The main legal point established in the judgment is that chilli powder and curry powder are not taxable under Entry 27 at 8% and are to be taxed at a lesser rate as general goods. The court overruled the previous decisions and clarified the taxability and rate of tax on the mixture.

Jagannadha Rao, C J.

The Writ Petition has been referred to a Full Bench by an order dated 30-7-1990 passed by a Division Bench of this Court. The issue relates to Entry 27 of the first Schedule to the Kerala General Sales Tax Act, 1963 which imposes sales fax at the rate of 8% on "spices (including chillies and coriander seeds) not falling under any other items in the schedule". The Division Bench pointed out that a clarification is necessary as to which of the decisions, viz., Ambika Provision Stores v. State of Kerala (1987 (2) KLT 99) and Commissioner of Sales Tax v. Rani Food Products (1987 (2) KLT1033) is correct and as to the correctness of the order dated 13-9-1988 passed on review in Rani Food Products case.

2. It is initially necessary to state the facts of the case before us. The Writ petitioner is a partnership firm dealing in pickles and other items like chilly powder, coriander powder, turmeric powder, sambar powder etc. The firm purchases chillies from the local market paying the first point sales tax at 8% and it then produces chillie powder from such tax-borne stocks. As the petitioner had doubts about the liability to tax in respect of the sales of chillie powder, the petitioner applied under S.59-A on 1-7-1982 as per Ext. P1 for clarification of his doubts on two questions as follows:

"(1): Whether the sale of chilly powder produced out of chillies which has suffered tax under items 27 of the first schedule of the Kerala General Sales Tax Act, is again exigible to tax under the said Act, and if so at what rate?

(ii): Whether the sale of curry powder made by blending of different spices powders is taxable if the spices used for making the curry powders have suffered tax under schedule 1 of the Kerala General Sales Tax Act and if so, at what rate?"

In other words, the questions were in two parts (1) Are chilly powder and chilly, (already taxed) different commercial commodities and if so, is chilly powder also 'spices' taxable under entry 27 of schedule 1, at 8%, and (2) if powders from different spices are mixed, is the resultant substance different from the principal substances (already taxed) and if so, is the mixture - which is called, curry powder - taxable under entry 27 of the first Schedule at 8%?

3. In reply to this query, the Government clarified to the petitioner by way of Ext. P2 dated 15-1-1983 as follows:

"I am to invite your attention to the reference cited and to inform you that chilly powder produced out of chillies and curry powder made by blending various spices are again exigible to tax at the rate of 8% irrespective of the fact that tax has already been levied on chillies and spices out of which chilly powder and curry powder are produced".

The effect of the clarification was to say that (1) chillie powder produced out of chillies is a different commercial commodity, the sale of which is taxable and further, that it is again 'spices' exigible to tax at 8% as per entry 27 of I schedule, and (2) that 'curry powder" which is a mixture of two or more' powders produced from 'spices', is a different commercial commodity liable to tax and that it is again 'spices' exigible at 8% as per entry 27 of I schedule. It is this Ext. P2 clarification that is questioned ii i the Writ Petition. These are the two questions that arise for consideration in this reference.

5. We shall initially advert to the points decided in the two Division Bench rulings of this court. In Ambika Provision Stores v. State of Kerala (1987 (2) KLT 99), the Division Bench was dealing with 'chillie powder' and 'corriander powder' derived from chillies and corriander respectively purchased after levy of tax at 8% under entry 27 in Schedule 1. It was contended there that both chillies and corriander, which had suffered tax, do not lose their identity and do not become commercially different commodities justifying fresh imposition of tax when these respective commodities are turned into powder and the powder is sold. The said conte