M. Jagannadha Rao, C.J.
1. The writ petition has been referred to a Full Bench by an order dated July 30, 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 tax at the rate of 8 per cent 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] 67 STC 170 and Deputy Commissioner of Sales Tax v. Rani Food Products [1988] 68 STC 446 is correct and as to the correctness of the order dated September 13, 1988 [Deputy Commissioner of Sales Tax (Law) v. Rani Food Products: C.M.P. No. 5651 of 1988] passed on review in Rani Food Products case [1988] 68 STC 446.
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 chilli powder, coriander powder, turmeric powder, sambar powder, etc. The firm purchases chillies from the local market paying the first point sales tax at 8 per cent and it then produces chilli powder from such tax-borne stocks. As the petitioner had doubts about the liability to tax in respect of the sales of chilli powder, the petitioner applied under Section 59-A on July 1, 1982, as per exhibit P1 for clarification of his doubts on two questions as follows:
(i) Whether the sale of chilli powder produced out of chillies which has suffered tax under item 27 of the First Schedule to 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 I of the Kerala General Sales Tax Act and if so, at what rate?
In other words, the questions were in two parts: (1) Are chilli powder and chilli (already taxed) different commercial commodities and if so, is chilli powder also 'spices' taxable under entry 27 of the First Schedule at 8 per cent, 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 per cent?
3. In reply to this query, the Government clarified to the petitioner by way of exhibit P2 dated January 15, 1983, as follows:
I am to invite your attention to the reference cited and to inform you that chilli powder produced out of chillies and curry powder made by blending various spices are again exigible to tax at the rate of 8 per cent irrespective of the fact that tax has already been levied on chillies and spices out of which chilli powder and curry powder are produced.
The effect of the clarification was to say that (1) chilli 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 per cent as per entry 27 of the First 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 to tax at 8 per cent as per entry 27 of the First Schedule. It is this exhibit P2 clarification that is questioned in the writ petition. These are the two questions that arise for consideration in this reference.
4. Entry 27 of the First Schedule to the Act reads as follows:
_______________________________________________________________________________________
Sl. No. Description of article Point of levy Rate of tax (%)
_______________________________________________________________________________________
27 Spices (including chillies and At the point of first 8
coriander seeds) not falling sale in the State by a
under any other items in this dealer who is liable to
Schedule. tax under Section 5.
_______________________________________________________________________________________
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] 67 STC 170, the Division Bench was dealing with 'chilli powder' and 'coriander powder' derived from chillies and coriander respectively purchased after levy of tax at 8 per cent under entry 27 of the First Schedule. It was contended there that both chillies and coriander 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 contention of the assessee was rejected and it was held that when chilli powder or coriander powder was produced from chilli or coriander respectively, a 'new and distinct commodity emerged out of manufacturing process' and that the said commodities are taxable again under entry 27 at 8 per cent. The Bench followed Sri Siddhi Vinayaka Coconut & Co. v. State of Andhra Pradesh : [1975]1SCR440 , Ganesh Trading Co. v. State of Haryana : AIR1974SC1362 and the Full Bench decision of this Court in Achamma Sebastian v. State of Kerala [1967] 20 STC 483.
6. The question then arose in Deputy Commissioner of Sales Tax v. Rani Food Products before a Division Bench as to the taxability of sambar powder, meat masala, pickle powder, etc., in the context of entry 27 of the First Schedule. The Revenue contended that each of these items--which was a mixture of powders derived from two other commodities which were 'spices'--were again 'spices' exigible to tax at 8 per cent under entry 27. The Tribunal held, while accepting the case of the Revenue that the commodities covered by the powders were new commodities exigible to sale tax. It, however, held that the new commodities, i.e., the mixtures of powders were not spices falling under entry 27 but could be taxed at 4 per cent multi-point tinder general goods. The Division Bench took the view that the mixtures of powders were new commodities different in flavour from the original commodities. Even if chillies and coriander seeds were taxable at 8 per cent, the powders thereof are not to be treated as spices and cannot fall under entry 27. They could be taxed only at 4 per cent as general goods. No reference was made to Ambika Provision Stores' case . There was a review petition in that case and it was clarified by order dated September 13, 1988 (Deputy Commissioner of Sales Tax v. Rani Food Products: C.M.P. No. 5651 of 1988), adverting to Ambika Provision Stores' case , as follows:
In an earlier decision in T.R.C. No. 78 of 1987 (Ambika Provision Stores v. State of Kerala) [1987] 67 STC 170, this Court held that when chillies are turned into chill powder and coriander into coriander powder, the original commodities underwent a change giving rise to chili powder and coriander powder, and they can no longer be regarded as chilli and coriander, but are two new commercially different commodities taxable again under entry 27 of the First Schedule of the Act at 8 per cent. We had not taken any contrary view in the present case and in the context of considering the character of the commodities, we have only stated that chilli and coriander seeds, when powdered and mixed, would not be 'spices' under item 27. The observation thereof be read and understood thus: chillies and coriander seeds, when powdered and mixed, do not fall under item 27.
