Supreme Court of India
DEPUTY COMMISSIONER OF SALES TAX ETC.ETC.versusA. B. ISMAIL ETC. ETC.
- Citation
- 1986 INSC 74
- Decided
- 15 April 1986
- Disposal
- Appeal(s) allowed
- Bench
- P N BHAGWATI
Holding
The slaughter of goats and sheep and the resulting meat, hides and skins are "other goods" distinct from the original animals, satisfying the consumption and manufacture requirements of s.5‑A(1)(a), making the purchase tax liability valid.
Summary
The respondents purchased live goats and sheep, slaughtered them, and sold the resulting meat. The assessing officer levied purchase tax on the purchase of the animals under s.5‑A(1)(a) of the Kerala General Sales Tax Act, 1963, treating the conversion into meat as manufacture of "other goods". The Sales‑Tax Appellate Tribunal and the appellate officer upheld the assessment, but the Kerala High Court set it aside, holding that meat was not a distinct "other good". The Supreme Court examined the statutory requirement of consumption, manufacture, and production of other goods, and held that slaughter converts the animals into meat, hides and skins, which are distinct goods, thereby satisfying all three ingredients. Consequently, the assessment orders were restored and the appeals were allowed.
Issues considered
- Whether the conversion of live goats and sheep into meat constitutes manufacture of "other goods" within the meaning of s.5‑A(1)(a) of the Kerala General Sales Tax Act, 1963.
- Whether the process of slaughter involves consumption and manufacture sufficient to attract purchase tax.
Legislation cited
- Kerala General Sales Tax Act, 1963s. 5, s. 5-A(1)(a)
Subjects
sales taxpurchase taxmanufactureother goodsconsumptionKerala General Sales Tax Actslaughtertax liabilitystatutory interpretation
Judgment
522
A
DEPUTY <XlltilSSI<llER OF SALES TAX ETC. ETC.
v.
A. B. ISMAIL ETC. ETC.
APRIL 15, 1986
B [P.N. BHAGWATI, C.J., V. KHALID AND G.L. OZA, JJ,]
Kerala General Sales Tax Act, 1963 : s. 5-A(l)(a) ~ •
Mutton produced after slaughtering goats and sheeps - Whether
'other goods' assessable to tax.
c Words and Phrases "Goat and Sheep" and ''Mutton" -
Meaning of. ~.
Section 5-A(l )(a) of the Kerala General Sales Tax Act ';f
1963 provides for levy of purchase tax on the purchase
turnover of a dealer who in the course of his business
D
purchases goods, the sale or purchase of which is liable to
tax under that Act, in circumstances in which no tax is
payable under s.5 and then consumes such goods in the msnu-
facture of other goods for sale or otherwise.
The respondents purchase goats and sheep for slaughter-~
E ing them and then sell the meat they get after such slaughter.
They were assessed by the assessing officer to sales tax on
their purchase turnover of goats and sheep under s. 5-A (l)(a) •
on the assumption that they converted the animsls into meat by
the msnufacturing process of slaughtering. The Appellate~
Officer and the Tribunsl agreed with the assessing officer.
F The High Court, however, quashed the assessment orders holding -(-
that the meat got after slaughtering the animsls was not
'other goods' within the meaning of the section.
In these appeals by certificate by the Department it was
contended for the respondents that they were only processing
G live goat and sheep into lllltton by killing them and cutting
them into pieces and that in this process there was neither
consumption nor a msnufacture, nor production of 'other. .
goods'. ._
Allowing the appeals, the Court,
H
DY. COMMNR. OF s.r. v. A.B. ISMAIL 523
A
-.,i HELD : 1. The three ingredients of s. 5-A( 1 )(a) of the
Kerala General Sales Tax Act, 1963 are : (i) consumption of
the goods; (ii) process of manufacture involved, and (iii)
production of other goods distinct from the original goods.
(525 B]
B
2. When goats and sheep are converted into meat, "other
goods" within the meaning of s. 5-A(l }(a) of the Act came into
• I-being, in as ID.lch as the slaughter of the animals and their
conversion into meat is the consequence of consumption of
goats and sheeps, wherein a process of manufacture can also be
inferred. (525 F-G]
c
)-_ 3. Both in commercial circles and in common parlance
"goats and sheep" and 111D.ltton" are two different things having
Ya distinct individuality of their own, one different from the
other, for when goats and sheep undergo the process of
slaughtering, meat, hides and skins - something entirely
different from the original goods, are produced by consuming D
the animals in the said process. (525 E; 527 F]
In the instant case the High Court was in error in
holding that "goods" and "meat" were the same and that no
~onsumption was involved in converting goats into meat.
