ORDER
Puttaswamy, J.
1. On a reference made by one of us (Puttaswamy, J.) these cases have been posted before a Division Bench for disposal.
2. As the questions that arise for determination are common, we propose to dispose of them by a common order.
3. In order to appreciate the contentions urged, it is useful to notice the facts in Writ Petition No. 27805 of 1982 in some detail as illustrative only.
4. M/s. Sterling Foods, Mangalore, petitioner in Writ Petition No. 27805 of 1982, a partnership firm of partners, which is engaged in dealing in prawns and other sea-food products, is a registered dealer under the Karnataka Sales Tax Act of 1957 (Karnataka Act 25 of 1957) and the Central Sales Tax Act of 1956 (Central Act 74 of 1956) ('the KST and CST Acts') on the file of the Assistant Commissioner of Commercial Taxes (Assessments), Mangalore (ACCT).
5. The petitioner purchases shrimps, prawns and lobsters locally and they are then cleaned, peeled, processed, frozen and packed in cartons which are stated to be exported to foreign buyers outside India under prior contracts of sale.
6. For the month of April, 1982, that is, from 1st April, 1982, to 30th April, 1982, the petitioner filed its 'statement of monthly turnover' on 22nd May, 1982 (annexure A), and tax paid in advance before the ACCT under the KST Act, inter alia, disclosing a sales turnover of Rs. 8,67,581.82 and purchase turnover of Rs. 22,73,331.14 of 'frozen shrimps' for the said period, however, claiming total exemption over the 'purchase turnover', with which claim only we are concerned, on the ground that the same had been purchased in the course of export.
7. In his notice No. 3010136 dated 24th May, 1982 (annexure B), the ACCT apprised the petitioner that the purchase turnover of shrimps was subject to tax under entry No. 13a of the Third Schedule to the KST Act as amended and that it should file revised return and pay the taxes due thereon and continue to do so in future. In response to the said notice, the petitioner filed its reply on 27th May, 1982 (annexure C), reiterating its earlier stand and denying its liability to pay taxes on the same.
8. On an examination of the reply filed by the petitioner, the ACCT by his notice No. 3010136/82-83 dated 9th July, 1982 (annexure E), issued under section 12B(2) of the KST Act proposed to levy purchase tax and other incidental levies aggregating to Rs. 52,610.72 as taxes on the purchase of shrimps of the value of Rs. 10,73,688.44 for the month of April, 1982, to which it again objected on 19th July, 1982. Even after this notice the petitioner did not relent and maintained its stand for the succeeding month of May, 1982, also. On 30th July, 1982, and 3rd August, 1982, the ACCT made two separate but identical orders for the months of April and May, 1982 (annexures E and G), under section 12B(2) of the KST Act assessing the petitioner to purchase tax and other incidental taxes for the said periods and also issued consequent notices of demands for Rs. 52,610.71 and 44,237.88 respectively. In this petition under article 226 of the Constitution, the petitioner has challenged the constitutional validity of entry No. 13a of the Third Schedule to the KST Act, the notices, the assessment orders and the notices of demands of the ACCT and has sought for appropriate writs/directions against the respondents from imposing or collecting purchase tax on purchase turnover of shrimps, prawns and lobsters under the KST Act.
9. In the other cases also the material facts and the challenges are not in any way different and the difference in periods and amounts does not make any difference to appreciate the contentions.
10. The respondents have resisted the petitions without, however, filing return in any of them.
11. Sri C. K. Viswanatha Iyer, Senior Advocate of Madras Bar, assisted by Sri B. V. Katageri of Bangalore Bar who appeared for the petitioner in Writ Petition No. 27805 of 1982, addressed leading arguments in these cases. Sriyuths G. Sarangan and J. N. S. Prasad, learned Advocates, appearing for the petitioners in other cases, adopted the arguments of Sri Iyer and supplemented them.
12. Sri S. Rajendra Babu, learned Government Advocate, has appeared for the respondents in all these cases.
13. Both sides have relied on a large number of rulings in support of their respective cases and we will refer to them at the appropriate stages.
14. We will first examine the contentions urged on the scope of the entry and then its validity as that is how the learned counsel for the petitioners, which in our opinion also is correct, addressed their arguments before us.
15. Sri Iyer has urged that frozen shrimps, prawns and lobsters were also shrimps, prawns and lobsters under entry No. 13a of the Third Schedule to the KST Act and there was no difference and distinction between raw shrimps, prawns and lobsters or those cleaned, peeled, processed or frozen and exported by the petitioners.
16. Sri Babu has urged that the legislature had deliberately treated 'raw' and 'frozen' shrimps, prawns and lobsters differently and distinctly and this Court cannot treat them as one and the same.
17. In his notice dated 9th July, 1982 (annexure E), addressed to the petitioner in W.P. No. 27805 of 1982, the ACCT, inter alia, observed thus :
'Whereas I am of the opinion that the statement of account in form 3 submitted by you for the month of April, 1982/May, 1982, is incorrect and incomplete. I propose to proceed to make a provisional assessment for the said month and hence you were called upon to produce the accounts. From the verification of the accounts on 6th July, 1982, it is revealed that you have purchased raw prawns, shrimps and lobsters to the extent of Rs. 22,73,333.11 out of which purchases within the State were Rs. 10,73,688.04. You have used the raw prawns, shrimps and lobsters in the products of frozen prawns, shrimps and lobsters. You are, therefore, liable to tax on the last purchase of prawns, shrimps and lobsters under entry 13a of the Third Schedule as the commodity produced is different from that of the commodity purchased by him.