7. It was at that stage that the present writ petition came up before the Division Bench which referred the matter to a Full Bench. The Division Bench stated while making the reference, after referring to the above order in review petition as follows:
If in the light of the finding that chilli powder is different from chillies, will chilli powder still come under item 27 is not free from doubt.
It is desirable that an authoritative pronouncement is given by a larger Bench.
That is how the matter has come before this Full Bench.
8. The point naturally arises whether the decision in Ambika Provision Stores' case is correctly decided and also whether there is any conflict between that case and the decision in Rani Food Products' case and the order of review in the latter case.
9. As the entire matter is open, we shall examine the question untrammelled by the abovesaid two judgments of this Court.
10. Recently, this very Full Bench had occasion to consider the various principles of interpretation applicable to words and entries in various sales tax statutes. That was in O.P. No. 10598 of 1989 and T.R.C. No. 203 of 1989 dated July 21, 1992 reportted in [1993] 91 STC 476 (Ker). There the matter, no doubt, arose under Section 5(3) of the Central Sales Tax Act but the main point was whether raw cashewnuts and cashew kernel extracted therefrom were the same commodities commercially or were different commodities. The judgments of the Supreme Court laying down the common parlance test, the commercial parlance test, the dictionary meaning test, the user test and lastly the substantial identity tests were all reviewed by the Full Bench in its majority judgment (rendered by two of us, the Chief Justice and Paripoornan, J.) (one of us, Krishnamoorthy, J., while concurring with the result, differed on certain aspects and pronounced a separate judgment). In the majority judgment it was held that raw cashewnuts and cashew kernel extracted therefrom, even if they could be different commodities commercially if the earlier tests of common or commercial parlance were applied, they were however not different commodities commercially if the 'substantial identity' test laid down by the Supreme Court in Deputy Commissioner of Sales Tax v. Pio Food Packers [1980] 46 STC 63, Sterling Foods v. State of Kamataka [1986] 63 STC 239 were applied. But, on facts, we felt bound by the observations of S.R. Das, J., in his separate judgment in Shanmugha Vilas' case [1953] 4 STC 205 (SC) where it was held that cashew kernel was different commercially from raw cashewnut, there being, according to the learned Judge, a process of manufacture.
11. We may point out that in Pio Foods' case [1980] 46 STC 63, the Supreme Court was dealing with pineapple fruit which was washed and then the inedible portion the end crown, the skin and inner core were removed and then the fruit was sliced and the slices filled in cans, sugar added as a preservative, the cans sealed under temperature and then put in boiling water for sterilisation. It was held that there was no process of manufacturing involved and that the original pineapple had not lost its commercial identity. The matter had arisen under Section 5A(1)(a) of the Kerala General Sales Tax Act wherein the words 'consumes such goods in the manufacture of other goods for sale or otherwise' fell for consideration. In that context Pathak, J., (as he then was) observed that the generally prevalent test was whether the article produced was regarded in trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture. Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps different kinds of processing at each stage. The Supreme Court observed:
With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity, but instead is recognised as a new and distinct article that a manufacture can be said to take place Although it has undergone a degree of processing, it must be regarded as still retaining its original identity.
