LexTRAVANCORE TEA ESTATES CO. LTD. versus STATE OF KERALA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
TRAVANCORE TEA ESTATES CO. LTD.
v.
STATE OF KERALA
October 11, 1976
[H. R. KHANNA AND JASWANT SINGH, JJ.J
755
Cewral Sales Tax Act (74 of' 1956) s. 8(3)(b) and Centml Sales Tax
'(Rei;istraiion and Turnover) Rules, 1957, r. 13-Goods used in the manufac-
ture or p1-ocessing of goods for sale-Scope-Fertilisers used for
i;rowi11c
lta
,plants, if could be included in goodJ used in the· manufacture of tea for sale.
A
B
Section 8 of the Central Sales Tax Act, 1956, deals with rates of tax on
C
sales in the course of inter-State trade or commerce. Section 8 ( 1 )(b) prpvides
·that every dealer, who in the course of inter-State trade or commerce sells to ~
registered dealer goods of the description referred to in sub-s. (3) shall be liable
.ro pay tax at 3% of his turnover. Section 8(3) (b) refers, imer alia to good~
'()f the class or classes specified in the certificate of registration of the registered
•dealer purchasing the goods as being intended for re-sale by him, or subject to
•any rules made by the Central Government in this behalf,. for use by him in the
manufacture or processing of goods for sale. Rule 13 of the Central Sales Tax
(Registration and Turnover) Rules, 1957, framed under the Act, provides that
D
the goods referred to in s. 8 ( 3 )(b) which a registered dealer may purchase
shall be goods intended for use by him inter alia as raw materials and proces~-
ing materials in the manufacture or processing of goods for sale.
The appellant owned tea estates in the respondent-State and was also main-
taining factories for the manufacture of tea.
It prayed for inclusion in its
Certificate of registration, (I ) fertilisers,
chemicals,
weedicides,
insecticides,
fungicides and pesticides for use in tea cultivation; and
(2)
weighing
and
measuring and packing equipments for use in tea estates.
The Department
refused to include them and the Tribunal and the High Court confirmed the
orders.
Jn appeal to this Court it was contended that, (1) cultivation and the grow-
ing of tea leaves was so integrally'- connected with the manufacture of tea that
it could be taken to be a part of the process of manufacturing tea, and since
fertilisers etc. were needed for tea cultivation, the same should be held to be·
intended for use in the manufacture or processing of tea for sale; and (2) since
weighing equipment used in the factories had been included in the
certificate,
the weighing e.quipment used for the purpose of cultivation should similarly be
included.
Dismissing the appeal,
E
F
HELD : ( 1) The goods in item (1) are intended for use not in the manu-
facturing process in respect of tea meant for sale but are only needed for the
cultivation and growth of tea plants and leaves. There is no direct relationship
between the use of fertilisers etc. and the manufacturing process and hence, they
G
were rightly not included in the registration certificate. [761 G]
(a) Cultivation and growth of tea plants result in the production of raw
material in the form of green tea leaves which are ultimately processed into
tea meant for sale.
But such cultivation and growth are, in the very nature of
things, prior to the manufacturing process and do not answer to the description
-Of manufacture .and processing of tea meant for sale.
There is a vital difference
.oetween an agricult11ral operation and a manufacturing process. What is nced-
~d for use purely in an agricultural operation cannot be held fo be required for
H
!lse in a. manufacturing process. [762 DJ
(b) The fact that the time Jag between the plucking of tea leaves and their
t>eing subjected to the manufacturing process is very little would not detract
B
c
756
SUPREl\fE COURT REPORTS
[ 1977] 1 S.C.R.
from the conclusion that thC cultivation and growth of tea
plants is distinct
and separate from the manufacturing process. [761 C]
(c) Rule 24 of the IncOroo Tax Rules. _1922, and c. 8 of the Incon1c Tax
ltul~s. 1962, p~escribe the formula \\o·hich should be adopted for apportioning
the mcome realise~ as a result of tho sale of tea after it is gro,vn and subj~ctcd
to the ma.nufactunng process in tho factory, thus recognisin('T the diffcrcnco bet-
flfCCU tho a.uicultural .income which U yielded in the form or'~ green leaves purely
by .tb.o _land over vth1ch tea plants are grown. and tho non-agricultural incon1e
which. is the result of subjecting: the green leaves, plucked to a partku!ar manu-
factunn: process. [761 Excerpt shown. Read the full judgment & AI analysis in Lexace.