Your contentions that the purchases were in the course of export as the purchases were made in pursuance to the contract for supply of frozen prawns, shrimps and lobsters and that the purchases are not liable to tax in view of section 5(3) of the C.S.T. Act, 1956, are not correct and acceptable.'
After setting out section 5(3) of the CST Act and analysing the same, the ACCT proceeded to observe thus :
'Thus the sale or purchase falling under section 5(3) must precede the export sale, must be after the placing of order by the foreign buyer or after making agreement with the foreign buyer and must be for the purpose of complying with such order or agreement. The reference to 'any goods' and 'those goods' in sub-section (3) indicates that goods purchased and exported must be the same goods. The goods purchased must not undergo a process or manufacture so as to change the goods into altogether a new product. Once the process or manufacture is introduced into the goods by the exporter, after making purchases for export, the link is broken and 'any goods' ceases to be 'those goods' within the meaning of sub-section (3) of section 5 of the C.S.T. Act, 1956. In other words, the provisions, the goods purchased are sold as they are, in the course of export (sic). The entry 13a clearly excludes the frozen prawns, shrimps and lobsters and hence the purchases of raw prawns, shrimps and lobsters clearly attract purchase tax.
You are buying raw prawns of various sizes from different persons, which are not suitable for export in that condition. The raw prawns so purchased undergo a process such as removal of head and tail, peeling, grading, deveining, cleaning and freezing. The frozen goods are subject to inspection by export inspection agency before shipment. Therefore, the purchases of raw prawns are not inextricably linked to export sales. The copies of contracts of the foreign buyers clearly show that order placed by them was for the supply of frozen Indian shrimps, which is a different commodity not covered in entry 13a of the Third Schedule.'
In his assessment orders, the ACCT carefully examined the objections urged by the petitioner. The rulings relied on by it and expressed thus :
'Their contentions are that the purchases were in the course of export as the purchases were made in pursuance to the contract for supply of frozen prawns, shrimps and lobsters and hence the same cannot be brought to taxation under the K.S.T. Act, 1957, in view of section 5(3) of the C.S.T. Act, 1956. They also contend that the raw shrimps, prawns and lobsters and the frozen shrimps, prawns and lobsters are one and the same commodity in view of the Supreme Court's decision in the case of Deputy Commissioner of Sales Tax (Law) v. Pio Food Packers : 1980(6)ELT343(SC) . They have also cited the Kerala High Court decision in the case of Deputy Commissioner of Sales Tax (Law) v. Neroth Oil Mills Co. Ltd. [1982] 49 STC 249.
The contentions of the assessees were examined. In the case of Pio Food Packers, the Sales Tax Officer had to levy tax on the purchases of pineapple under section 5A(1)(a) of the K.G.S.T. Act, 1963, for the reasons that they were purchased from dealers or persons not liable to tax and consumed in the manufacture of pineapple slices, pineapple jam, pineapple squash and pineapple juice. The assessees however had conceded that pineapple jam and pineapple squash would fall under section 5A(1)(a) and in regard to the pineapple slices they contended that it would not fall under the said section before the S.T.A.T. which has held that pineapple slices would not fall within section 5A(1)(a). In revision before the High Court, the order of the Tribunal was maintained. The Supreme Court also upheld the decision of the Tribunal. Section 5A(1)(a) of the K.G.S.T. Act, 1963, is in pari materia with that of section 6 of the K.S.T. Act, 1957. There was no specific entry in any of the schedules to the K.G.S.T. Act, 1963, as 'the pineapple other than pineapple slices, pineapple jam and pineapple juice'. The pineapple was a general item of goods liable to tax. The department had formed an opinion that when pineapple underwent certain process a different commodity was produced. The Supreme Court only upheld the view of the Tribunal that the pineapple when washed and the inedible portion, the end crown, the skin and inner case are removed no new commodity was emerged. I am unable to concede the contention of the assessees that the above decision is applicable to this case on hand. The entry 13a of the Third Schedule reads as under :
'Shrimps, prawns and lobsters other than frozen shrimps, prawns and lobsters.' This clearly indicates the intention of the legislature to treat the raw shrimps, prawns and lobsters and frozen shrimps, prawns and lobsters as two different commodities and to levy tax on the last purchases of raw shrimps, prawns and lobsters. The assessee had purchased raw shrimps, prawns and lobsters and produced frozen shrimps, prawns and lobsters which is a different commodity in view of the above entry 13a. The assessees have exported the frozen shrimps, prawns and lobsters in pursuance to the contract of the foreign buyer to supply frozen shrimps, prawns and lobsters. The assessees are therefore last purchasers in the raw shrimps, prawns and lobsters and hence liable to tax. The decision of the Kerala High Court in the case of Deputy Commissioner of Sales Tax (Law) v. Neroth Oil Mills Co. Ltd. [1982] 49 STC 249 is also, in my opinion, not applicable as entry 13a in the Third Schedule is not similar to that of the one in the schedule of the K.G.S.T. Act, 1963. It has not been brought to the notice or there is any indication in the above decision to the effect that the entry 13a is similar to the entry in the K.G.S.T. Act, 1963. As could be construed from the said above decision, the frozen shrimps, prawns and lobsters are not excluded from that of the raw shrimps, prawns and lobsters in the entry of the schedule to the K.G.S.T. Act. The Honourable Karnataka High Court in the case S. Soundarapandian v. Commissioner of Commercial Taxes, Bangalore [1980] 46 STC 211 has upheld that words used in the entries in sales tax laws should be understood by the meaning attached to those words at common parlance and the technical meaning attached to those words and given in dictionaries could not be a safeguard for arriving at a correct conclusion. The legislature has clearly indicated by amending the entry 13a of the Third Schedule, w.e.f. 1st September, 1978, 'shrimps, prawns, and lobsters, other than frozen shrimps, prawns and lobsters' that the frozen shrimps, prawns and lobsters is a different commodity which has been exported. The Supreme Court in a case, Assessing Authority v. East India Cotton . : [1982]1SCR55 , has laid down a dictum at pages 245 and 246 that 'it is a well-settled rule of interpretation that a statute must be construed according to its plain language and neither should any thing be added nor subtracted unless there are adequate grounds to justify the inference that the legislature clearly so intended'. Therefore the decisions cited above are clearly distinguishable to the facts of the case on hand and hence they are not applicable.