After posing the question: 'does the processing of the original commodity bring into existence a commercially different and district article?' Pathak, J., (as he then was) referred to two leading American cases. The first one is Anheuser-Busch Brewing Association v. United States [1907] 207 US 556 : 52 L Ed 336 where it was observed:
At some point processing and manufacturing will merge. But where the commodity retains a continuing substantial identity through the processing stage we cannot say that it has been 'manufactured'.
There, as pointed out in an earlier Full Bench decision referred to above dealing with raw cashewnuts, certain corks were cut, assorted, branded with date and name of brewer, etc., to show from what firm the cork came from. The corks were put into a machine or air-fan and dust, neal, bugs and worms removed, they were then cleaned by washing, and steaming, removing tannin and germs and making the corks soft and elastic, and they were exposed to blasts of air in a machine, until they were absolutely dry. They were then put into a bath of glycerin and alcohol and dried in a special system and finally dried by absorption of the chemicals that had covered them. This process would take three days. It was held that there was no new substance derived. In East Texas Motor Freight Lines v. Frozen Food Express (1955) 351 US 49 : 100 L Ed 917 which was also referred to in Pio Foods' case [ : 1980(6)ELT343(SC) , Douglas, J. (as he then was) held that 'processing of chickens' in order to make them marketable, did not turn them from agricultural commodities into manufactured commodities. He observed:
Killing, dressing and freezing a chicken is certainly a change in the commodity. But it is no more drastic a change than the change which takes place in milk from pasteurizing, homogenizing, adding vitamin concentrates, standardising and bottling.
There was, it was held, no difference between the chicken in the pan and the one that was dressed.
12. Sterling Foods' case : 1986(26)ELT3(SC) came soon thereafter. There the appellants purchased shrimps, prawns and lobsters locally and cut the heads and tails of the Shrimps, Prawns and lobsters and then subjected them to peeling, deveining and cleaning and freezing. It was held that by reason of the processing of the goods after their purchase, there was no change in their identity and that, in fact, commercially they were to be regarded as the original goods from which they were processed. The original goods were only made ready for the table. Bhagwati, C.J., observed that the test was whether, in the eyes of those dealing in the commodity or in commercial parlance, 'the processed commodity is regarded as distinct in character and identity from the original commodity.' This case was followed in Deputy Commissioner of Sales Tax v. Shiphy International : 1988(34)ELT416(SC) where it was held that when fresh frog legs were subjected to a process wherein the skin was removed and the goods were then washed and freezed, there was no distinct change in the character or substantial identity of the goods.
13. We may also point out that even earlier, 'rice' was held to include 'parched rice' and 'puffed rice' in Alladi Venkateswarlu v. Government of Andhra Pradesh : [1978]3SCR190 . In State of Orissa v. Titaghur Paper Mills Co. Ltd. : [1985]3SCR26 , timber and 'sized and dressed timber'were held to be the same commodity. Much earlier, in Tungabhadra Industries Ltd. v. Commercial Tax Officer : [1961]2SCR14 , it was held that even 'hydrogenated oil' or 'vanaspathi' were not different from 'groundnut oil'. It was observed that even though by refinement and hydrogenation, the viscous liquid became 'semi-solid' liquid, the 'essential nature' of the commodity had not changed. The addition of hydrogen atoms was, it was observed, made to make the groundnut oil more stable, thus improving its quality and utility. It was stated:
. neither mere absorption of other matter, nor inter-molecular changes necessarily affect the identity of a substance as ordinarily understood..It would undoubtedly be very bad groundnut oil but still it would be groundnut oil and if so, it does not seem to accord with logic that when the quality of the oil is improved in that its resistance to the natural processes of deterioration through oxidation is increased, it should be held not to be oil.
Again in Commissioner of Sales tax v. Harbilas Rai and Sons [1968] 21 STC 17 (SC), bristles plucked from pigs, boiled, washed with soap and chemicals and sorted out in bundles according to their size and colour, were regarded as remaining the same commercial commodity, namely, pig bristles.
