Modified sugarcane seedlings lost exemption and were treated as taxable because their commercial use had changed.

Sugarcane exempt under the Andhra Pradesh General Sales Tax Act did not retain that exempt status when the assessee cut it into smaller pieces and supplied it to members as seedlings for cultivation rather than for juice extraction. The changed form and distinct commercial use meant the goods were no longer treated as exempt sugarcane, and the turnover was liable to sales tax as unclassified goods. The stated principle is that a commodity may lose exemption when its modified form is supplied for a different commercial purpose, with taxability then falling under the general charging provision.

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Issues: Whether sugarcane seedlings supplied by the assessee to its members retained the exempt character of sugarcane under the Andhra Pradesh General Sales Tax Act, 1957, or became taxable unclassified goods.

Analysis: Sugarcane is exempt under section 8 of the Andhra Pradesh General Sales Tax Act, 1957 as an item in the Fourth Schedule. The material showed that the assessee cut sugarcane into smaller pieces and supplied them to members as seedlings for cultivation, not for extraction of juice. In that form and for that purpose, the goods could not be treated as the exempt commodity of sugarcane. The Tribunal had correctly applied the governing principle that the changed commercial use and character of the article determined its taxability.

Conclusion: The sugarcane seedlings were not exempt sugarcane and were liable to sales tax.

Final Conclusion: The revision failed and the assessment treating the turnover from sugarcane seedlings as taxable was upheld.

Ratio Decidendi: When a commodity exempt in its original form is supplied in a modified form for a distinct commercial use, it may lose the benefit of exemption and be taxable under the general charging provision.

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