Your contention that the purchases were in the course of export is therefore not acceptable. The sale or purchase falling under section 5(3) must precede the export sale, must be after the placing of order by the foreign buyer or after making agreement with the foreign buyer and must be for the purpose of complying with such order or agreement. The inference to 'any goods' and 'those goods' in sub-section (3) indicates that goods purchased and exported must be the same goods. Since the goods purchased and exported were two different commodities, the purchases of raw shrimps, prawns and lobsters were not in the course of export and hence liable to tax under entry 13a of the Third Schedule to the K.S.T. Act, 1957.'
On this finding - the ACCT levied taxes on this petitioner. We are called upon to decide the correctness of this finding, for which purpose, it is necessary to trace the legislative history of entry No. 13a of the Third Schedule to the KST Act.
17-A. As on 1st November, 1956, on which day then new State of Karnataka comprising the areas referred to in section 7 of the States Reorganisation Act came into being, there were different sales tax laws providing for levy of taxes on sales and purchases in all the integrating areas. The new State by virtue of powers derived from article 246(3) of the Constitution and entry No. 54 of List II (State List) of the Seventh Schedule to the Constitution enacted the uniform KST Act repealing all the corresponding Acts referred to in section 40 of that Act. The Act came into force from 1st October, 1957. Section 5 of the Act which is the principal charging section provides for levy of taxes on sales and purchases on various articles described in the schedules to the Act. The Third Schedule to the Act when enacted contained 13 entries on which a single point purchase tax was leviable under section 5(3)(b) of the Act and none of those entries brought raw or frozen shrimps, prawns and lobsters to purchase tax, which position continued till 31st March, 1973.
18. The Karnataka Sales Tax (Amendment) Act, 1973 (Karnataka Act 7 of 1973) (1973 Act), that came into force from 1st April, 1973, introduced a new entry, viz., entry No. 13a to the Third Schedule to the K.S.T. Act, which reads thus :
'THIRD SCHEDULE Goods in respect of which a single point purchase tax only is leviable under section 5(3)(b). -----------------------------------------------------------------------Sl. No. Description of the Point of levy Rate of taxgoods----------------------------------------------------------------------- * * * * 13a Shrimps, prawns and Purchase by the Four per cent.'lobsters. last dealer inthe State liableto tax under thisAct. -----------------------------------------------------------------------
Section 9 of the Karnataka Sales Tax (Amendment) Act of 1978 (Karnataka Act 18 of 1978) (1978 Act) amended the said entry as hereunder :
'......... (2) in the entries relating to serial number 13a, in column 2, after the word 'lobsters', the words 'other than processed or frozen shrimps, prawns and lobsters' shall be and shall be deemed always to have been inserted;
(3) the following explanation shall be and shall be deemed always to have been inserted, at the end, namely :- 'Explanation. - In item 13a 'processing' includes all or any of the following, namely, cutting of head or tail, peeling, deveining, cleaning of freezing.''
The Karnataka Taxation and Certain Other Laws (Amendment) Act, 1982 (Karnataka Act 13 of 1982) (1982 Act), that came into force from 1st April, 1982, further amended the said entry as hereunder :
'(17) in the Third Schedule -
(a) in the entries relating to serial number 13a, for the words in column 2, the words 'shrimps, prawns and lobsters' shall be and shall be deemed always to have been substituted and after the words as so substituted, the following shall be and shall be deemed to have been inserted with effect from the first day of September, 1978, namely :-
'other than frozen shrimps, prawns and lobsters.';
(b) the explanation at the end shall be and shall be deemed always to have been omitted.'
We have earlier set out entry No. 13a as introduced by the 1973 Act and that entry as amended by the two amending Acts that have been given retrospective effect stand thus from 1st April, 1973, to 31st August, 1978.
'Entry 13a. Shrimps, prawns and Purchased by the last Four per cent. lobsters other than dealer in the State processed or frozen liable to tax under shrimps, prawns and this Act. lobsters. Explanation. - In item 13a 'processing' includes all or any of the following, namely, cutting of head or tail, peeling, deveining, cleaning or freezing.'
From 1st September, 1978, the said entry stands thus :
'Shrimps, prawns and lobsters other than frozen shrimps, prawns and lobsters.'
With this brief legislative history we now proceed to ascertain its true scope and ambit.