14. In the light of the above line of cases dealing with the 'substantial identity' test, can it be said that chilli in its original form see item 27 of the First Schedule and chilli powder are different commercial commodities? In our opinion, not. When chillies are made into powder, they do not, in our view, change in 'substantial identity and character' or 'essential nature.' They may be used in their natural form or used after being converted into powder. The mere change into the powdered form, in our view, does not change the 'essential nature' of the commodity, as stated in Tungabhadra Industries' case [1960] 11 STC 827 or the substantial identity, as stated in Pio Foods' case [1980] 46 STC 63 and Sterling Foods' case : 1986(26)ELT3(SC) decided by the Supreme Court. There is only a change in the form and no change in the substantial identity.
15. We may, in this context also refer to other cases decided by certain other High Courts in regard to certain commodities in the original form and in the form of their powders. It has been consistently held that there is no change in the substantial identity though there may be change in the form. In Rasoi Products v. Commercial Tax Officer , the Calcutta High Court held that when pepper, black pepper, white pepper and turmeric are powdered, there is no substantial change in the commodities.and that the powders are not again liable to sales tax. In Ram Bhadur Takkur Takkur (P) Ltd. v. Coffee Board [1991] 80 STC 199 it was held by the Madras High Court that when coffee seeds are powdered and coffee powder results, there is no substantial change in the identity of the two goods for purposes of sales tax. In New Swastik Flour Mill v. State of Karnataka [1992] 84 STC 49, the Karnataka High Court held that atta, maida and soji which are produced out of wheat, though different in form from the parent substance, they are nothing but wheat in substance for purposes of the sales tax law. They followed the decision in Dhanbad Flour Mills v. State of Bihar [1989] 75 STC 47 of the Patna High Court, where a similar view was taken.
16. Following the decisions of the Supreme Court referred to above, which now have emphasised the essential nature of the substantial identity tests, and the decisions of the High Courts above referred to, we hold that when chillies are converted into chilli powder, they essentially and substantially remain the same commodities and are therefore not taxable under entry 27 of the First Schedule, once again when sold in the powdered form. We accordingly overrule Ambika Provision Stores v. State of Kerala [1987] 67 STC 170. To the extent that Ambika Provision Stores' case [1987] 67 STC 170 is accepted in Rani Food Products' case (C.M.P. No. 5651 of 1988 decided on 13th September, 1988) the latter is also overruled to that extent. We also hold that exhibit P2 clarification of the Government that chillies in the powdered form are again taxable and that too under entry 27 of the First Schedule to the Act is clearly erroneous. We decide the first question posed in exhibit P1 accordingly.
17. We shall now deal with the second question posed in exhibit P2 which deals with curry powder, Curry powder is essentially a mixture of two commodities in the powdered form, such as the mixture of chilli powder and coriander powder. We have already held that when chillies are converted into chilli powder or for that matter coriander into coriander powder, each of the resultant substances are not liable to sales tax again when sold in that form as the essential nature and substantial identity remains the same. But the question now is if two commodities in their powdered form are mixed, can the mixture be said to be not a new commodity? The question also is whether the mixture would be 'spices' as stated in entry 27 of the First Schedule?
18. It is in this context, that the decision in Deputy Commissioner of Sales Tax v. Rani Food Products becomes relevant. There, the Division Bench held that when chilli powder and coriander powder are mixed, the resultant commodity is a different product. We are in entire agreement with this view of the Division Bench that the resultant product, the mixture--which is also called curry powder--is taxable under the Sales Tax Act for it is essentially and substantially different from either chillies or coriander taken separately.
19. The further question is whether the said mixture or curry powder is taxable under entry 27 of the First Schedule at 8 per cent or whether it is taxable at a lesser rate as general goods. The Division Bench in Rani Food Products' case accepted the view of the Tribunal in that case that the mixture is taxable not as spices but only as general goods. We respectfully agree with this view of the Division Bench in Rani Food Products' case . The order dated September 13, 1988 [Deputy Commissioner of Sales Tax (Law) v. Rani Food Products: C.M.P. No. 5651 of 1988] in the review petition filed in Rani Food Products' case [1988] 68 STC 446 is also accepted by us to the above extent.
