Court rules baby fish as fresh fish exempt from sales tax under Kerala Sales Tax Act 1963

The court ruled in favor of the respondent, holding that baby fish should be considered fresh fish falling under entry 18 of the Kerala General Sales Tax Act, 1963, and therefore exempt from sales tax. The court emphasized that the Legislature likely did not intend to tax baby fish sold to fish farms, citing exemptions for marine products and nursery plants in other entries of the Act. The decision to dismiss the tax revision cases affirmed that fish, including baby fish, are covered under the exemption provided in entry 18 of the Third Schedule to the Act.

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Issues:
Whether baby fish is entitled to exemption from sales tax under entry 18 of the Third Schedule to the Kerala General Sales Tax Act, 1963.

Analysis:
The court deliberated on the issue of whether baby fish should be exempt from sales tax under entry 18 of the Third Schedule to the Kerala General Sales Tax Act, 1963, which provides exemption for "dried fish and fresh fish." The respondent, engaged in selling baby fish to fish farms, argued that baby fish should be considered fresh fish and hence entitled to the exemption. The assessing officer, however, contended that since baby fish is not used as food, it should be assessed under the residuary entry of the First Schedule. The first appellate authority ruled in favor of the respondent, stating that baby fish should be considered fresh fish falling under entry 18 and therefore exempt from tax, a decision upheld by the Tribunal.

The Special Government Pleader representing the State argued that dried fish and fresh fish under entry 18 are typically food commodities, emphasizing that baby fish, due to its small size, is not suitable for human consumption and should not be exempt. Conversely, the respondent's counsel contended that all types of fish, regardless of size, should be covered under entry 18 and thus exempt from sales tax. The court acknowledged the general treatment of fish as a food commodity under entry 18 but highlighted that the Legislature likely did not intend to tax baby fish sold to fish farms for multiple reasons.

The court noted that entry 37 of the Third Schedule exempts marine products like prawns and lobsters without specifying that the exemption is only for consumption purposes. Additionally, entry 39 provides exemptions for nursery plants and seeds, indicating the Legislature's intent to encourage cultivation. The absence of any provision in the Act to tax non-food fish like ornamental fish further supported the view that fish in all forms, including baby fish, should fall under entry 18. Consequently, the court dismissed the tax revision cases, affirming that fish, regardless of form, are covered under the exemption provided in entry 18 of the Third Schedule to the Act.

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