19. The rules or canons of construction of entries occurring in sales tax laws have been explained by the Supreme Court in a large number of rulings and it is enough to notice a few of them only. In Ramavatar Budhaiprasad : [1962]1SCR279 the Supreme Court explained the principles in these words :
'................ But this word must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of every day use 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'. It is to be construed as understood in common language : Craies on Statute Law, page 153 (5th Edition). It was so held in Planters Nut and Chocolate Co. Ltd. v. The King (1952) 1 Dom LR 385, 389. This interpretation was accepted by the High Court of Madhya Pradesh in Madhya Pradesh Pan Merchants Association, Santra Market, Nagpur v. State of Madhya Pradesh (Sales Tax Department) [1956] 7 STC 99, 102 (Nag) where it was observed : 'In our opinion, the word 'vegetables' cannot be given the comprehensive meaning the term bears in natural history and has not been given that meaning in taxing statutes before. The term 'vegetables' is to be understood as commonly understood denoting those classes of vegetable matter which are grown in kitchen gardens and are used for the table.''
In Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh : 1981(8)ELT325(SC) the Supreme Court reiterated them in these words :
'It is well-settled that in interpreting items in statutes like the Excise Tax Acts or Sales Tax Acts, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances, resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted.'
In Thillai Chidambara Nadar v. Additional Appellate Assistant Commissioner : AIR1985SC1644 and Chiranjit Lal Anand v. State of Assam : AIR1985SC1387 they being the very latest, the Supreme Court has again reiterated them.
20. Entry No. 13a, as originally enacted which only read as 'shrimps, prawns and lobsters' did not make any distinction and difference between raw 'shrimps, prawns and lobsters' all of which belong to the family of fish normally found in sea and are caught from sea either by conventional or mechanised fishing methods or those that undergo processing like cutting of heads or tails; peeling and cleaning without which they are not consumed by human beings. 'Shrimps, prawns, and lobsters' caught from the sea as live animals cannot and are not consumed as such. Without cutting, peeling and cleaning or processing they are not consumed. Freezing is undertaken for purposes of preservation and transport to other places or far off counties in the world. Even after such processing also, in common parlance they are only called as shrimps, prawns and lobsters. In any even on the ratio of the ruling of the Supreme Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers : 1980(6)ELT343(SC) which approved the principles enunciated by the American Supreme Court in East Texas Motor Freight Lines v. Frozen Food Express 100 L Ed 917; 351 US 49 that can only be the inevitable conclusion to be reached by us, which would have then presented no difficulty for us in following the ruling of the Kerala High Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Neroth Oil Mills Company Limited [1982] 49 STC 249. But unfortunately for the petitioners that entry was not allowed to stand in that form by the legislature for reasons that are not far to seek.
21. At this stage we will assume that there is a difference and distinction in entry No. 13a as it stood for the periods prior to 1st September, 1978, and thereafter effected by the two amending Acts of 1978 and 1982 and ascertain their import on that basis.
22. We must at the verb outset remember that the legislature made the amendments deliberately. We cannot ignore the deliberate amendments made to entry No. 13a either on the traditional rules of construction of statutes or the progressive rule of construction of statutes applied to taxation measures in recent times [vide K. P. Varghese v. Income-tax Officer, Ernakulam : [1981]131ITR597(SC) , State of Karnataka v. Hansa Corporation : [1981]1SCR823 , McDowell & Company Limited v. Commercial Tax Officer : [1985]154ITR148(SC) and the Full Bench ruling of this Court in C. Arunachalam v. Commissioner of Income-tax ILR (1984) 2 Kar 1387 (FB)].
23. The amendments made in 1978 and 1982 Acts clearly make a distinction and difference between raw shrimps, prawns and lobsters caught from sea and shrimps, prawns and lobsters which are fit for table purposes. The processed and frozen shrimps, prawns and lobsters are decidedly different from raw shrimps, prawns and lobsters. The raw/live shrimps, prawns and lobsters fall within the former part of entry No. 13a and the processed and frozen shrimps, prawns and lobsters fall within the latter part of that entry. The use of the terms 'other than' in between the former and the latter parts is significant and leaves no scope in holding that one is different from the other. The terms 'other than' have been used to exclude the latter from the former. We cannot interpret the terms 'other than' as conjunctive 'and' or as disjunctive 'or'. On the language and in the context, we are bound to hold that the former are different from the latter. If we are to hold that they are one and the same, as urged for the petitioners, it will not be interpretation of the plain and unambiguous terms, but will only be legislating in the thin guise of interpretation, which is plainly impermissible [vide Polestar Electronic (Private) Limited v. Additional Commissioner, Sales Tax : [1978]3SCR98 ]. Apart from this it would so result in defeating the legislative mandate. We are of the view that this is the broad effect of the amendments made in 1978 and 1982.
24-1. In Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam's case [1982] 49 STC 249 (Ker) the facts in brief were these : The respondent assesses which purchased raw 'prawns' locally processed them and then exported them from India, claimed that the purchase turnover of raw prawns cannot be subjected to purchase tax under the Kerala General Sales Tax Act, 1963 (Kerala Act). In sustaining that claim, the assessee urged that the processed prawns were in no way different for the purpose of section 5(3) of the CST Act and the Kerala Sales Tax Appellate Tribunal (Tribunal) had upheld the same. In sustaining the said order of the Tribunal the court relying on the ruling of the Supreme Court in Pio Food Packers' case : 1980(6)ELT343(SC) expressed thus :
'4. Commercially prawns which are purchased by the assessee and prawns exported after processing for the purpose of such export are one and the same commodity as rightly held by the Sales Tax Appellate Tribunal. We see no reason to interfere. The revision is dismissed.'
