Poppy seed turnover exemption denied tax treatment as importer or manufacturer where goods were bought from farmers, not imported

The turnover of poppy seeds was held exempt because the assessee did not fall within the statutory meanings of either importer or manufacturer. Under the relevant definitions, an importer was the dealer making the first sale after import into the State, while manufacture covered producing, making, collecting, extracting, altering or otherwise processing goods. The Tribunal found that the poppy seeds were purchased from farmers and were not imported by the assessee. It also found that the collection activity was carried out by the farmers, not by the assessee. On those findings, the turnover was wrongly subjected to tax and exemption applied.

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Issues: (i) Whether the assessee was liable to tax on the turnover of poppy seeds, or entitled to exemption on the footing that it was neither an importer nor a manufacturer under the Act.

Analysis: The relevant definitions treated an importer as the dealer making the first sale after import into the State, and manufacture as producing, making, collecting, extracting, altering or otherwise processing goods. The Tribunal's own finding was that the poppy seeds were purchased from farmers and were not imported by the assessee. On that finding, the assessee could not be treated as an importer. The assessee also could not be treated as a manufacturer, because the collection was done by the farmers and not by the assessee.

Conclusion: The turnover of poppy seeds was wrongly subjected to tax and the assessee was entitled to exemption on that turnover.

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