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PETITIONER: COMMISSIONER OF SALES TAX, MADHYA PRADESH

       Vs.

RESPONDENT: M/S POPULAR TRADING COMPANY, UJJAIN

DATE OF JUDGMENT:       05/04/2000

BENCH: S.N.Phukan, S.R.Babu

JUDGMENT:

     RAJENDRA BABU, J.  :

     For  the  assessment periods 1978-79 and  1979-80  the Sales  Tax Officer assessed the respondent under the  Madhya Pradesh Sthaniya Kshetra Me Mal Ke Prvesh Par Kar Adhiniyam, 1976,  that  is, an Act to levy a tax on the entry of  goods into  a local area in Madhya Pradesh for consumption, use or sale  therein  [hereinafter referred to as ‘the Act’].   The respondent  is a dealer in coconuts.  Apart from oil he  was assessed  to  entry tax on ‘watery coconuts’ under the  Act. The  assessee  claimed  in  the   appeal  that  ‘copra’  and ‘coconut’  are  commercially two different  commodities  and ‘watery  coconut’  is  not liable to payment to  entry  tax. However,  the appellate authority rejected this claim.   The matter  was  carried  in  second   appeal  to  the  Tribunal unsuccessfully.   Thereafter, the respondent questioned  the correctness  of  the  orders of the Tribunal and  the  other authorities   before  the  High   Court.   The  High   Court considered  the  Entry  at  item   No.   5  which  reads  as "Oilseeds,  that  is  to  say -  (viii)  Coconut  (i.e.Copra excluding tender coconuts)(Cocos Nucifera)".  The High Court took  the  view that ‘tender coconut’ is not subject to  tax and  falls outside the scope of entry referred to above  and does  not  specifically contain ‘watery coconut’;  that  the word ‘copra’ clarifies that ‘watery coconut’ is not shown to be a taxable item.  The High Court relied upon a decision of this Court in Sri Siddhi Vinayaka Coconut & Co.  & Ors.  vs. State  of  Andhra Pradesh & Ors., 1974 (4) SCC 835, to  hold that  ‘watery  coconut’ and ‘dry coconuts’ are two  distinct commodities.   The High Court also stated that every seed or article  which can yield oil is not an oil seed and  adopted the  test  as to whether ‘coconut’ is ‘copra’.  Inasmuch  as ‘watery  coconut’ cannot be classified as ‘copra’, the  High Court  took the view that it is not sufficient to show  that ‘watery  coconut’  is liable to be taxed but the  Department was  liable  to  show that ‘watery coconut’ was  in  reality ‘copra’ and, therefore, liable to tax.  The Tribunal was not justified  in  holding that ‘watery coconut’ was not  exempt from payment of entry tax in terms of the aforesaid entry.

     The learned counsel for the appellant very strenuously contended  that the High Court had overlooked the essence of the  matter, namely, what is brought to tax under Entry 5 is an ‘oil seed’ and ‘coconut’ of all descriptions except those

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which   are  not  covered   therein.   The  learned  counsel submitted  that ‘watery coconut’ undergoes a natural process of  ripening  to a coconut and thereafter it ceases to be  a ‘tender  coconut’  and so includes both dehusked coconut  or coconut  without husk and while dehusked coconut is known as ‘copra’,  coconut  with husk is known as  ‘watery  coconut’. She, therefore, submitted that ‘watery coconut’ falls within the scope of Entry 5 to attract tax.

     The view taken by the High Court in this case has lost sight  of the expression in the opening clause of the  entry ‘Oilseeds, that is to say’.  The phrase ‘that is to say’ has been  the subject matter of interpretation by this Court  in State  of  Tamil Nadu vs.  Pyarelal Malhotra, 1976 (37)  STC 311.   The  expression  ‘that  is to  say’  is  descriptive, enumerative  and  exhaustive  and circumscribes to  a  great extent  the scope of the entry.  The entry provides for ‘Oil seeds,  that  is  to say coconut’, which again  says,  ‘i.e. Copra  and  coconut including any other commodity.’  An  oil seed  botanically means a seed which is a flowering  plants’ unit  of  reproduction  or germ capable of  developing  into another  such  plant.   Seed which can yield oil is  an  oil seed.   If  a seed by reason of application of a  scientific method  produces oil is not necessarily understood to be  an ‘oil  seed’ in a common parlance.  If a commodity  possesses all  the qualities of an oil seed it cannot be excluded from the  ambit  of the expression ‘oil seed’.  Oil is  generally extracted  from dry coconuts, but in some parts of India  it is  extracted even from copra recovered from fresh coconuts. Copra  of watery coconut before it dries up may not yield as much  oil as dried copra.  The oil which it yields may  also contain  some  watery substance which have to be  eliminated for the purpose of recovering pure coconut oil.  At the same time,  it  yields sufficient quantity of oil.  Thus  ‘watery coconut’  while  yielding oil merely because it yields  some watery  substance  does not cease to be an ‘oil  seed’  and, therefore, it falls within the entry.

