COMMISSIONER OF SALES TAX, LUCKNOW versus D. S. BIST &. ORS.

Citation: [1980] 1 S.C.R. 593 · Decided: 11-09-1979 · Supreme Court of India · Bench: N.L. UNTWALIA · Disposal: Dismissed

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Judgment (excerpt)

) 
• 
COMMISSIONER OF SALES TAX, LUCKNOW 
v. 
D. S. BIST &. ORS. 
September 11, 1979 
[N. L. UNTWALIA AND R. S. PATHAK, JJ] 
593 
U . .P. Sales Tax Act, 1948-S. 2(i) proviso-Tea leaves after drying and 
pTocessing-Whether re1nained agricultural produce not exigible to sales tax 
under the proviso. 
The proviso to s. 2(i) of the U.P. Sales Tax Act, 1948 excludes from the 
term "turnover" proceeds of sale of agricultural or horticultural prcxluce grown 
by a person on any land in which he has interest. 
The assessee, who was an agriculturist, O\Vlled tea gardens in the State. After 
being plucked from tea shrubs tea leaves are withered iili shade in 
rooms, 
crushed by hand or foot, roasted for 15 minutes, then covered by wet sheets 
for the purpose of generating fertnentation, graded and finally roasted again 
with charcoal for obtaining :flavour and colour. 
The final product is sold in 
the market. 
Before the Sales Tax Authorities the assessee contended that tea leaves 
sold by him were agricultural produce grown by him on his own land and 
that, therefore, the sale of tea effected by him was exempt from sales tax under 
the proviso to s. 2(i) of the Act. 
The Sales Tax Authorities rejected the 
assessee's contention. 
The High Court answered the reference iil favour of 
the assessee and against the revenue. 
Dismissing the appeal, 
HELD: (per Untwalia J.) : The !High Court was right in holding that sales 
of tea leaves were not exigible to sales tax. 
The commodity which was sold was 
not different froml the commodity which was produced in agriculture and, there-
fore, the proviso to s. 2(i) is attracted. [600 F, 602 E] 
1. Almost every kind of , agricultural produce has to undergo some kind 
of processing or treatment by the agriculturist himself either on the farm or 
elsewhere in order to make it non·perishable, transportable and marketable. 
Some minimal process is necessary to be applied to many varieties of agri-
cultural produce. The test in these cases is to see whether in relation to that 
agricultural produce the process applied was minimal or was so cumbersome 
and long drawn out that either in common parlance or in the market or even 
otherwise no one would treat the produce as an agricultural produce. 
The 
mere fact that in the case of a particular product the process is a bit longer 
or even a bit complicated would not rob the produce of its character of being 
an agricultural produce. [597 B-C; F-G] 
2. AH the processes enumerated by the Revising Authority were necessary 
for the purpose of saving the tea leaves from perishing, making them fit for 
transporting and marketing. 
The processes applied were all within the region 
of minimal processes and :at no point of, time they crossed that limit and 
robbed the lroves of their character of being and continuing to be agricultural 
produce. ['98 C-E] 
A 
B 
c 
D 
E 
p 
G 
H 
B 
c 
D 
E 
594 
SUPREME COURT REPORTS 
[1980] 1 S.C.R. 
, Vol. 21 Encyclopaedia Britannica (1968 edition), referred to. 
The State of Madras v. Swasthik Tobacco Factory 17 S.T.C., 316, The. 
State of Madras v. Bell Mark .Tobacco Co. 19 S.T.C., 129 referred to. 
The State of Madras v. R. Saravana Pillai 7 S.T.C., 541, Deputy Com-
missioner of Agricultural Income Tax and Sales Tax,_ South Zone v. Sherneilly 
Rubber & Cardamom Estates Ltd. & others. 12 S.T.C. 519, Commissioner .of 
Income Tax l'. Woodland Estates Ltd. 58 I.T.R., 612 Rayav11.rapu Mrityanjaya 
Rao v. The Stat~ of Andhra Pradesh 20.S.T.C., 417, Commissioner of Sales. 
Tax, U.P., Lucknow v. Harbilas Rai and Sons, 21 S.T.C., 17 approved. 
Killing Valley Tea Company Ltd. v. Secretary to State A.l.R. 1921 Calcntta, 
40 distinguished. 
' 
(Pathak, J. concurring). 
In Killing Valley Tea Co. Ltd. v. Secretary to State A.I.R. 1921 Calcutta, 
40 the Calcutta High Court was of opinion that while process of selecting and 
plucking tea leaves from the tea shrubs could be deemed to be agriculture, the 
subsequent process which included drying and rolling of the leaf was a manu-
facturing process. If the Calcutta High Court could be said to have laid down 
that as a result of those processes the tea leaf ceased to be agricultural produce, 
\t is not correct. 
trhe tea leaf remained what it always was. It was tea 
leaf when selected and plucked and it continued to be tea leaf when after the 
process of withering, crushing and roasting, it was sold in the market. 'The pro-
cess applied ~ras intended to bring out its potential qualiti

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