DEPUTY COMMISSIONER OF SALES-TAX (LAW), BOARD OF REVENUE (TAXES), ERNAKULAM versus SHIPHY INTERNATIONAL, ALLEPPEY

Citation: [1988] 3 S.C.R. 98 · Decided: 07-03-1988 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Dismissed

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Judgment (excerpt)

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DEPUTY COMMISSIONER OF SALES-TAX (LAW), 
BOARD OF REVENUE (TAXES), ERNAKULAM 
v. 
SHIPHY INTERNATIONAL, ALLEPPEY 
MARCH 7, 1988. 
[SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.) 
Central Sales Tax Act, 1956-Section 5(3)-Export of fresh frog 
legs after freezing to avoid decomposition and decay-.c.Whether assessee 
entitled to benefit of the Section-Test to be applied in determination of 
character of commodity. 
The respondent-assessee bad purchased fresh frog legs and after 
removing the skin, ~ashing and removing dirt etc. and freezing it for 
the purpose of avoiding decomposition and decay exported the said frog 
legs and claimed entitlement to benefit of s. 5(3) of the Central Sales 
Tax Act, 1956. 
It was contended on behalf of the State that what was purchased 
as fresh legs was not exported as such, without freezing them and, 
therefore, the assessee was not entitled to the benefit of the section. 
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The Sales Tax Tribunal held that the fresh frog legs purchased by 
the assessee and exported after freezing for the purpose of avoiding 
decomposition and decay, were one and the same commodity and the 
frozen legs did not undergo any material change in character and the 
identity of the frog legs remained unchanged as such, and, therefore, 
the assessee was entitled to the benefit of s. 5(3) of the Act. The High 
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Court upheld the view of the Tribunal. 
Dismissing the State's appeal, 
HELD: Every processing does not bring about a change in the 
character and identity of the commodity. The nature and extent of 
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processing may vary from one case to another and indeed there may be 
several stages of processing and perhaps different kinds of processing at 
each stage. With each process suffered, the original commodity experi-
ences change. But it is only when the change or a series of changes take 
the commodity to the point where commercially it can no longer be 
regarded as the original commodity but, instead, is recognised as a new 
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and distinct commodity that it can be said that a new commodity, 
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BOARD OF REVENUE v. SHIPHY INTERNATIONAL [MUKHARJI, J.[ 
99 
distinct from the original, has come into being, The test is whether in 
the eyes of those dealing in the commodity or in commercial parlance 
the pro~essed commodity is regarded as distinct in character and 
identity from the original commodity, 
In the instant case, the High Court was right in holding, on the 
facts found by the Tribunal, that frozen frog legs are same as fresh frog 
legs, and the process was only to prevent decomposition. 
M/s. Sterling foods. v. State of Karnataka and another, [i986] 3 
SCC 469 and Deputy Commissioner of Sales Tax v. Pio Food Packers, 
[ i980] 3 SCR 127i, relied on, 
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East Texas Motor Freight Lines v. Frozen Food Express, (100 L C 
Ed. 917 at 923) referred to. 
Deputy Commissioner of Sales Tax and others v. A.B. Ismail and 
others, [1986] Snppl. SCC 2i8, distingnished. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 904 
(NT) of 1988 
From the Judgment and Order dated 10.11.1986 of the Kerala 
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High Court in T.R.C. No. 162 of 1986 
V.J. Francis for the Appellant. 
The Judgment of the Court was delivered by 
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SABYASACHI MUKHARJI, J. Special leave granted. 
This is an appeal against the judgment and order of the High 
Court of Kerala dated 10th of November, ·1986. By the impugned 
judgment the High Court has dismissed the Tax Revision Case filed at 
the instance of the Sales-tax authority. The asssessee-respondent he· 
rein had purchased fresh frog legs and after removing the skin, wash-
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ing and removing dirt etc. and freezing it for the purpose of avoiding G 
decomposition and decay, the said frog legs were exported. The asses· 
see·claimed that they were entitled to the benefit of section 5(3) of the 
Central Sales-tax Act, 1956. 
In order to appreciate the question it is necessary to refer to the 
findings of the Tribunal. The Tribunal found that what was purchased 
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SUPREME COURT REPORTS 
11988] 3 S.C.R. 
A by the assessee was fresh frog legs and, after freezing it for the purpose 
of avoiding decomposition and decay, it was exported. It was, there-
fore, held by the Tribunal that what was purchased as fresh frog legs 
was exported by the assessee. It was contended on behalf of the State 
that what was purchased was fresh frog legs and the same was not 
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exported as such without freezing it. The tribunal held that only frozen 

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