(529 E-F] E
- L Cbeyyabba v. State of Kamatata, (1980] 45 s.r.c. 1,
approved.
Amar Khan Mahboob v. State of Bombay, [ 1960] 1 S. T. C.
-)' 698, referred to. F
Deputy Coml..ssioner, Sales-tax (Law) Board of Revenue
{Tues) Ernalmla• v. Pio Food Packers, [1980] 3 S.C.R. 1271
and Chiranjit Lal Anand v. State of Assam and Anr., [1985]
A.I,R. s.c. 1387, distinguished.
G
CIVIL APPELLATE JURISDICTION Civil Appeal No. 1161 of
,_,1979 etc.
From the Judgment and Order dated 13.6,1978 of the
Kerala High Court in T.R.C. 130 of 1977.
H
K.M.K. Nair for the Appellants,
524 SUPREME COURT REPORTS [1986] 2 S.C.R.
A
N. Veerappa, V.J. Francis and s. Balakrishnan for the l_.
Respondents.
The Judgment of the Court was delivered by
KHALID, J. The short question that falls to be decided
B in these appeals, by certificate, against the Judgment of a
Division Bench of the Kerala High Court, is whether goat and
sheep and the meat got after slaughtering them are the same... •
for the purpose of sales-tax in the State. The High Court,
disagreeing with the Sales-tax Appellate Tribunal held tnem to
be the same goods.
c
2. It is the admitted case in these appeals that the{
respondents purchase goat and sheep for slaughtering them and
then sell the meat they get after such slaughter. It is also'1
admitted that live stock will be goods within the meaning of
the Kera la General Sales-tax Act (the Act for short). The
o respondents submitted nil returns claiming exemption on the
sales turnover of meat and skin. Assessments were completed
accepting these nil returns. Subsequently the assessees were
informed that the purchase turnover of goats and sheep had
escaped levy of tax under Section 5-A of the Act. After neces-
sary hearing, a~sessment orders were passed, holding that th~
E assessees converted the animals into meat by a manufacturing
process, within the meaning of Section 5-A of the Act. The
Appellate Officer and the Tribunal agreed with this finding of
the assessing officer. The assessee took the matter before the
High Court and challenged the assessment orders. The High).-
Court quashed the assessment orders and held that the meat got
F after slaughtering the animals will not be 'other goods' with- 'f
in the meaning of Section 5-A. Hence these appeals by the ,
State.
3. For a proper understanding of the dispute raised in
these cases it is ncessary to read Section 5-A(l) (a) of the
G Act which alone is relevant for our purpose.
"S. Levy of purchase tax :- (1) Every dealer who in
the course of his business purchases from a,..
registered dealer or from any other person any
goods, the sale or purchase of which is liable to
H tax under this Act, in circumstances in which no
tax is payable under Section 5, and either -
DY. CO!t!NR. OF S.T. v, A,B, ISMAIL [KHALID, J,] 525
A
(a) consumes such goods in the manufacture of other
goods for sale or otherwise;"
The Section speaks of three ingredients, the existence of
which alone, will attract levy of tax. They are : (i) consump-
tion of the goods (ii) process of manufacture involved and B
(iii) production of other goods. The question before us is
whether these ingredients are present when goats and sheep are
" ~slaughtered and converted into meat for sale. The assessee 's
contention is that he is only processiag live goat or sheep
into 1DJtton by killing them and cutting them into pieces and
that in this process there was neither consumption nor a manu-
facture nor production of "other goods". c
).
4. Before dealing with the authorities, cited at the Bar,
Y it would be useful to consider, unaided by authorities, the
question whether 'goats and sheep' and 1 mUtton' are the ·same
goods known to commercial circles and in common parlance. We
will see how a co111DOn man understands these expressions. If a D
person goes to a butcher's shop and asks for 1DJtton he will
not be given goats not will he be satisfied with goats.