20. Therefore, so far as the second question posed in exhibit P1 is concerned we hold that the mixture or curry powder is taxable and the rate applicable is not 8 per cent as in entry 27 of the First Schedule but is the lesser rate applicable to general goods. The decision of the Government in exhibit P2 to the extent that the curry powder is taxable is accepted but we do not agree that entry 27 of the First Schedule is applicable to the curry powder. The mixture is liable to tax only as general goods. To the extent of liability of the mixture to sales tax, exhibit P2 is correct and to the extent of rate of tax on the mixture, it is wrong.
21. In the result, we overrule Ambika Provision Stores' case [1987] 67 STC 170 and its acceptance in Rani Food Products' case (C.M.P. No. 5651 of 1988 decided on September 13, 1988). As to the curry powder mixture's taxability and as to the rate of tax applicable thereto, we accept Rani Food Products' case [1988] 68 STC 446. The writ petition is allowed quashing exhibit P2 in part as stated above. No costs.
K.S. Paripoornan, J.
22. With great respect to My Lord the Chief Justice, I am of the view that the original petition should be dismissed. I was a party to the decision in Ambika Provision Stores' case [1987] 67 STC 170 and also in Rani Food Products' case [1988] 68 STC 446. So, I am of the view that the entire matter should be reviewed briefly to bring out clearly the matters decided in those cases and the limited question that arises for consideration herein. I shall state the facts and the relevant law in brief, in view of the importance of the question that arises for consideration.
23. The petitioner herein is a firm. It is engaged in the business of producing and marketing pickles, chilli powder and other items. The firm is an assessee under the Kerala General Sales Tax Act. It purchased chillies from local market paying sales tax at the point of first sale in the State at 8 per cent. The firm produces chilli powder from such tax-borne chillies. The chilli powder was sought to be taxed. The petitioner contended before the assessing authority, the Board of Revenue and the Government, that the word 'spices' occurring in entry 27 of the First Schedule to the Kerala General Sales Tax Act will take in chillies and also the chilli powder, and since the commodity is taxable only at the point of first sale in the State, the chilli powder produced out of tax-borne chillies cannot be taxed again. The Revenue did not accept this plea. That resulted in the filing of this original petition assailing the stand taken by the Revenue.
24. The short point that arises for consideration in this case turns on the interpretation of entry 27 of the First Schedule to the Kerala General Sales Tax Act as it stood at the relevant time. It is as follows:
__________________________________________________________________________________Sl.No. Description of article Point of levy Rate of tax (%)__________________________________________________________________________________27 Spices (including chillies At the point of first 8and coriander seed) not sale in the State by afalling under any other dealer who is liable toitems in this Schedule. tax under Section 5.___________________________________________________________________________________
25. Admittedly, chillies will be taken in by the above entry. The chillies purchased by the firm had borne tax. The firm produces chilli powder from such tax-borne chillies. The question is whether chilli powder can again be taxed? The stand of the Revenue is that it can be so done. The Revenue did so and further held that chilli powder is spices falling under entry 27 of the First Schedule to the Kerala General Sales Tax Act and taxable at 8 per cent. The assessee had no case either before the statutory authorities or before us that even if chilli powder can be taxed again, it cannot be taxed as spices falling under entry 27 of the First Schedule, but only under some other entry or as general goods:
26. An identical question came up before a bench of this Court in Ambika Provision Stores v. State of Kerala [1987] 67 STC 170. In the said case, the Sales Tax Appellate Tribunal had found that chillies and coriander as well as their powders are commercially distinct and different commodities. This Court held that the processing of the original commodities, viz., chilli and coriander, into chilli powder and coriander powder brought into existence a commercially distinct and different commodity which were again taxable as spices, falling under entry 27 of the First Schedule to the Kerala General Sales Tax Act. The said decision will squarely apply to the instant case also. But it is contended that a later Bench has taken a different view in Deputy Commissioner of Sales Tax v. Rani Food Products and in view of the conflict of Bench decisions, the matter requires reconsideration. That is the reason why the Division Bench, which heard the matter originally, referred the case to a Full Bench, by order dated July 30, 1990.
