ASSISTANT COMMERCIAL TAXES OFFICER AJMER Vs. SHANKER NAMKIN BHANDAR

JUDGEMENT

(1.) THIS is a revision under section 15 of the Rajasthan Sales Tax Act, 1964 (hereinafter referred to as "the Act") as amended by the Rajasthan Sales Tax (Amendment) Act, 1984. The following two questions arise for consideration in this revision : " 1. Whether, under the facts and circumstances of the case, the assessee is entitled for exemption under Notification No. F. 5 (31)FD/ct/72-16 dated 28th July, 1972 although he has employed servants for preparation of namkins, etc. 2. Whether, under the facts and circumstances of the case, the fried and salted groundnut remains the same commodity, i. e. , oil-seed. "

(2.) THE non-applicant, M/s. Shanker Namkin Bhandar (hereinafter referred to as "the assessee") is a partnership firm and owns a Namkin Bhandar. By notification dated 28th July, 1972, issued in pursuance of the third proviso to sub-section (1) of section 3 of the Act the State Government prescribed that for the purpose of clause (c) of sub-section (1) of section 3 the limit in respect of dealers dealing exclusively in deshi-sweetmeats and namkins prepared by themselves shall be Rs. 50,000. In relation to the assessment year 1973-74, it was claimed that the assessee was not liable to be assessed for the sales tax for the reason that the turnover of the assessee was less than Rs. 50,000 and that the namkins sold by the assessee were prepared by the assessee. In respect of the assessment year 1974-75, the assessee claimed exemption from the sales tax on the ground that salted and fried groundnuts sold by the assessee were oil-seeds which were exempt from tax and turnover in respect of sales of salted and fried groundnuts by the assessee could not be taxed. THE assessing authority held that the namkin products sold by the assessee were prepared by the servants and employees of the assessee and not by the assessee personally and the assessee was not entitled to claim exemption from tax under notification dated 28th July, 1972. THE assessing authority also held that salted and fried groundnuts could not be regarded as oil-seeds, since on frying the character of groundnut was changed completely. On appeal the Deputy Commissioner upheld the findings of the assessing authority on both these issues. THE single Member of the Board of Revenue, in revision accepted the revision and held that the turnover of the assessee for the year 1973-74 could not be taxed in view of the notification dated 28th July, 1972. THE learned Member of the Board of Revenue also held that the oil-seeds as defined in the notification dated 9th March, 1960 are not confined to groundnuts when used as oil-seeds but cover groundnuts in whatever form they may be available and that groundnut after having been fried and salted does not loose its original character and, therefore, sales of salted and fried groundnuts could not be taxed. THE said view of the learned single Member was affirmed by the Division Bench of the Board of Revenue in Special Appeal. THE learned Members constituting the Division Bench of the Board of Revenue held that halvais normally deal in a wide range of products and considering the physical constraints, cooking schedule, business routine, sitting hours and other relevant factors, it is difficult to conceive of a situation where a halvai can personally prepare all the products before sitting at the sale counter and that some help is required for the various operations involved and that the word "prepared" in the notification dated 28th July, 1972 does not mean cooked or prepared personally. THE learned Members of the Board of Revenue were also of the view that groundnut is a rich source of edible oil and being an oil-seed it enjoys the benefit of tax exemption at par with other oil-seeds and that by the process of frying flavour of groundnut seed naturally changes but unless the relevant entry is specifically amended to exclude such varieties of groundnuts from the category of oil-seeds it will be difficult to withhold the benefit of tax exemption. Feeling aggrieved by the said decision of the Division Bench of the Board of Revenue the applicant filed a reference application under section 15 (1) of the Act as it stood at the relevant time and the Board of Revenue referred the two questions mentioned above for the opinion of this Court. THE said reference is now being treated and disposed as a revision in view of the provisions contained in section 13 (10) of the Rajasthan Sales Tax (Amendment) Act, 1984.

(3.) IN Dewan Chand Chaman Lal v. State of Punjab [1977] 39 STC 75, a Division Bench of the Punjab and Haryana High Court was required to deal with the question whether parched groundnuts could be considered as oil-seeds. The learned Judges observed that in order to qualify as parched groundnuts, groundnuts are subjected to a mechanical process resulting in loss of considerable moisture and some volatile oil. Raw groundnuts which are not generally eaten as such are made edible for direct consumption by parching and even the taste is a little different and the price is much higher, and that no one would dream of using parched groundnuts for extracting oil. The learned Judges have held that parched groundnuts were not known in common parlance as oil-seeds used principally for the extraction of oil and, therefore, parched groundnuts did not fall within the expression "oil-seeds".