Equally so when he intends to purchase goats he will not be
satisfied if ID.ltton is supplied to him. This is because the
""'two, both in commercial circles and in common parlance, are
two different things having a distinct individuality of their E
own, one different from the other. It would therefore be wrong
to assume, as the High Cour_t has done, that these two goods
are the same. What happens is that when goats and sheep
~ converted into meat, "other goods" within the meaning of the
Section come into being. It is true that to attract Section
5-A, two other ingredients are also to be satisfied, namely F
'r consumption and manufacture. Consumption is a word of wide
import. It denotes the taking in of something, to convert that
something into another. Here the slaughter of the animals and
their conversion into meat is the consequence of consumption
of goats in a legal sense. In such conversion, a process of
manufacture can also be inferred. The important ingredients of
G
this Section, of course, is the bringing into existence of
other goods, after consumption and manufacture, which are
•-'fl distinct from the original goods. Lifeless 1DJtton is, by any
standard, "other goods" different from "goat and sheep".
5. The High Court rested its conclusion on a decision of
H
526 SUPREME COURT REPORTS [1986] 2 s.c.R.
A
the same High Court reported in 41 S.T.C. 364. Witbout a~
detailed discussion, the High Court, relying upon the above
decision held as follows :
" ...... We have given the matter our careful
attention; and we have again given careful
B consideration to the elaborate arguments in regard
to the processes involved in the transaction and
their effect in the light of the provisions of th~ ~
section, especially as one of us was not a party to
the earlier Division Bench ruling. We are clearly
of the view that the Tribunal was not correct in
c the view that it took, and that it cannot be said
that there was a "consumption" resulting in the,.(
"manufacture" of "other goods" within the meaning "
of the section ••••••••• " "f
The High Court then ref erred to a decision of the
D American Supreme Court reported in 207 US 556, and the
decisions reported in 20 S.T.C. 261 and 40 S.T.C. 350, and
observed as follows :
"...•.. In !he commercial sense, viz. in the sense
known to the commercial world, we do not think it~
E can be said that the meat exposed for sale in the
market after cutting or slaughtering goats or sheep
can be said to have been 'manufactured' after
'consuming' the goat or sheep. The meat exposed for
sale is still of goat or sheep, in the same way as ~
dressed chicken is still chicken, or the sliced,
F canned and packed pineapple is still pineapple ~
prepared from the raw fruit aft~r the minimal ,
process for making it marketable ...... "
We are constrained to hold that the approach of the High
Court to the facts of the case was incorrect and reliance on
G the decisions referred to above was wrong. In the American
case the question was whether chicken killed and dressed after
plucking its feathers and throwing out its entrails and kept ~
in cold storage was a manufactured product, different from ,~•
chicken. The Court there held that a chicken killed and
dressed is still a chicken. We respectfully agree with this
H conclusion. A chicken killed and a dressed chicken are both
DY. COMMNR. OF S.T. v. A.B. !SMAIL [KHALID, J.] 527
A
.-..ichicken and both are known to the ordinary man as well as
coonnercial world as chicken. By reiooval of the feathers and
entrails the dressed chicken is made ready for the table.
There is no process of manufacture and bringing into being an
item different from the original goods, In 20 S.T.C. 261 the
Court had to deal with prawn pulp made out of raw prawns. The B
Court held that there was neither consumption nor manufacture
involved in making the prawn pulp and that in the process of
" ~conversion, goods distinct from raw prawn was not produced
when prawn pulp came into being. In 41 S.T.C. 364, the goods
involved were pineapple and sliced pieces of pineapple. They
are clearly the same goods. This Court approved this finding
when the State took the matter in appeal before this Court. c
)
6. This Court held in Amrar Khan Hahboob v. State of
'YBoabay, [1960] 11 S.T.C. 698 that conversion of raw tobacco
into beedis by reiooving stem and dust which in turn is
required for the manufacture of beedis aioounted to consumption
of raw tobacco attracting tax liability. More or less similar D
is the case before us. There is clearly a process of
consumption in converting goats into 1111tton by which goods
different from the original goods are produced.
7. The Karnataka High Court had to consider an identical
question as the one now raised before us in K. <lleyyabba v. E
State of Kamataka, [1980] 45 S.T,C. 1 with reference to
Section 6 of the Karnataka Sales-tax Act, 1957. The Court held
that dealers in that case who purchased sheep and goat in the
_.. course of their business under circumstances in which no tax
was leviable under Section 5 of that Act, were liable to pay
'r tax on the purchase price under Section 6 of the Act, as they F
consumed the goats and sheep by way of slaughtering them to
produce 1111tton, hides and skins, as part of their business
activities. We approve the conclusion in this case.