27. In Ambika Provision Stores' case [1987] 67 STC 170 at page 172, the Division Bench held thus:
It is true that chilli and coriander are liable to tax at 8 per cent single point; but it should be stated that when chilli was turned into chilli powder and coriander into coriander powder, the original commodities underwent a change, giving rise to chilli powder and coriander powder. They can no longer be regarded as chilli and coriander. A new and distinct commodity emerged out of the manufacturing process. These two new or commercially different commodities are taxable again under entry 27 of the First Schedule of the Act at 8 per cent. The same commodity at different stages could be treated and taxed as commercially different articles. This position is settled by a series of decision of courts We are of the view that 'chilli powder' and 'coriander powder' are distinct and different from chilli and coriander, both in common parlance and in commercial circles.
28. In Rani Food Products' case the assessee was a dealer in sambar powder, meat masala, pickle powder, etc. For the assessment year 1983-84, the turnover of these powders was assessed at 8 per cent, treating them as spices. The Sales Tax Appellate Tribunal held that the said Powders could not be treated as spices, but only as general goods taxable at the general rate of 4 per cent. It was observed that the three main curry powders constituted mainly ingredients like chilli and coriander liable to be taxed at the rate of 8 per cent as spices. But the Appellate Tribunal held that the commodity, which emerged from mixing the various ingredients, cannot be held either as chillies or coriander and cannot be called as spices. The said view, expressed by the Tribunal, was upheld by this Court. But an observation, in para 6 of the judgment, to the effect that item 27, including chillies and coriander seeds, does not include the powders thereof necessitated the filing of review petition by the Revenue and in clarifying the matter, this Court held that chilli and coriander seeds, when powdered and mixed, will not fall under item 27. That was so since a new commodity emerged out of the mixture which was not governed by any entry in the First Schedule and it could be treated only as general goods liable to tax at the rate of 4 per cent multi-point. It should be noticed that in the later Division Bench case (Rani Food Products' case), the question arose whether the curry powders consisting of a mixture of powders of chilli and coriander will fall within the entry 'spices' and the court held that it will not be so. A mixture of the powders will be a distinct and different commodity and will not be taken in by the word 'spices'. In the above perspective there is no conflict between the two Bench decisions [Ambika Provision Stores' case and Rani Food Products' case].
29. It was argued that when chilli powder is produced from tax-borne chillies, it continues to be the same commodity and bears the same identity and since chillies were taxed at the first point of sale, the chilli powder produced out of such chillies should not be taxed again. In advancing the above plea, counsel for the assessee submitted that the Supreme Court of India has, in recent times, laid down a new test known as 'identity test' and in that perspective the identity of the goods is not lost when chilli powder is produced out of chillies purchased. Heavy reliance was placed on the decisions of the Supreme Court in Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 STC 827, Pio Food Packers' case [1980] 46 STC 63, Sterling Foods v. State of Kamataka [1986] 63 STC 239 and Deputy Commissioner of Sales Tax v. Shiphy International [1988] 69 STC 325 to support the above plea. The above plea was highlighted contending that there is no substantial difference in the identity between chilli and chilli powder and so the chilli powder cannot be called a distinct -and different spice liable to tax again. This Full Bench had occasion to survey the various or different tests adopted in different cases, as to how a particular entry occurring in sales tax legislation should be understood. Sec O.P. No. 10598 of 1989 and T.R.C. No. 203 of 1989 judgment dated July 21, 1992. [Reported as Sundareswaran v. State of Kerala in [1993] 91 STC 476 (Ker)].
30. I am of the view that the plea of the assessee is against the decisions of the Supreme Court and the Full Bench decision of this Court. A Constitution Bench of the Supreme Court in Ramavatar Budhaiprasad v.'Assistant Sales Tax Officer [1961] 12 STC 286, has ruled that in the absence of a definition of the word in the Sales Tax Act, the words occurring in the Act should not be construed in any technical sense or from the botanical point of view, but as understood in common parlance. It must be construed in its popular sense meaning that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it. Subsequent Constitution Benches and other Benches of the Supreme Court have followed the above decision. The ratio stated in Ramavatar's case : [1962]1SCR279 was expressed in a slightly different language also by stating that the particular words used by the Legislature in the denomination of articles are to be understood according to the common commercial understanding of the terms used and not in their scientific or technical sense see State of West Bengal v. Washi Ahmed : [1977]3SCR149 . They should be understoodin the 'commercial sense' [see Commissioner of Sales Tax v. Jaswant Singh Charon Singh : [1967]2SCR720 . The crux of the matter is that the entry occurring in the Sales Tax Act should be construed as understood in common parlance or in the commercial world or circle. Ramavatar's case : [1962]1SCR279 was followed by another Constitution Bench in Motipur Zamindary Co. (Private) Ltd. v. State of Bihar [1962] 13 STC 1.
