST Act.3. Whether the imposition of tax on flour and fine-flour amounts to double taxation on declared goods.Issue-wise Detailed Analysis:1. Whether flour and fine-flour (maida and suji) are considered 'wheat' under Section 14(i)(iii) of the CST Act:The petitioners contended that flour and fine-flour are merely forms of wheat and should be considered declared goods under Section 14(i)(iii) of the CST Act. They relied on the case of Dhanbad Flour Mills v. State of Bihar, where it was held that atta, maida, and suji are included in the term 'wheat' under Section 14(i)(iii) of the CST Act. The court examined the case of Alladi Venkateswarlu v. Government of Andhra Pradesh, which dealt with the term 'rice' and concluded that parched rice and puffed rice are still considered rice. However, the court found that this case did not directly address whether flour and fine-flour are declared goods under Section 14 of the CST Act.The court referred to various cases, including the Karnataka High Court's decision in New Swastik Flour Mills, which held that atta, maida, and suji are not different from wheat and should be considered declared goods. However, the court noted that in taxing matters, a common-sense view must be taken, and the terms should be understood in their commercial sense. The court concluded that flour and fine-flour are different commodities from wheat in physical appearance and commercial identity.2. Whether the notification dated June 27, 1990, contravenes the provisions of Sections 14 and 15 of the CST Act:The petitioners challenged the notification dated June 27, 1990, which imposed a tax on flour and fine-flour, arguing that it violated Sections 14 and 15 of the CST Act. Section 14 of the CST Act declares certain goods to be of special importance in inter-State trade or commerce, and Section 15 imposes restrictions on the tax rates and stages of levy for these goods. The court examined the language of Section 14 and noted that the term 'wheat' does not include 'in all its forms,' unlike other entries in the section. The court concluded that the Legislature intended to declare only wheat in its original form as declared goods, and not its forms like flour and fine-flour.3. Whether the imposition of tax on flour and fine-flour amounts to double taxation on declared goods:The petitioners argued that taxing flour and fine-flour amounts to double taxation on declared goods, as wheat has already been taxed. The court referred to the principle that a commodity's identity must be considered in its commercial sense. The court found that flour and fine-flour have different identities from wheat and are not considered the same commodity. Therefore, taxing these forms does not amount to double taxation on declared goods.Conclusion:The court concluded that flour, fine-flour (atta, maida, and suji) are not included in the term 'wheat' under Section 14(i)(iii) of the CST Act. Consequently, the restrictions imposed under Section 15 of the CST Act do not apply to these commodities. The notification dated June 27, 1990, does not contravene the provisions of Sections 14 and 15 of the CST Act. The writ petitions were dismissed with no order as to costs.