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1990 DIGILAW 598 (KAR)

A. S. YALAGI v. STATE OF KARNATAKA.

1990-10-24

K.B.NAVADGI, M.P.CHANDRAKANTARAJ

body1990
JUDGMENT K. B. NAVADGI, J. - In this appeal under section 24 of the Karnataka Sales Tax Act, 1957 ("the Act"), M/s. A. S. Yalagi, a firm represented by its partner, the assessee has challenged the order dated November 10, 1986, in SMR 80/85-86 made by the Commissioner of Commercial Taxes, Karnataka, Bangalore, in exercise of his revisional jurisdiction under section 22-A of the Act. 2. We have heard the learned counsel for the assessee and the learned High Court Government Pleader for the respondent-State. We have examined the record. 3. Briefly stated, the facts relevant to dispose of the appeal are these : The assessee is a registered dealer under the Act. For the assessment year from November 16, 1982 to November 4, 1983, it filed the monthly returns along with the payment of tax in respect of its turnover relating to groundnuts and peanuts. It also filed the return for the aforesaid assessment period. Before the assessment was completed, having come to know of the amendment effected to entry 5 of the Fourth Schedule to the Act, the assessee filed a revised return for the period from April 1, 1983 to November 17, 1983 and claimed levy of tax on the purchase turnover of peanuts at 3 per cent which was the rate specified after the amendment to the said entry for that limited period. The Assistant Commissioner of Commercial Taxes, the assessing authority, negatived the plea raised by the assessee and by his order dated October 26, 1984, held that the entire turnover was liable to tax at 4 per cent as turnover relating to groundnuts. 4. Feeling aggrieved by the assessment, the assessee preferred an appeal to the Deputy Commissioner of Commercial Taxes (Appeals), Belgaum. The appellate authority by his order dated November 7, 1985, regard being had to the certificate issued by the Secretary of the Agricultural Produce Market Committee and the examination of the assessment records, held that in respect of the turnover relating to peanuts for the period from April 1, 1983 to November 17, 1983, tax was leviable at 3 per cent only. In that view of the matter, the appellate authority allowed the appeal and directed the assessing authority to issue a revised demand notice in terms of the order made in the appeal. 5. In that view of the matter, the appellate authority allowed the appeal and directed the assessing authority to issue a revised demand notice in terms of the order made in the appeal. 5. The Commissioner of Commercial Taxes after examining the records and the orders made by the assessing authority and the appellate authority in exercise of his revisional jurisdiction suo motu, felt that the order made by the appellate authority was erroneous and prejudicial to the Revenue. He, therefore, proposed to set aside the order of the appellate authority and restore that of the assessing authority and in that behalf issued a show cause notice to the assessee calling upon it to file objections, if any. 6. The assessee filed his objections on April 23, 1986. Among other things, the assessee contended that groundnuts and peanuts had been classified under one and the same entry 5 of the Fourth Schedule, subjected to the same rate, that therefore in the returns filed it was being mentioned as groundnuts, that even after the amendment of the entry with effect from April 1, 1983, splitting the entry into two parts subjecting groundnuts to the tax at 4 per cent and peanuts at the rate of 3 per cent due to want of knowledge of the amendment, it continued to mention goods in the returns as groundnuts and that it is only after the amendment effected to the entry with effect from November 18, 1983, it filed revised return and claimed lower rate legitimately due to it. It further contended that the claim allowed by the appellate authority was based on evidence and that the order made by it (the appellate authority) was correct and was not liable to be interfered with on the grounds of error and prejudicial to the interest of Revenue. Entry 5 of the Fourth Schedule to the Act, before its amendment by Act of 1983 with effect from April 1, 1983, stood as under : Groundnut including groundnut Purchase by the first Three per seeds 'peanut', coconut or earliest of the cent. (i.e., copra excluding tender successive dealers in coconuts), sesamum or til the State liable to (gingelly) seeds, kusum tax under this Act. (kardi), safflower seeds and nigar (ramatil). The tax leviable under the entry in respect of both groundnuts and peanuts was at 3 per cent. (i.e., copra excluding tender successive dealers in coconuts), sesamum or til the State liable to (gingelly) seeds, kusum tax under this Act. (kardi), safflower seeds and nigar (ramatil). The tax leviable under the entry in respect of both groundnuts and peanuts was at 3 per cent. With effect from April 1, 1983, entry 5 came to be amended splitting up the entry into two parts as 5(a) and 5(b) subjecting groundnuts to the tax at the rate of 4 per cent and peanuts at the rate of 3 per cent. The amended entry was in the force till November 17, 1983. The assessee filed monthly returns without noticing the amendment along with the payment of tax for the period during which the amendment was in force at 4 per cent. After it came to know of the amendment, it filed a revised return claiming levy of lower rate of tax in respect of the turnover relating to peanuts. 