TaxTMI 
TaxTMI 
TaxTMI 
1995 (12) TMI 295
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....ocate (S. Ganesh and K.J. John, Advocates, with him), for the appellants in C.A. Nos. 5626 to 5662 of 1985, 2371 and 2372 of 1991 and 5535 of 1995. N. Sudhakaran, Advocate, for the intervener in C.A. No. 4212 of 1992. A.K. Ganguli, Senior Adovcate (Ms. Aruna Mathur, Ajay Kapur and A. Mariarputham, Advocates for Arputham, Aruna & Co., Advocates, with him), for the respondent (State of Tamil Nadu) in C.A. Nos. 5626 to 5662 of 1985. M. Veerappa, Advocate, for the respondent (State of Karnataka) in C.A. Nos. 2371 and 2372 of 1991. S. Ganesh, T.V.S.N. Chari and Mukul Nayyar, Advocates, for the intervener in C.A. Nos. 5626 to 5662 of 1985. P.S. Poti, Senior Advocate (S. Prasad, Kumar Parimal, M.K.D. Namboodiri and S. Balakrishnan, Advocates, with him), for the appellant in C.A. No. 4212 of 1992. T.L. Viswanatha Iyer, Senior Advocate (M.T. George, Advocate, with him), for the respondent (State of Kerala) in C.A. No. 4212 of 1992. -------------------------------------------------- The judgment of the Court was delivered by SUHAS C. SEN, J.- The Central Sales Tax Act, 1956 (for short, "the Act"), was amended by insertio....
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....nd article 286(1) of the Constitution is misconceived. Under article 286(1), the court has to examine whether any tax is being imposed by the State Legislature on the sale or purchase of goods "in the course of the import of the goods into or export of the goods out of the territory of India". In order to resist imposition of sales tax by the State, the assessee will have to establish the identity of the goods purchased with the goods to be exported out of the territory of India. In order to fulfil an export obligation, if an exporter purchases goods and as a result of some processing, the identity and character of the goods change, then it will not be a case of export of the same goods. There is no dispute that every change does not bring into existence new goods nor can it be said that however small the change may be due to the processing, the identity of the goods will be completely lost. It is a question of fact and degree. But the point to note is that the issue before the Supreme Court in Shanmugha Vilas case [1953] 4 STC 205; [1954] SCR 53 and the issue that has been raised in the present case are the same. Therefore, it will be wrong to distinguish the judgment of the Supre....
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....ion 5 of the Central Sales Tax Act was wider than article 286 of the Constitution. It is true that sub-section (3) by a legal fiction has widened the scope of export sale, but the basic concept remains the same. In order to get immunity from taxation by the State Legislature, the goods exported must be the same goods which were purchased. The question raised in these appeals is whether the purchase of raw goods made by the appellants after which the cashew kernels were extracted and exported to foreign countries could be subjected to the State Sales Tax Act in view of the provisions of section 5(3) of the Central Sales Tax Act. In other words, the question is whether the export of cashew kernels obtained out of raw cashew- nuts would amount to export of "those goods which had been purchased". The answer will depend on the nature of the cashew kernels that are exported and the raw cashew purchased by the dealers. This aspect of the matter was gone into in depth in Shanmugha Vilas case [1953] 4 STC 205 (SC); [1954] SCR 53 by S.R. Das, J. (as he then was). It has been recorded in the judgment of Das, J., that the case was heard at great length and over several days and ultimately th....
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....espondents in the sense that a jute mill consumes raw jute, or a textile mill consumes cotton and yarn. The raw cashews not being actually exported the purchase of raw cashews cannot be said to have been made 'in the course of' export so as to be entitled to immunity under clause (1)(b)." It was argued, and some of the High Courts have also taken the view, that this judgment is confined to the facts of this case. But this, in our opinion, will be a wrong view to take. By that judgment as many as eight appeals were disposed of. The High Court on remand had made a report on how the edible kernels are extracted from raw cashew-nuts and having examined minutely the whole process, the court came to the conclusion that the kernels were not the same goods as raw cashew-nuts purchased by the dealers. What was exported were the edible kernels and what was purchased for the purpose of export were raw cashew-nuts. This Court has taken the view that after examining the facts in detail the final products were not the same goods as raw cashew-nuts. It may be mentioned that Patanjali Sastri, C.J., speaking for the majority, was also of the view that raw cashew-nuts and kernels manufactured out ....
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....aterials before the departmental authorities and the court held that it continued to be oil and was nothing more. The court took the view: ".........No doubt, several oils are normally viscous fluids, but they do harden and assume semi-solid condition on the lowering of the temperature. Though groundnut oil is, at normal temperature, a viscous liquid, it assumes a semi-solid condition if kept for a long enough time in a refrigerator. It is therefore not correct to say that a liquid state is an essential characteristic of a vegetable oil and that if the oil is not liquid, it ceases to be oil. Mowrah oil and Dhup oil are instances where vegetable oils assume a semi-solid state even at normal temperatures. Neither these, nor coconut oil which hardens naturally on even a slight fall in temperature, could be denied the name of oils because of their not being liquid. Other fats like ghee are instances where the physical state does not determine the identity of the commodity. ....................... Both the Tribunal as well as the High Court have pointed out that except for its keeping quality without rancidity and ease of packing and transport without leakage, hydrogenated oi....
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....n that case that there was no essential difference between pineapple fruit and canned slices. It was held that clause (a) of section 5A(1) truly spoke of goods consumed in the manufacture of other goods for sale. This Court merely held that if pineapple is sliced and made ready for sale in the market, the slices did not lose the character of being pineapple. There again it was a case of a fruit which was merely sliced and made ready for sale by adding preservatives and by canning. This case also does not in any way affect the principles laid down in the case of Shanmugha Vilas [1953] 4 STC 205 (SC); [1954] SCR 53. Furthermore, in that case, the problem was construction of the word "consume " in section 5A(1)(a) of the Kerala General Sales Tax Act. In the case of Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan [1980] 46 STC 256, it was held by this Court that "rayon tyre-cord fabric" was "rayon fabric". It was observed by Pathak, J. (as his Lordship then was), that "it was fairly well-settled that the words or expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. It is they who are concerned with it and it ....