We have earlier expressed that if entry No. 13a had stood as originally enacted, we would have no hesitation in following these principles. But, as later pointed out by us that entry underwent a radical transformation for which reason, we must necessarily hold that the principles enunciated herein cannot be applied by us.
24-2. In this ruling the court has not referred to the period of assessment and the relevant entry of the Kerala Act that was in force. But, from the copy of the S.L.P. made available to us, it appears that the period of assessment was for the month of November, 1976, when the relevant entry in the Kerala Act stood thus (vide page 127 of Gangadharan on Law of Sales Tax in Kerala made available by Sri Iyer) :
------------------------------------------------------------------------Sl.No. Description of the goods Point of levy Rate of tax------------------------------------------------------------------------ '................................. 65A. (i) Prawns, lobsters, frogs, At the point of 5froglegs, cuttlefish and last purchase incrab not falling under the State by a(ii) below or dealer who is liableitem 25H(viii). to tax undersection 5. (ii) Prawns, lobsters, frogs,froglegs, cuttlefish andcrab canned or tinnedor frozen or otherwiseprocessed not fallingunder item 25H(viii). .....................' ------------------------------------------------------------------------
If this is how that entry stood then the ruling of the Kerala High Court in Neroth's case [1982] 49 STC 249 had overlooked the true import of the same and the rules of construction governing the same that have been noticed and dealt by us. For these very reasons, with great respect to their Lordships we will not be justified in subscribing to them and regret our inability to do so.
25. We are of the view that the rulings of the Kerala and Madras High Courts in Joseph v. State of Kerala [1967] 20 STC 261 (Ker), Coastal Food Packers, Cochin v. State of Kerala [1975] 36 STC 72 (Ker), State of Tamil Nadu v. Tata Oil Mills Co. Ltd. [1983] 52 STC 328 (Mad.), Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers [1978] 41 STC 364 (Ker) and State of Tamil Nadu v. Eastern Aquatic Traders [1985] 58 STC 151 (Mad.) which interpreted different entries but which were all strongly relied upon by Sri Iyer, do not bear on the construction of an altogether different entry occurring in the KST Act. What is true of these rulings is also true of the ruling of this Court in Sri Lakshmi Coconut Industries v. State of Karnataka [1980] 46 STC 404.
26. With the above broad analysis of entry No. 13a we now pass on to ascertain its import prior to 1st September, 1978, and thereafter.
27. Prior to 1st September, 1978, the latter part of entry No. 13a employs the terms processed or frozen shrimps, prawns and lobsters. The term 'processed' which is the past perfect tense of the term 'processing' defined in the explanation as inclusive of cutting of heads or tails, peeling, deveining, cleaning or freezing must receive the ordinary meaning ascribed to that and the special meaning attached to the same by the legislature. The term 'processing' is a very comprehensive term and in the context means to treat and preserve or make fit for table purposes or human consumption. As noticed by us earlier 'frozen' or freezing is done only for preservation and transport purposes. The frozen shrimps, prawns and lobsters are undoubtedly processed, though the possibility of processed shrimps, etc., not being frozen and sold immediately locally or at the nearest places cannot altogether be ruled out. Both these types of shrimps, prawns and lobsters were excluded from levy of purchase tax prior to 1st September, 1978. But, after 1st September, 1978, only frozen raw shrimps, prawns and lobsters are excluded from levy of purchase tax.
28. The term 'frozen' is derived from the word 'freeze'. The terms 'frozen' and 'freeze' are defined in the following dictionaries :
''freeze' ......... to subject (food packages) to intense cold and solidification into a block like ice for preservation (patrons prepared and wrapped meats at home and froze them in their lockers .....)
'frozen'....... use of foods prepared for the table (- custard) (- fruit salad).'
(vide Webster's Third New International Dictionary at pages 907 and 915 respectively).
''freeze' ......... to preserve (food) by means of very low temperatures : Meat from New Zealand is frozen and brought to England in special ships. Frozen foods have taken the place of tinned foods in many homes, frozen beans .........'
(vide Longman Dictionary of Contemporary English by 'Chief Editor, Paul Procter, page 449).
What emerges from this is that shrimps, prawns and lobsters after they have been processed are frozen for long preservation and transportation to distant places. What is exported from this country is only frozen shrimps, prawns and lobsters that have already undergone processing. The latter part of entry No. 13a only exempts such frozen shrimps, prawns and lobsters and not the raw shrimps, prawns and lobsters purchased locally by the petitioners which are then processed and freezed for export.
29. Sri Iyer has contended that for purposes of the CST Act and section 5(3) of that Act, in particular, entry No. 13a of the Third Schedule should only be interpreted as shrimps, prawns and lobsters without any distinction between them and the frozen variety.
30. When closely examined this contention goads us to interpret the entry in two ways - one for the local Act and the another for the CST Act. We cannot interpret an entry occurring in the KST Act, the local Sales Tax Act, in one way for local purchases and sales and in another way for purchases and sales in the course of export, import or inter-State trade and commerce. We are of the view that every legal principle and rules of construction of statutes positively prohibit us from placing such a construction suggested by Sri Iyer. We have, therefore, no hesitation in rejecting this contention of Sri Iyer.
