STATE OF MADRAS Vs. R SARAVANA PILLAI

JUDGEMENT

(1.) THE limited question that arises in this application, preferred by the Government under Section 12-B of the Madras General Sales-tax Act is whether the arecanuts sold by the respondent in the assessment year 1951-52 constituted "agricultural or horticultural produce grown by (the assessee) himself or grown on any land which he had an interest, whether as owner, usufructuary mortgagee, tenant or otherwise" within the meaning of the proviso to Section 2 (1) of the Act.

(2.) THE Deputy Commercial Tax Officer rejected the accounts of the petitioner and estimated the turnover of the cured nuts' sold by the petitioner, during 1951-52 at rs. 40,736 and assessed him to a tax of Rs. 636-8-0 on that turnover. An appeal to the Commercial Tax Officer failed. The assessee took the matter up on further appeal to the Appellate Tribunal. The Tribunal rejected the assessee's contention that he was not a "dealer" at all as defined by the Act. The Tribunal, however, accepted the contentions of the assessee : (1) that what the assessee sold was horticultural produce within the meaning of the proviso to Section 2 (i) of the Act, and (2) that the assessee had an interest in the land in which that produce was grown, within the meaning of Section 2 (i) of the Act. It was only the correctnees of the finding of the Tribunal, that what was sold by the assessee in 1951-52 was horticultural produce, that the Government challenged in the proceedings before us.

(3.) THE assessee's appeal was heard by the Appellate Tribunal along with appeals preferred by others similarly situate. They were all persons who grew and marketed arecanuts in Coimbatore District in accordance with the practice that prevailed in that district. It was not disputed at any stage that there was no market for the arecanuts' as gathered from the tree. While the practice in South kanara District is to gather the nuts after they are ripe, the practice in Coimbatore district to gather them while they are still raw. After gathering the produce, the areca-nuts are peeled, and the kernels are then sliced, boiled and dried. In the course of boiling, the tannin content of the nuts gets minimised, and that itself colours the nuts, and that colour persist after the nuts are dried. It is only after they are dried that they are fit to be marketed. So much was common ground. While the assesses contended that what was sold was still horticultural produce, the contention of the Government was that it was produce subjected to a manufacturing process that was sold, and that what was sold had ceased to be horticultural produce as such before it was sold.