1988 (9) TMI 52 - SC - VAT / Sales Tax

Tobacco seeds severed from plant are not 'tobacco' and excluded from sales tax exemption; appeals dismissed

SC held that tobacco seeds, once severed from the plant, do not fall within the statutory definition of 'tobacco' or 'any form of tobacco' and therefore ... Interpretation of the Term 'Tobacco' - Whether tobacco seed oil and tobacco seed cake are entitled to exemption under the Andhra Pradesh General Sales Tax Act, 1957? - Held that:- It is quite clear that tobacco seeds do not fall within the second or inclusive part of the definition. This part of the definition is important. It specifically excludes from the definition any part of the tobacco plant so long as it is still attached to the earth. It makes mention only of parts of the plant after it is severed from the earth. It is common knowledge that when a plant is severed from the earth, its parts will comprise of not only the leaves, stalks and stems but also the seeds. Yet the inclusive part of the definition enumerates only the leaves, stalks and stems and, deliberately one should think, avoids mention of seeds. The present definition, when it says that tobacco means any form of tobacco lays emphasis that the item under consideration should be tobacco in form. The leaves, stalks and stems, even after drying, curing and other processes and even 'manufacture' retain the form of tobacco, as understood in common parlance. But it is otherwise with the seeds. They are not tobacco in form. They do not have the properties of tobacco. They are not used to exploit the narcotic qualities of tobacco. Apart from their use for seeding purposes, the seeds are only used for the manufacture of oil and cake. We are told that the oil is used as an ingredient in the manufacture of scents and the cake as manure. Having regard to all this, we agree with the High Court that tobacco seed once it is separated from the plant, is an item entirely different from tobacco and does not fall within the expression 'tobacco or any form of tobacco'. Thus we affirm the view taken by the High Court and dismiss these appeals Issues Involved:1. Whether tobacco seed oil and tobacco seed cake are entitled to exemption under the Andhra Pradesh General Sales Tax Act, 1957.2. Interpretation of the term 'tobacco' under the Andhra Pradesh General Sales Tax Act and related statutes.Issue-wise Detailed Analysis:1. Exemption under the Andhra Pradesh General Sales Tax Act, 1957:The primary issue is whether tobacco seed oil and tobacco seed cake qualify for exemption under Section 8 of the Andhra Pradesh General Sales Tax Act, 1957. Section 8 provides an exemption from sales tax for goods specified in the Fourth Schedule, which includes 'tobacco and all its products.' However, the Andhra Pradesh High Court had previously ruled in Amara Purushotham Mamidi Obaian & Co. v. State of AP (1962) that tobacco seeds, once detached from the plant, do not constitute 'tobacco' and thus do not qualify for exemption. The High Court's decision emphasized that products manufactured from tobacco seeds, such as oil and cake, are distinct from tobacco itself.2. Interpretation of the Term 'Tobacco':The definition of 'tobacco' was further scrutinized in light of the Amendment Act 9 of 1970, which modified the Fourth Schedule by removing the words 'and all its products' from the entry for tobacco. An explanation added to the Fourth Schedule referred to the definitions in the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Central Act 58 of 1957), which in turn referred to the definitions in the Central Excises and Salt Act, 1944. Under the 1944 Act, 'tobacco' includes 'any form of tobacco, whether cured or uncured and whether manufactured or not,' but explicitly excludes any part of the tobacco plant still attached to the earth.The Division Bench of the Andhra Pradesh High Court in 1977 reaffirmed that tobacco seeds do not fall within the definition of 'tobacco' as per the 1944 Act. Consequently, tobacco seed oil and tobacco seed cake are also not considered 'tobacco' for the purposes of exemption under the Andhra Pradesh General Sales Tax Act.Conclusion:The Supreme Court agreed with the High Court's interpretation that the definition of 'tobacco' is exhaustive, covering only the leaves, stalks, and stems of the tobacco plant once detached from the earth, but not the seeds. The seeds, and by extension the oil and cake derived from them, do not fall within the definition of 'tobacco' and thus are not eligible for exemption under the Andhra Pradesh General Sales Tax Act. The Court also noted that the legislative intent was to exclude these items from the exemption, as evidenced by the amendment removing the reference to 'all products of tobacco.'Final Judgment:The appeals and petitions were dismissed, affirming the High Court's view that tobacco seed oil and tobacco seed cake do not qualify for exemption under the Andhra Pradesh General Sales Tax Act. No orders were made as to costs.