31. Sri Sarangan has urged that entry No. 13a was outside the scope and ambit of 'taxable turnover' defined in section 2(u-1) of the KST Act in so far as they pertained to purchases 'in the course of export'.
32. As we apprehend this contention of Sri Sarangan is nothing but a facet of the earlier contention urged by Sri Iyer, examined are rejected by us, which means that this contention must also be rejected for those very reasons. We will, however, assume that this contention of Sri Sarangan is an independent, separate and a distinct contention and examine the same on that basis also.
33. The meaning of entry No. 13a or for that matter any other entry in the KST At is not dependent on the meaning of the term 'taxable turnover' defined in section 2(u-1) of that Act. We do not see any correlation or antagonism between the two at all. We fail to see as to how this contention even if sound in any way advances the case of the petitioners.
34. The term 'taxable turnover' is defined in section 2(u-1) of the KST Act for purposes of that Act and rightly excludes the turnover of purchases or sales in the course of inter-State trade or commerce or in the course of export of the goods out of the territory of India or in the course of import of goods into the territory of India, which are regulated by the CST Act. But, that exclusion does not necessarily mean that entry No. 13a is automatically excluded from the same. The latter does not follow from the former. We see no merit in this contention of Sri Sarangan either.
35. Learned counsel for the petitioners have contended that entry No. 13a was in conflict with the CST Act and in particular section 5(3) of that Act that had liberalised the rules governing 'in the course of export' and thus trenches on the field reserved to Parliament for which reason, it was beyond the legislative competence of the State Legislature.
36. The Act has been enacted by the State Legislature by virtue of the powers derived from article 246 and entry 54 of the State List. Entry 54, the scope of which has been explained by the Supreme Court in a large number of cases even before its amendment by the Constitution 46th Amendment, enabled the State Legislature to identify, classify or reclassify goods and subject them to purchase or sales tax as may decided by it. From this itself it follows that entry No. 13a is within the legislative competence of the State Legislature.
37. Entry No. 13a does not in any way conflict with the CST Act and in particular section 5(3) of that Act. The classification and reclassification made does not affect the principles formulated by the Parliament to determine whether the penultimate purchases or sales are in the course of export, import or inter-State trade and commerce on which aspect only Parliament has exclusive power to legislate under article 246(1) and entry No. 92A of the Constitution.
38. Article 286 of the Constitution that places certain restrictions on the taxing power of State, in the course of imports, exports and inter-State sales empowers Parliament to formulate principles for determination on all of them and levies to be made thereon. The CST Act is not a total bar for the State to legislate on the field reserved to it under the Constitution. We are, therefore, of the view that entry No. 13a is within the legislative competence of the Karnataka State Legislature.
39. Sri Sarangan has urged that entry No. 13a classifying 'raw' and 'frozen' shrimps, prawns and lobsters ultimately consumed human beings into two separate and distinct groups when both of them really belonged to one and the same group or base was on unreal and unsubstantial ground of impermissible classification, arbitrary and was violative of article 14 of the Constitution.
40. The true scope and ambit of article 14 of the Constitution has been explained by the Supreme Court in a very large number of cases. In Ram Krishna Dalmia v. Justice S. R. Tendolkar : [1959]1SCR279 , In re Special Courts Bill, 1978 : [1979]2SCR476 the Supreme Court has exhaustively reviewed all the earlier cases prior to those rulings and has restated them. Even the scope and ambit of article 14 of the Constitution, in matters of classification for taxation where the legislature enjoys greater freedom has been explained by the Supreme Court in a large number of cases. In Twyford Tea Company Limited v. State of Kerala : [1970]3SCR383 and R. K. Garg v. Union of India AIR 1981 SC 2138 the Supreme Court by majority, reviewing all the earlier rulings till then rendered has restated the principles in examining the challenge based on article 14 of the Constitution. Bearing the principles stated in these cases, it is necessary to examine this challenge of the petitioner.
41. 'Raw' shrimps, prawns and lobsters caught from the sea that undergo an elaborate processing and freezing in modern scientific plants made fit for preservation and transportation and ultimate sales in outstation places in and outside the country called as 'frozen' are not one and the same and are decidedly different and separate and they can be so treated by the legislature. United States of America, the most affluent country in the world is one of the biggest buyers of frozen shrimps, prawns and lobsters apart from other advanced countries like Russia, France and others. Raw shrimps, prawns and lobsters are not consumed as such can hardly be doubted. But, that does to mean that when raw shrimps, prawns and lobsters are processed and frozen they can still be said to be raw shrimps, prawns and lobsters, that too when the legislature deliberately and consciously treats them so and classifies them separately. The fact that they are ultimately consumed by human beings has hardly any relevance for identification and classification, at any rate for purposes of taxation. The classification is essentially for raising revenue. If one has regard to all these facts and circumstance, it is difficult to hold that the classification made by the legislature between raw and frozen varieties suffers from the vice of impermissible classification and violates article 14 of the Constitution. Even otherwise, in classifying raw and frozen variety separately the characteristics of which are not one and the same, we find it difficult to hold that the same is based on an artificial and unreal differences and distinctions to attract the vice of article 14 of the Constitution. In classifying the raw and frozen variety differently and subjecting only the former for purchase tax, the legislature has not acted arbitrarily and irrationally.
42. On the foregoing discussion, we hold that the challenge of the petitioners to entry No. 13a as violative of article 14 of the Constitution is without any merit and we reject the same.
