The judgment established that the sale of agricultural produce, after minimal processing for transport and marketing, does not constitute a business of selling under the Central Sales Tax Act, 1956.

Headnote:
Central Sales Tax Act - Definition of 'dealer' - Interpretation of whether the company is a dealer as defined in S.2(b) of the Central Sales Tax Act, 1956
Fact of the Case:

The respondent, a rubber company, was deemed not a dealer as defined in S.2(b) of the Central Sales Tax Act, 1956, in respect of its sales of rubber, as it only converted latex into sheets and sold them to customers.
Finding of the Court:

The court found that the company, by selling its own produce after minimal processing for transport and marketing, cannot be considered a person engaged in the business of selling. The court also referred to the scheme of Indian taxation and concluded that the respondent is not a dealer as defined in the Act.
Issues: The main issue was whether the company can be considered a person engaged in the business of selling goods under the Central Sales Tax Act, 1956.
Ratio Decidendi: The court held that the sale of the company's own produce, after minimal processing for transport and marketing, is not separate and distinct from its agricultural avocation, and thus, the company cannot be considered a person carrying on a business of selling.
Final Decision: The Tribunal's decision was upheld, and the petition was dismissed with no order as to costs.

Judgment :-

1. This petition by the Deputy Commissioner of Sales Tax, South Zone, Quilon, is directed against the decision of the Sales Tax Appellate Tribunal, Trivandrum, in Tribunal Appeal No. 428 of 1962. That decision is to the effect that the respondent, the Travancore Rubber and Tea Company Limited, Alleppey, is not a dealer as defined in S.2(b) of the Central Sales Tax Act, 1956, in respect of its sales of rubber and that those sales are not as a result liable to taxation under the said enactment.

The definition of the expression "dealer" as given in S.2(b) of the Act reads as follows:

"'dealer' means any person who carries on the business of buying or selling goods and includes a Government which carries on such business."

It is common ground that all that the company does is to convert the latex tapped from its rubber trees into sheets and effect a sale of those sheets to its customers. The sole question for determination is whether in these circumstances the company can be considered to be a person who carries on the business of selling goods.

3. Latex is an opaque liquid resembling milk. It is not disputed that the usual method of selling it is after converting it into sheets, and that the conversion is not a manufacturing process but a process essential for the transport and marketing of the produce concerned.

4. We take the view that an agriculturist selling his own produce either as gathered or after subjecting it to the minimum requirements necessary for transport and marketing cannot be considered to be a person engaged in the business of selling. The sale which he effects, as we see it, is only the culmination of his agricultural operations; it is not separate and distinct from his agricultural avocation; and he cannot be considered to be a person carrying on a business of selling simply because he effects a sale of his own agricultural produce.

5. In Konduri Buchirajalingam v. State of Hyderabad (1958-9 S.T.C. 397) the Supreme Court had to deal with the definition of turnover in the Hyderabad General Sales Tax Act, 1950, as it stood prior to the amendment by the Hyderabad General Sales Tax (Amendment) Act, 1953. The definition before the amendment read as follows:

"'turnover' means the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration."

The Supreme Court said that the definition showed that turnover "only refers to the turnover of a dealer and not of an agriculturist". The definition of dealer embodied in the Hyderabad General Sales Tax Act, 1950-S. 2(e)-is in essential particulars the same as the definition of that expression in the Central Sales Tax Act, 1956. The definition in the Hyderabad Act reads as follows:

"'dealer' means any person, local authority, company, firm, Hindu undivided family or any association or associations of persons engaged in the business of buying, selling or supplying goods in the Hyderabad State whether for a commission, remuneration or otherwise and includes a State Government which carries on such business and any society, club or association which buys or sells or supplies goods to its members."

6. The view we have taken is the same as the view taken by Velu Pillai, J., in Muhammed and Others v. Sales Tax Officer, Kozhikode (-1962-13 S.T.C. 54 =1961 KLT. 843). The relevant considerations are discussed at length in that decision and it is unnecessary to go over the ground afresh in any greater detail.

7. List II (State List) in the Seventh Schedule to the Constitution deals with agricultural income and sales tax separately. Item 46 of that List is:

"Taxes on agricultural income"; and item 54 is:

"Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92 A of List P.

Item 92 A of List I (Union List) is:

"Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce".

Thes

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