- (1.) The short question that falls to be decided in these appeals, by certificate, against the judgment of a Division Bench of the Kerala High Court, is whether goat and sheep and the meat got after slaughtering them are the same for the purpose of sales tax in the State. The High Court, disagreeing with the Sales Tax Appellate Tribunal held them to be the same goods.
(2.) It is the admitted case in the appeals that the respondents purchase goat and sheep for slaughtering them and then sell the meat they get after such slaughter. It is also admitted that live. stock will be goods within the meaning of the Kerala General Sales Tax Act (the Act for short). The respondents submitted nil returns claiming exemption on the sales turnover of meat and skin. Assessments were completed accepting these nil returns. Subsequently the assessees were informed that the purchase turnover of goats and sheep had escaped levy of tax under S. 5-A of the Act. After necessary hearing, assessment orders were passed, holding that the assessees converted the animals into meat by a manufacturing process, within the meaning of S. 5-A of the Act. The Appellate Officer and the Tribunal agreed with this finding of the assessing officer. The assessees took the matter before the High Court and challenged the assessment order. The High Court. quashed the assessment orders and held that the meat got after slaughtering the animals will not be 'other goods' within the meaning of S. 5-A. Hence these appeals by the State.
(3.) For a proper understanding of the dispute raised in these cases it is necessary to read Section 5-A(1)(a) of the Act which alone is relevant of our purpose. "5A. Levy of purchase tax :- (1) Every dealer who in the course of his business purchases from a registered dealer or from any other person any goods, the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under Section 5, and either - (a) consumes such goods in the manufacture of other goods for sale or otherwise;" The Section speaks of three ingredients, the existence of which alone, will attract levy of tax. They are : (i) consumption of the goods (ii) process of manufacture involved and (iii) production of other goods. The question before us is whether these ingredients are present when goats and sheep are slaughtered and converted into meat for sale. The assessee's contention is that he is only processing live goat or sheep into mutton by killing them and cutting them into pieces and that in this process there was neither consumption nor a manufacture nor production of "other goods".;