43. The power of the Parliament and the State Legislature to legislate retrospectively is now well-settled (vide Rai Ramkrishna v. State of Bihar : [1963]50ITR171(SC) . The petitioners have not alleged and proved that the retrospectivity given to the entry is destructive of their trade and business even to remotely attract the vice of article 19 of the Constitution, if any.
44. In Coffee Board, Bangalore v. Joint Commercial Tax Officer, Madras : [1970]3SCR147 the majority of the Supreme Court speaking through Hidayatullah, C.J., reviewing all the earlier cases has explained the meaning of the term 'in the course of export' in these words :
'The phrase 'sale in the course of export' comprises in itself three essentials : (i) that there must be a sale, (ii) that goods must actually be exported, and (iii) the sale must be a part and parcel of the export. Therefore either the sale must take place when the goods are already in the process of being exported which is established by their having already crossed the customs frontiers, or the sale must occasion the export. The word 'occasion' is used as a verb and means 'to cause' or 'to be the immediate cause of'. Read in this way the sale which is to be regarded as exempt is a sale which causes the export to take place or is the immediate cause of the export. The export results from the sale and is bound up with it. The word 'course' in the expression 'in the course of' means 'progress or process of', or shortly 'during'. The phrase expanded with this meaning reads 'in the progress or process of export' or 'during export'. Therefore the export from India to a foreign destination must be established and the sale must be a link in the same export for which the sale is held. To establish export a person exporting and a person importing are necessary elements and the course of export is between them. Introduction of a third party dealing independently with the seller on the one hand and with the importer on the other breaks the link between the two, for then there are two sales one to the intermediary and the other to the importer. The first sale is not in the course of export for the export begins from the intermediary and ends with the importer.
Therefore the tests are that there must be a single sale which itself causes the export or is in the progress or process of export. There is no room for two or more sales in the course of export. The only sale which can be said to cause the export is the sale which itself results in the movement of the goods from the exporter to the importer.
The course of export may be established by agreement or by force of law. To be the former the agreement between the seller and the buyer must envisage an export out of India who then become exporter and importer respectively. By force of law a person selling the goods may be compelled to sell them only in an export sale but that too is not essentially different from the first. In either case there is a seller and a buyer who by reason of the sale also become exporter and importer respectively. Any other buyer who is not himself the importer buys for export even if export ultimately results. It is to bring out these results that Parliament has recognised only two cases of sale in the course of import : (a) where the sale is effected by a transfer of documents of title to goods after the goods have crossed the customs frontiers that is to say the goods are already on the way to the importer and (b) when the sale itself causes the export to take place that is to say the exporter and importer negotiate and complete a sale which without more would result in the export of the goods. No other sale can qualify for the exemption under section 5(1) read with article 286(1)(b).'
These principles have again been reiterated in Mod. Serajuddin v. State of Orissa : AIR1975SC1564 .
45. In Consolidated Coffee Limited v. Coffee Board, Bangalore : [1980]3SCR625 the Supreme Court has explained the true import of section 5(3) of the CST Act as amended by Act 103 of 1976 that came into force from 1st April, 1976, in these words :
'Section 5(1) was construed by this court in the context of two sales (though both were closely connected with the ultimate exportation of the goods out of India) rather very strictly in the two cases, namely, the Coffee Board's case : [1970]3SCR147 and the Mod. Serajuddin's case : AIR1975SC1564 ). In the former case, in regard to the very export auctions conducted by the Coffee Board for the avowed purpose of exporting the coffee through the registered exporters (which are the subject-matter of the instant writ petitions) this court negatived the claim that the sales of coffee at such auctions were made 'in the course of export' within the meaning of section 5(1) on the ground there were two sales, one by the Coffee Board to the intermediary (registered exporter) and the other by the intermediary to the importer and that the first sale was not 'in the course of export' for the export began from the intermediary and ended with the importer and that the introduction of the intermediary (registered exporter) between the seller (Coffee Board) and the importing buyer broke the link. This court laid down the test that there must be a single sale which itself caused the export and there was no room for two or more sales being 'in the course of export'. In other words, notwithstanding the compulsion to export arising from clauses 26, 30 and 31 of the auction conditions the penultimate sale was held to be not in the course of export. The latter case [Mod. Serajuddin's case : AIR1975SC1564 ] was stronger than the Coffee Board's case : [1970]3SCR147 inasmuch as the penultimate sales (two contracts for sale of mineral ore entered into by Mod. Serajuddin with the State Trading Corporation) were so inextricably connected with the final sales (two corresponding contracts for sale of the identical goods entered into by the STC with the foreign buyers) that the former were to stand cancelled if the latter for any reason fell through any vice versa and further the penultimate sales were effected to implement the contracts with the foreign buyers and even then following the ratio of the Coffee Board's case : [1970]3SCR147 this court held that the penultimate sales (Mod. Serajuddin's contracts with her the STC) were not sales in the course of export. Negativing the contention that the contracts between Mod. Serajuddin and the STC and the contracts between that STC and the foreign buyer formed integrated activities in the course of export, this court took the view that the crucial words in section 5(1) showed that only if a sale occasioned the export, it would be in the course of export and that the two sets of contracts were separate and independent and Mod. Serajuddin was under no contractual obligation to the foreign buyer either directly or indirectly and that his rights and obligations were only against the STC. It will thus appear clear that even when the STC had with it foreign buyer's contracts and Mod. Serajuddin's contracts with the STC had been entered into for the purpose of implementing such foreign buyer's contracts, this court held that the sales between Mod. Serajuddin and the STC were not sales in the course of export. It was at this stage, i.e., when section 5(1) was interpreted by this court in the aforesaid manner that the Parliament felt the necessity of enacting section 5(3) for the purpose of giving relief in respect of penultimate sales that immediately precede the final (export) sales provided the former satisfy the conditions specified therein. The statement of objects and reasons in this behalf runs thus :
