Slaughter tapping arrangement treated as taxable sale of latex, not a mere licence or profit a prendre.

Slaughter tapping arrangements can constitute a taxable sale where the agreement authorises a third party to tap rubber trees, appropriate the latex, and pay consideration for the latex obtained. The absence of any contractual provision dealing with the latex after expiry of the licence period supported transfer of property in the latex, rather than a mere licence or profit a prendre. Applying the statutory definitions of agriculturist and turnover under the Kerala Value Added Tax Act, 2003, a company holding rubber plantations was denied the agriculturist benefit. The demand under the Act was therefore upheld as the transaction was treated as sale turnover.

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Issues: Whether the consideration received under the slaughter tapping arrangement was taxable under the Kerala Value Added Tax Act, 2003 as sale turnover, or whether the arrangement was merely a licence or profit a prendre carrying no sales tax liability.

Analysis: The agreement authorised the third party to tap the rubber trees and appropriate the latex, and the consideration was paid for the latex obtained, not merely for a bare right to collect it. The absence of any contractual provision dealing with the latex after expiry of the licence period supported the view that the transaction involved transfer of property in the latex to the third party. The statutory definitions of agriculturist and turnover under the Kerala Value Added Tax Act, 2003 were also relied on to hold that a company holding rubber plantations did not get the benefit available to an agriculturist.

Conclusion: The arrangement was held to be a taxable sale of latex and not a mere grant of licence or profit a prendre, and the demand under the Kerala Value Added Tax Act, 2003 was upheld against the assessee.

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