DY. COMMISSIONER OF SALES TAX (LAW), BOARD OF REVENUE(TAXES,) ERNAKULAM versus COCO FIBRES

Citation: [1990] SUPP. 3 S.C.R. 419 · Decided: 04-12-1990 · Supreme Court of India · Bench: KULDIP SINGH · Disposal: Appeal(s) allowed
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Judgment (excerpt)

DY. COMMISSIONER OF SALES TAX (LAW), BOARD OF 
REVENUE(TAXES,) ERNAKULAM 
v. 
COCO FIBRES 
DECEMBER 4, 1990 
[KULDIP SINGH AND K. RAMASWAMY JJ.) 
Kera/a General Sales Tax Act: Section 5A-'Coconut husk'-
Whether coconut fibre a separate identity from 'Coconut husk'. 
A 
B 
The assessee is a registered dealer under the Kerala General 
Sales Tax Act. In its retnrn of taxable turnover, the assessee excluded C 
the value of coconut husks purchased and converted into coconut fibre 
on the ground that there was no manufacturing process involved in 
making fibre from coconnt busk. 
The Sales .Tax Officer as well as the Appellate Authority negatived 
the assessee's claim. The Sales Tax Appellate Tribnnal however, D 
allowed the assessee's revision, and the High Court confirmed the order 
of the Tribunal. 
Allowing the appeal oftbe Revenue, this Court, 
HELD: (1) By the process of manufacture something is produced 
and brought into the existence which is different from that, out of which E 
it is made in the sense that the thing produced is by itself a commercial 
commodity capable of beiiig sold or supplied. The material from which 
the thing or product is manufactured may necessarily lose its Identity or 
may become transformed into the basic or essential properties. [421D-E) 
Ujagar Prints v. Union of India, [1989) 3 SCC 488, referred to. 
F 
(2) The test laid down by this Court is that the article which 
comes into beiiig must be commercially different from the one from 
which it is made or manufactured. [422D) 
State of Bihar v. Chrestien Mica Industries Ltd., [1956) 7 S.T.C. G 
626 and Commissioner of Sales Tax v. Harbilas Rai & Sons, [1968) 21 
S.T.C. 17 (S.C.), referred to. 
(3) In view of the admitted position that green husk is soaked into 
saltish sea water for days together and after decomposition, on being 
subjected to beatiiig either by manual or mechanical process, fibre is H 
produced in the process, which is a distinct commodity known in the 
419 
A 
420 
SUPREME COURT REPORTS 
[1990] Supp. 3 S.C.R. 
commercial parlance. No one in the market would sale or supply husk 
when fibre is asked for. [422E] 
Dy. Commissioner of Sa/ex Tax (Law) v. Pie Food Packers, 
[1978] 41 S.T .C. 364, distinguished. 
B 
( 4) The Coconut fibre is commercially a different identifiable 
c 
D 
E 
F 
G 
H 
·commodity known as such in commercial parlance. Therefore, the 
value of sale or purchase of coconut busk would attract purchase tax 
under section 5-A of the Sales Tax Act. '[422G] 
CIVIL APPELLA'IE JURISDICTION: Civil Appeal No. 4014 
(NT) of 1985. 
From the Judgment and Order dated 17.10.1984 of the Kerala 
High Court in T.R.C. No. 73 of 1984. 
K.R. Nambiar for the appellant. 
The Judgment of the Court was delivered by 
K. RAMASWAMY, J. This appeal by special leave is against 
the judgment of the Division Bench of the Kerala High Court dated 
October 17, 1984 made in T.R.C. No. 73 of 1984. The respondent is a 
registered dealer under the Kerala General Sales Tax Act, (for short 
'the Act'). For the assessment year 1975-76 the respondent filed a 
return on taxable turnover of Rs.39 ,376.32 as against the turnover of 
Rs.58,130 excluding a sum ofRs.72,787.87, the value of coconut husks 
purchased by the assessee and converted into the coconut fibre. The 
respondent claimed that there is no manufacturing process involved in 
making fibre from conconut husk and therefore, the purchase value is 
not exigible to tax under the Act. This was negatived by the Sales Tax 
Officer who assessed the purchased turnover on coconut husk at 4 per 
cent under s. 5A of the Act, which was confirmed by the appellate 
authority. On revision, the Sales Tax Appellate Tribunal by Order 
dated July 26, 1983 relying upon the decision of the Kerala High Court in 
Dy. Commissioner of Sales Tax (Law) v. Pie Food Packers, [1978] 41 
S.T.C. 364 allowed the Revision holding that no manufacturing pro--
cess was involved in converting the husk into the fibre, the.refore, the 
turnover was not includable to assessment. This was confirmed by the 
High Court. Thus this appeal. 
The short question that arises for decision is whether coconut 
fibre is a separate entity from the husk in the commercial parlance. 
Admittedly, the coconut husk was purchased by the respondent. The 
DY. COMMISSIONER v. COCO FIB1*.S {K. RAMASWAMY, J.l .421 
process involved in making the coconut fibre from the coconut husk is 
as follows: 
The green husks are soaked in saltish sea water for da
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