'According to section 5(1) of the Central Sales Tax Act, a sale or purchase of goods can qualify as a sale in the course of export of the goods out of the territory of India only if the sale or purchase has either occasioned such export or is by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. The Supreme Court has held [vide Mod. Serajuddin v. State of Orissa : AIR1975SC1564 ] that the sale by an Indian exporter from India to the foreign importer alone qualifies as a sale which has occasioned the export of the goods. According to the Export Control Orders exports of certain goods can be made only by specified agencies such as the State Trading Corporation. In other cases also, manufacturers of goods, particularly in the small-scale and medium sectors, have to depend upon some experienced export house for exporting the goods because special expertise is needed for carrying on export trade. A sale of goods made to an export canalising agency such as the State Trading Corporation or to an export house to enable such agency or export house to export those goods in compliance with an existing contract or order is inextricably connected with the export of the goods. Further, if such sales do not qualify as sales in the course of export, they would be liable to State sales tax and there would be a corresponding increase in the price of the goods. This would make our exports uncompetitive in the fiercely competitive international markets. It is, therefore, proposed to amend, with effect from the beginning of the current financial year, section 5 of the Central Sales Tax Act to provide that the last sale or purchase of any goods preceding the sale or purchase occasioning export of those out of the territory of India shall also be deemed to be in the course of such export if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for, or in relation to, such export.' Two things become clear from this statement : first, the Mod. Serajuddin's decision : AIR1975SC1564 is specifically referred to as necessitating the amendment and secondly penultimate sales made by small and medium scale manufacturers to an export canalising agency or private export house to enable the latter to export those goods in compliance with existing contracts or orders are regarded as inextricably connected with the export of the goods and hence earmarked for conferral of the benefit of the exemption. But here again, 'existing contract' with whom is not clarified. In other words, on this crucial point the statement is silent and does not throw light on whether the existing contract should be with a foreign buyer or will include any agreement with a local party containing a covenant to export. Therefore, the question will again depend upon proper construction and, as we have said above, in the matter of construction the two aspects discussed earlier show that by necessary implication 'the agreement' spoken of by section 5(3) refers to the agreement with a foreign buyer ..................
Having come to the conclusion that on proper construction the expression 'the agreement' occurring in section 5(3) refers to the agreement with a foreign buyer and does not include any agreement with a local party containing a covenant to export, the next question that arises for our consideration is as to when does the penultimate sale (the sale of coffee at export auctions conducted by the Coffee Board to the registered exporters) takes place, i.e., becomes complete by the passing of the property in the coffee sold thereat to the registered exporters The determination of the point of time at which the property in the coffee passes to the registered exporters becomes necessary because before that the agreement with or order from a foreign buyer in respect of those goods must come into existence to implement which the penultimate sale must have taken place ....
Having regard to the above discussion it is clear to us that in the penultimate sales (sales of coffee effected to the registered exporters at export auctions conducted by the Coffee Board) the property in the coffee sold thereat passes to the buyer immediately upon payment of full price, weighment and setting apart of the coffee for delivery to the buyer under clauses 19 and 20 of the auction conditions and it would be at this stage, i.e., just before this stage is reached that the agreement with or order from a foreign buyer must be available or produced in order to attract section 5(3) of the Central Sales Tax Act, 1956.'
On the application of these principles, the petitioners have to prove that frozen shrimps, prawns and lobsters were purchased by them and have been exported in pursuance of a prior agreement to sell to claim exemption from payment of purchases tax, which is not the position as found by the ACCT in Writ Petition No. 27805 of 1982. We are of the view that this finding of the ACCT which is based on the correct application of the principles cannot be disturbed by us. What is true of the petitioner in Writ Petition No. 27805 of 1982 is also true of the other petitioners.
46. As all the contentions urged for the petitioners fail, these writ petitions are liable to be dismissed.
47. We, therefore, dismiss these writ petitions and discharge the rule issued in all these case. But, in the circumstances of the cases, we direct the parties to bear their own costs.
48. Writ petitions dismissed.
49. Orders on the oral applications made by the petitioners for a certificate of fitness to appeal to the Supreme Court of India under articles 133 and 134A of the Constitution.
50. Immediately after we pronounced our order dismissing these writ petitions, learned counsel for the petitioners made oral applications for certificates of fitness to appeal to the Supreme Court of India under articles 133 and 134A of the Constitution on the ground that the questions decided by us raise substantial questions of law of general importance and they need to be decided by the Supreme Court of India.
51. Sri S. Rajendra Babu, learned Government Advocate appearing for the respondents, in our opinion, very rightly does not oppose the oral applications made by the petitioners.
52. On one of the important questions that arise for determination, we have dissented from the view expressed by the High Court of Kerala in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Neroth Oil Mills Company Limited [1982] 49 STC 249. We are of the view that the questions raised and decided in these case are substantial questions of law of general importance and they need to be decided by the Supreme Court of India. We, therefore, allow the oral applications made by the petitioners in all these cases and grant them a certificate of fitness to appeal to the Supreme Court of India and direct the Registrar to issue necessary certificates there to the petitioners.