31. A Constitution Bench of the Supreme Court in Sri Siddhi Vinayaka Coconut & Co. v. State of Andhra Pradesh [1974] 34 STC 103 at page 110 observed thus:
This Court has in a number of cases held that the same commodity at different stages could be treated and taxed as commercially different articles. In A. Hajee Abdul Shukoor and Co. v. State of Madras : [1964]8SCR217 , this Court held that 'hides and skins in the untanned conditions are undoubtedly different as articles of merchandise than tanned hides and skins' and pointed out that 'the fact that certain articles are mentioned under the same heading in a statute or the Constitution does not mean that they all constitute one commodity'. We may also refer to the decisions in Jagannath v. Union of India : 1978(2)ELT304(SC) , where tobacco in the whole leaf and tobacco in the broken leaf were treated as two different commodities, East India Tobacco Co. v. State of Andhra Pradesh : [1963]1SCR404 where Virginia tobacco and country tobacco were treated as two different commodities, and Venkataraman v. State of Madras : (1967)IILLJ246SC where cane jaggery and palm jaggery were treated as two different commodities.
The question in the said case was whether 'watery coconuts' and 'dried coconuts' are two distinct commodities, commercially speaking. The court held that it was so. In laying down the law extracted hereinabove, the Constitution Bench followed the earlier Constitution Bench decisions in Hajee Abdul Shukoor and Co: v. State of Madras : [1964]8SCR217 , Jagannath v. Union of India : 1978(2)ELT304(SC) and East India Tobacco Co. v. State of Andhra Pradesh : [1963]1SCR404 . Various Constitution Bench decisions of the Supreme Court, viz., Shanmugha Vilas Cashew-nut Factory's case [1953] 4 STC 205 (SC) at page 247, Anwarkhan Mehboob Co. v. State of Bombay [1960] 11 STC 698, Hajee Abdul Shukoor & Co.'s case : [1964]8SCR217 , Jagannath's case : 1978(2)ELT304(SC) and Sri Siddhi Vinayaka Coconut & Co.'s case [1974] 34 STC 103, have emphasized the cardinal point that if a new or different commercial article, or a different article of merchandise, or a different marketable product, is produced out of a commodity, it could be treated and taxed as a commercially different and distinct article. In Sri Siddhi Vinayaka Coconut & Co.'s case, the Constitution Bench stressed the point that the same commodity at different stages could be treated and taxed as commercially different articles. A Full Bench of this Court in Achamma Sebastian v. State of Kerala [1967] 20 STC 483 had occasion to decide an issue similar to the one in the instant case. In that case, 'rubber products' were taxable at the point of first sale in the State under item 5 of the First Schedule to the Act as it stood then. The assessee therein purchased rubber soles and rubber strap moulding from manufacturers in the State. Sales tax was levied on the sale of such goods. The commodity so purchased by the assessee was sold as chappals. It was contented that chappal is a rubber product on which tax has already been levied at the point of first sale within the State. Since the sale of soles and strap mouldings by the manufacturers was taxed as rubber products, the further sales of such rubber products cannot be taxed. Negativing this plea, a Full Bench of this Court held that though chappal is an article consisting of a division of strap moulding and rubber soles, it is commercially distinct from those parts or ingredients and has an identity of its own as a well-known variety of footwear. The Court observed that strap and the sole sold as chappal is a different entity and has a new identity. The straps and soles have separate commercial identity of their own, quite distinct from that of a chappal. The Supreme Court of India declined to grant special leave from the said decision (S.L.P. No. 143 of 1968).