7. Entry 5 was amended by Act 10 of 1983 with effect from April 1, 1983. The amended entry reads as under : "5(a) Groundnut including groundnut seeds - (i) purchased within Purchase by the first or Four per Karnataka earliest of the successive cent dealers in the State liable to tax under this Act. (ii) obtained from Sale by the first or earliest Four per outside Karnataka of the successive dealers in cent the State liable to tax under this Act. (b) Peanuts, coconuts Purchase by the first or Three (i.e.), copra excluding earliest of the successive per cent tender coconuts .... dealers in the State liable to tax under this Act. Again, the entry suffered amendment by Act 23 of 1983 and the entry relevant for our present purpose, as amended with effect from November 18, 1983, reads as follows : "5(a) Groundnut or peanut including groundnut or peanut seeds - (i) purchased within Purchase by the first Four Karnataka or earliest of the per successive dealers in cent the State liable to tax under this Act. (ii) obtained from Sale by the first or Four outside Karnataka earliest of the per successive dealers in cent the State liable to tax under this Act. 8. Thus under entry 5 as it stood before April 1, 1983, groundnuts and peanuts purchased by the first/earliest of the successive dealers were liable to tax at 3 per cent. (ii) obtained from Sale by the first or Four outside Karnataka earliest of the per successive dealers in cent the State liable to tax under this Act. 8. Thus under entry 5 as it stood before April 1, 1983, groundnuts and peanuts purchased by the first/earliest of the successive dealers were liable to tax at 3 per cent. With effect from April 1, 1983, the groundnuts and peanuts were split up into two parts. Groundnut including groundnut seeds was placed under entry 5(a) whereas peanuts, coconuts excluding tender coconuts were placed under entry 5(b). This entry was again amended putting both groundnut and peanut together under entry 5(a) prescribing the rate of tax at 4 per cent first purchase. 9. The appellate authority after examining the records relating to assessment in the light of the grounds of appeal, noticed that the original returns filed by the assessee disclosed the purchase turnover of peanuts and groundnuts and the revised return filed by the assessee claimed the benefit of reduced rate of tax in respect of transactions relating to peanuts. The certificate issued by the authorities of Agricultural Produce Market Committee produced by the assessee and the relevant purchase invoices supported the contention of the assessee. Noticing the amendments effect to entry 5 and examining the certificate and the invoices, the appellate authority concluded that the tax leviable on the purchase turnover of peanuts for the period from April 1, 1983 to November 17, 1983, should by at 3 per cent. 10. The Commissioner taking a view that the appellate authority was wrong in holding that peanut was different from groundnut and taking the view that order was prejudicial to the interest of Revenue chose to interfere with the order made by the appellate authority. The question therefore that falls for our consideration in this appeal is, whether the groundnut and peanut are different commodities or one and the same for the period from April 1, 1983 to November 17, 1983. Botanically, there is no difference between groundnut and peanut as those words are used in India. The Fourth Schedule to the Act is no more than a total reflection of the goods mentioned in section 14 of the Central Sales Tax Act, 1956, as declared goods. Under clause vi(i) of section 14 of the Central Sales Tax Act, groundnut or peanut (arachis hypogaea) is described by the botanical name. The Fourth Schedule to the Act is no more than a total reflection of the goods mentioned in section 14 of the Central Sales Tax Act, 1956, as declared goods. Under clause vi(i) of section 14 of the Central Sales Tax Act, groundnut or peanut (arachis hypogaea) is described by the botanical name. The same is not reflected in the corresponding entry in the Fourth Schedule to the Act. They are split up without disclosing the botanical name. 11. In the reply to the show cause notice issued by the Commissioner, the assessee demonstrated that in common parlance, the smaller variety of groundnut is known as "gajji shenga" and the groundnut of smaller variety is peanut and that the other variety is known as "balli shenga" whereby clearly pointing out that botanically groundnut and peanut represented the same produce though different in size. That was the position before the amendment of the entry with effect from April 1, 1983. But by the amendment of entry with effect from April 1, 1983, the Legislature intended to separate the two and treated them differently and distinctly subjecting peanut to a lower rate of tax. The Legislature by effecting amendment, for a limited period, though botanically the product remained the same for the purposes of exigibility to tax, intended to treat the product differently. In that view of the matter, the appellate authority was correct in treating the transactions in peanuts and groundnuts distinctly as separate transactions attracting different rates of tax. This aspect was totally overlooked by the Commissioner and what was not really an erroneous order was taken to be an erroneous order by the Commissioner. Thus the Commissioner assumed jurisdiction under section 22-A where none existed. Nor can it be said that charging a lower rate as prescribed by the Legislature after the amendment for the given period, i.e., between April 1, 1983 and November 17, 1983, was prejudicial to the interest of Revenue. As such, the Commissioner could not assume revisional jurisdiction, in view of the catena of decisions of this Court and the Supreme Court on the question of revisional jurisdiction in similar circumstances. 12. We, therefore, for the reasons given, must allow the appeal and restore the order of the appellate authority. No costs. Appeal allowed.