     In  this  context, it is necessary for us to refer  to the  decision of this Court in Sri Siddhi Vinayaka Coconut & Co.   & Ors.  vs.  State of Andhra Pradesh & Ors (supra)  on which strong reliance has been placed by the High Court.  In that  case  this  Court  was concerned  with  the  entry  as contained  in the Andhra Pradesh General Sales Tax Act.  The entry  therein  merely  contained ‘coconuts’  in  the  Third Schedule  and ‘tender coconuts’ in the Fourth Schedule which are  useful  only for drying purposes which was exempt  from tax.   An  Explanation  was added to the Third  Schedule  to state  that  the expression ‘coconuts’ would mean  fresh  or dried  coconuts,  shelled or unshelled including copra,  but excluding  tender  coconuts.   Again  by  another  amendment another  Explanation was added to state that the  expression ‘coconuts’  in  the  Schedule  would  mean  dried  coconuts, shelled  or unshelled, including copra but excluding  tender coconuts.   Thus this Court was concerned in that case  with two sets of entries - one contained in the Central Sales Tax Act,  which  is similar to the provisions with which we  are concerned  in  the present case, and the other as stated  in the  Third and Fourth Schedule to the Andhra Pradesh General Sales  Tax Act.  In that context, this Court had to consider whether  a  ‘watery  coconut’  could  be  taxed  within  the permissible  restrictions  as  also   ‘dried  coconut’  that resulted from the drying of the same watery coconut.  It was contended  that  under  the  State  statute  though  ‘watery coconut’  and ‘dried coconut’ were treated separately  there

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is a provision for refund when ‘watery coconut’ had suffered tax  became ‘dried coconut’.  In that context that  decision was  rendered  and we are concerned with different  kind  of entry for tax.

     This  Court  in  Ganpat  Lal Lakhotia  vs.   State  of Rajasthan  &  Ors., 1997 (10) SCC 455, quoted with  approval what  was stated in Sri Krishna Coconut Co.  vs.  CTO,  1965 (16) STC 511 (AP), wherein it was stated as follows :- "In a tender  coconut,  the kernel is hardly formed or is only  in the  initial  stages of formation.  In a dried  coconut  the kernel  has formed and fully developed and further the water inside the coconut has dried up leading to the drying of the kernel   also.    But  a  fully   grown   coconut   with   a well-developed  kernel which contains water cannot be called either  a tender or a dried coconut.  This is the well-known variety  of  coconuts  used  for culinary  purposes  and  on auspicious occasions and as part of the offerings in temple. I  do not think it is correct or reasonable to describe this class of coconuts as either dried or tender."

     It  was noticed therein that a ‘watery coconut’ in due course becomes ‘dried coconut’ or ‘copra’ and, therefore, it could  not be stated that ‘watery coconuts’ are outside  the scope  of the entry.  If for purpose of the benefit  arising under Section 14 of the Central Sales Tax Act, which was the subject  matter  of consideration before this Court, it  has taken  the  view that the ‘watery coconuts’ are not  outside the scope of the said provision.

     There is no reason to state that the ‘watery coconuts’ in  the present cases fall outside the scope of the Act.  In the light of this analysis, we are of the view that the High Court  was not justified in holding that ‘watery coconut’ is not  taxable  under the relevant entry of the Act.   In  the result,  we  set aside the order made by the High Court  and restore that of the Tribunal.  However, in the circumstances of the case, there shall be no orders as to costs.