8. The respondents relied upon the decision of this Court
in the case of Deputy eon.tssioner, Sales-tax {Lav) Board of G
Revenue {Taxes) Ernakulam v. Pio Food Packers, [1980] 3
·-'1 S.C.R. 1271. In that case this Court upheld the assessee 's
plea that raw pineapple, when converted into slices, did not
change its identity so as to attract liability to tax on the
plea that raw -pineapple wa~ consumed in manufacturing sliced
pineapple. While upholding the plea of the assessee, this H
Court laid down the tests in such cases as follows :
528 SUPREME COURT REPORTS [1986] 2 s.c.R.
A
"The generally prevalent test is whether the.......,
article produced is regarded in the trade, by those
who deal in it, as distinct in indentity from the
colllllOdity involved in its manufacture. Co11J1Dnly,
manufacture is the end result of one or 1110re
processes through which the original co111110dity is
B 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 a~ "
different kind of processing at each stage. Wl.th
each process suffered, the original co111110dity ex-
periences a change. But it is only when the change,
c or a series of changes, take the coDllOOdity to the
print where conmercially it can no longer be{'
regarded as the original coD1100dity but instea<I il!I
recognised as a new an<! distinct article that a"'(
manufacture can be said to take place, Where then
is no essential difference in identity between the
D original colllllOdity and the processed artic;le it iii
not possible to say that one co111110dity has been
consumed in the manufacture of another, Although it
has undergone of a degree of processing, it npst be
regarded as still retaining ita original identity, ,..
E A large number of cases has been placed beforlil 0#
by the parties, and in each of thea the &lll!lll
principle has been applied: Does the proeesaillj oC
the original coD1100dity bring into exi•tence a
conmercially different and distinct article? sonie ~
of the cases where it was held by this Court that a
F different conmercial article had Colli$ into -I
existence include "-tldlan Mehboob Co, v. 'D¥ ',
State of Bombay and others (where raw tobacco was
manufactured into bidi patti). A Bltj81! Abdul
Shnkoor and Co. v. The State of Madras (raw hides
and skins constituted a different col!Q:)dity from
G dressed hides and skins with different physica1
properties), lbe State of Madras v. s.ium To~
Pactory (raw tobacco manufactured into chewing ~-.
tobacco) and Ganesh Tradf.Qg Co, Jarnfl •· Stat. of ;
Raryana and Anr., (paddy dehusked into rice),.,.,"
H It cannot be doubted that pineapple fruit when converted
into slices does not lose its identity or becomes a new
DY. COOMNR. OF S.T. v. A.B. ISMAIL [KHALID, J.] 529
A
product. BotR of them are known as pineapple in the co11111ercial
....,, circle as also in colllDOn parlance. That is not the case here.
9. Considerable support was sought by the respondents
from a decision of this Court in Qiiranjit Lal Anand v. State
of Assam & Anr., 1985 A.I.R. s.c. 1387. That case related to B
an item called 'meat on hoof' • In that case the dealer had
submitted a tender to supply among others 'meat on hoof' to
., jo.the Central Reserve Police Units within the State of Assam. In
that case, the dealer was assessed for the purchase of meat on
hoof which is a name used mainly by the military for a 'live
goat'. The contention of the dealer was that since meet was
exempted from sales tax by the Assam Act, 'meet on hoof' C
). should also be exempted from assessment. This court after
· considering the contention in the peculiar facts of that
-rcase, held that meet on hoof would also come within the exemp~
tion and set aside the assessment, disagreeing with the High
Court. In our view, the principle enunciated in that decision
has to be applied only to the fact of that case because the D
goods involve in that case was 1 meet on hoof 1 and meet was
exempt from assessment under the Act. It would not, therefore,
be proper to rely upon the said decision dedded purely on the
facts of that case in deciding the present cases. Here goats
.. and sheep undergo a process viz., slaughtering, and then comes
into existence meat, hides and skin by consuming the goat in E
the said process, the end product being something entirely
different from the original goods. The High Court was, there-
fore, in error in holding that goat and meat are the same and
that no consumption was involved in converting goats into
~ meat. The High Court confused the issue when it said that
"the meat exposed for sale is still of the goat and sheep". F
i' Nobody disputes that the meat is of the goat and of the
sheep. What is to be seen 'is whether meat and goat are the
same. The High Court fell in an error when it used the
expression "meat of the goat" while discussing the facts of
the case.
G
10. In the result, we set aside the judgment of the High
Court, allow these appeals, restore the order of the Tribunal,
•· 1- but in the circumstances of the case with no order as to
costs.
H
P.s.s. Appeals allowed.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "sales tax"Sign in to search