M/s. Haji K. Abdul Khader Bawa and Sons vs State of Karnataka.

Jagannatha Shetty, J.-This Revision petition is directed against the order of the Tribunal dated December 12,1979 made in S.T.A. No. 250 of 1979 dismissing the appeal of the assessee.

The petitioner is a firm dealing in fish manure, fish oil, dry fish, tapioca under the name and style of M/s. Haji K. Abdul Khader Bava & Sons. For the period from April 1,1975 to March 31,1976, the firm also acted as a buying agent on behalf of'' the Bombay principal M/s. Hindustan Liver Ltd., in respect of tapioca. The firm claimed exemption of purchase tax under S. 6 in respect of the turn over relating to tapioca. The Assessing Officer observed that the purchases of tapioca were not found to have been made from un-regstered dealers within the state. They were disposed off other than by way of sale, i.e., by way of transfer to their principal M/s.Hindustan Liver Ltd,, Bombay, and therefore, the same attracted the liability under S. 6 of the K.S.T, Act, 1957.

Being aggrieved by that part of the assessment order, an appeal was preferred before the Deputy Commissioner of Commercial Taxes (Appeals) Mangalore Division, Mangalore. The Deputy Commissioner also held that, since the goods were disposed of other than by way of sales within the State or in the course of inter-state trade or commerce, levy of tax under S. 6 of the K.S.T. Act was justified and accordingly he dismissed the appeal.

The assessee took up the matter in second appeal before the Appellate Tribunal. Before the Tribunal one additional contention was raised i.e., tapioca is a vegetable falling under item 5 of the V schedule to the Act and therefore the disputed turnover was not liable to tax. After discussing that question at some length, the Tribunal without forming any opinion, finally observed that, that contention could not be entertained for the first time, since it was not raised before the Assessing Officer, So stating The Tribunal dismissed the Appeal.

The only contention urged by Srinivasan, learned Counsel for the petitioner before us is, that tapioca is a vegetable falling within item 5 of the V schedule.

Item 5 reads:

"Vegetables and vegetable seeds including onion seeds but excluding dried vegetables and dehydrated vegetables."

The Tribunal has observed that even if tapioca is used for table use as the other ordinary vegetables it would be necessary to ascertain whether tapioca is not used as dry vegetables. In our opinion, it is not necessary to make that part of the investigation, since it is nobody''s case that the turnover relating to the tapioca in the instant case pertains to dry tapioca, or the tapioca which has undergone some process for the purpose of dehydration and for using it for commercial purpose.

The Tribunal has further observed that the proper test to be applied must be the main and predominent user of the article as vegetable. This is also not a correct approach. Predominent use of an article as vegetable depends upon various factors. An article may be a vegetable but it may not be generally used by people if it is expensive or if it has got a peculiar taste or particular effect. Secondly, if it is generally accepted as a vegetable it cannot cease to be a vegetable, merely because it is not predominently taken for table use.

The nature of the article should be judged not by any single test above mentioned, but by its general use or acceptance by common people. Secondly, the nature of the article should be considered at the time of its sale or purchase and its subsequent use after dehydration may not be relevant.

A similar case came up for consideration before a Bench of this Court in Sri U. Kamalaksha Shenoy v. State of Karnataka, S.T.R.P. Nos. 110 and 111 of 1980 disposed of on November 25,1983. There, It was observed:

"The tapioca, a sample of which has been produced before us by the learned Counsel for the petitioner is a tuber which is commonly available in almost all parts of the state. It is also taken for table use like vegetables and potatoes. The question, therefore, is whether the tapioca purchased by the petitioner could be properly considered as vegetable or whether it could be included in the category of potatoes or sweet potatoes. There was no proper investigation on these two aspects of the matter by any one of the authorities below."

So stating, this Court directed the Tribunal to re-conslder the matter in the light of the observations made therein.

It seems to us that the present case also must be reconsidered in the light of the observations made herein. It is proper that the matter may be examined by the Assessing authority having regard to all circumstances of the case.

In the result, Revision petition is allowed. In reversing the orders of the Tribunal and the Deputy Commissioner, the matter is remitted to the assessing authority for re-doing the assessment in respect of the turnover of tapioca. The assessment in other respects is kept undisturbed.

The petitioner is entitled to refund of the institution fee here and also before the Tribunal.

The parties shall appear before the assessing authority on 27th August, 1984 to receive further notice.