M/S. FALCON TYRES LTD. versus STATE OF KARNATAKA AND ORS.

Citation: [2006] SUPP. 3 S.C.R. 734 · Decided: 20-07-2006 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Dismissed

Judgment (excerpt)

A 
MIS. FALCON TYRES LTD. 
v. 
STA TE OF KARNA T AKA AND ORS. 
JULY 20. 2006 
B 
[ASHOK BHAN AND MARKANDEY KA TJU, JJ.] 
Taxation : 
Karnataka Tax on Entry of Goods Act, 1979-Sections 2(A)(I), 3(6)-
. C Second Schedule, Serial no.2-Rubber procured from neighbouring State-
Entry Tax-Exemption from-Entitlement-Held : Rubber is not agricultural 
or horticulture produce hence not entitled to exemption from entry tax. 
D 
Interpretation of Statute : 
Legislative intention-While interpreting provisions of a Statute, 
legislative intention to be given effect to in consonance with the definition 
as contained in the statute. 
The question which has arisen for consideration in the present appeal 
E is whether rubber procured by appellant from the neighbouring State of Kerala 
for manufacture of tyres is entitled to exemption from entry tax leviable under 
the Karnataka Tax on Entry of Goods Act, 1979 .• 
F 
Dismissing the appeal, the Court 
HELD: I.I. The definition of the agriculture and horticulture produce 
in S.2(A)(I) of the Karnataka Tax on Entry of Goods Act, 1979, includes all 
agriculture or horticulture produce but excludes, (I) tea, coffee, rubber, 
cashew, cardamom, pep11er and cotton and (2) "such produce as has been 
subject to any physical, chemical or other process for being made fit for 
consumption". The words "such produ\!e" in the second part do not refer to 
G the produce which has already been excluded from the agricultural or 
horticulture produce but refer to such other agricultural produce which has 
been subjected to any physical, chemical or other process for being made fit 
for human consumption. [740-A, B, D, E) 
H 
734 
FALCON TYRES LTD. v. ST ATE OF KARNA TAKA 
735 
1.2. From the reading of the definition under Section 2(A)(l), it A 
unequivocally emerges that rubber and few other items enumerated therein 
are excluded from being agricultural produce or horticulture produce. For 
all intent and purposes as far as the present Act is concerned, it is the 
definition given in the Act, which will govern the expression 'agricultural 
produce'.1740-G-HI 
2. Suh-section (6) of Section 3 provides for exemption in respect of goods 
specified in the Second Schedule. At SI. No. 2 of the Second Schedule, only 
B 
tea, coffee and cotton (whether ginned or un-ginned) have been given exemption 
from payment of Entry Tax and not other items such as rubber, cashew, 
cardamom and pepper and such other agricultural produce which has been C 
subjected to any process for making it fit for human consumption. Intention 
of the legislature is that though tea, coffee and cotton have been excluded in 
the definition clause from the agricultural produce but for the purposes of 
the Entry Tax Act tea, coffee and cotton are exempted from payment of Entry 
Tax. This is an exception created by the ler,islature. If the legislature intended 
to create exception for rubber 1ilso it could have done it but it chose not to do D 
it. Simply because the legislature has included tea, coffee and cotton in the 
Second Schedule exempting it from payment of Entry Tax does not mean that 
all other agricultural produce items which have been excluded from the 
definition of the agricultural produce would stand included in the Second 
Schedule to the Act exempting them from payment of Entry Tax. This would E 
be doing violation to the Act as well as acting contrary to the intent of the 
legislature. 1741-C-Fl 
Karnataka Forest Development Corporation Ltd. v. Can/reads Private 
Limited and Ors., (199414 SCC 455, distinguished. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4408 of2001. 
From the Judgment dated 30.1.2001 of the High Court ofKarnataka at 
Bangalore, in Civil Revision Petition No. 2588/2000. 
F 
Dhruv Mehta, Harshvardhan Jha and Yashraj Singh Deora (for Mis. K.L. G 
Mehta & Co.) for the Appellant. 
Sanjay Hegde for the Respondents. 
The Judgment of the Court was delivered by 
H 
736 
SUPREME COURT REPORTS [2006] SUPP. 3 S.C.R. 
A 
BHAN, J. The appellant is a public limited company and a dealer 
registered under the Kamataka Tax on Entry of Goods Act, 1979 (hereinafter 
referred to as "the Entry Tax Act"). It is engaged in the manufacture of tyres 
of two wheeler motor vehicles. Appellant is located in Metagalli in Mysore 
and Metagalli is a local area within the definition of 'Local area' in Section 
2(A)(5) of the Entry Tax Act. The main input in the manufacture of tyres is 
B rubber which the appellant procures from the neighb

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