32. Applying the ratio laid down by the Constitution Bench of the Supreme Court in the various decisions, Shanmugha Vilas Cashew-nut Factory's case, Anwarkhan Mehboob Co.'s case, Hajee Abdul, Shukoor & Co.'s case, Jagannath's case, Sri Siddhi Vinayaka Coconut Co.'s case, etc., I hold that 'chilli powder' is distinct and different from 'chilli', both in common parlance and in commercial world of circles. It may be, 'chilli' is taxed as spices coming under entry 27. But, when 'chilli powder' produced out of the chilli so purchased, a different and distinct commodity emerges as 'chilli powder', known in common parlance and commercial world or circle by distinct and different name and the said chilli powder is taxable, as a different and distinct goods. The further question as to whether it can be taxed as 'spices' under entry 27 does not fall to be considered in this case.
33. The decisions of the Supreme Court relied on--Tungabhadra Industries Ltd.'s case, Pio Food Packers' case, Sterling Foods v. State of Karnataka [1987] 11 ECC 89 (SC) and Deputy Commissioner of Sales Tax v. Shiphy International [1988] 16 ECC 181 (SC) are distinguishable and the decisions turned on their own facts. It has not been laid down in those cases that in all cases even though a new or distinct and different commodity is produced as understood in common parlance or in the commercial world from the original commodity, the goods produced cannot be taxed again. I am of the view, that if the original commodity and the commodity produced have both distinct and different labels and/or understood in common parlance and in the commercial, world as distinct and different goods, they are for all intents and purposes, taxable as different items of merchandise. This follows from the decisions of the Constitution Benches of the Supreme Court referred to hereinabove.
34. It is evident that the cases pressed into service by the assessee's counsel turned on the construction of the particular language of the Act in question. In Tungabhadra Industries Ltd. case, the matter arose in connection with the claim of deduction under Rule 5(1)(g) read with Rule 18(2) of the Madras General Sales Tax (Turnover and Assessment) Rules. Pio Food Packer's case was concerned with the interpretation of Section 5A of the Kerala General Sales Tax Act. Sterling Food's case and Shiphy's case were concerned with the interpretation of Section 5(3) of the Central Sales Tax Act, 1956. It is not possible for us to say that in these decisions rendered by the Supreme Court, the court was deviating in any manner, from the earlier decisions of the Constitution Benches of the Supreme Court, Shanmugha Vilas Cashew-nut Factory's case, Anwarkhan Mehboob Co.'s case, East India Tobacco Co.'s case, Hajee Abdul Shukoor and Co.'s case, Jagannath's case and Sri Siddhi Vinayaka Coconut & Co.'s case. Later Bench decisions of the Supreme Court in Ganesh Trading Co.'s case, Venkataraman's case and other cases (I need not multiply authorities and so I do not refer to all of them) have laid down the law only in conformity with the decisions of the Constitution Benches referred to earlier.
35. I am of the view that the decisions pressed into service by the assessee's counsel can be explained or distinguished. The said decisions turned on their own facts in the context of relevant statutory provisions. In those cases, a minimal process or fashioning was employed, to preserve 'the goods'-- the commodity concerned form decay for over a period of time, and to make them marketable. In such cases, the goods or the commodity was preserved, or still remained intact. There was no change in identity. It was so, in substance too. No new or distinct or different commodity, as understood in common parlance or in the commercial world, ever emerged. That may be the basic reason for the court to reach the conclusion, it arrived at in those cases. The principles or ratio of these later cases by Division Benches should be understood by us in the light of the ratio contained in the innumerable Constitution Bench decisions of the Supreme Court, which I have referred to earlier. I am of the view that it is plausible to state that the identity test is only one of the aspects to be borne in mind in evaluating whether the original commodity has ceased to be and a new commodity or goods has resulted or is produced with a new label or user as understood in common parlance or in the commercial world.
36. Therefore, I hold that 'chilli powder' is distinct and different from 'chilli'--'spice', purchased and which was taxed. As chilli powder is a distinct and different commodity, it could be taxed again. The said stand taken by the Revenue is plainly right. Ambika Provision Stores' case and Rani Food Products' case were decided on their own facts and there is no conflict in the principles laid down in those decisions. The said decisions do not require reconsideration.
37. This original petition is without merit. It is dismissed. No costs.