Holding

Groundnuts are taxable as "nuts" under the entry tax Act, and their use as oil seeds does not exempt them from levy.

Summary

The Supreme Court examined whether groundnuts, classified as "nuts" under the Schedule of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970 (and its 1972 amendment, as amended by West Bengal Act XIX of 1974), are liable to entry tax when imported for the purpose of extracting oil. The respondents, licensed dealers of edible oil seeds, argued that groundnuts used as oil seeds for edible oil production should be exempt from tax. The Court held that a plain reading of the statute shows that "nuts" are expressly listed as taxable items and that groundnuts fall within this description, irrespective of their intended use. The 1974 amendment, which substituted "nuts including groundnuts, cashew nuts and walnuts but excluding betel nuts," was deemed clarificatory and retrospective, confirming that groundnuts are taxable. Consequently, the Court overruled the lower courts' view that purpose of import could exempt groundnuts and allowed the appeals, setting aside the earlier judgments and dismissing the writ petitions.

Issues considered

Whether groundnuts, described as "nuts" in the Schedule of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, are liable to entry tax when imported for oil extraction.
Whether the purpose of import (as oil seeds for edible oil) can exempt groundnuts from entry tax.
Interpretation of the 1974 amendment substituting "nuts including groundnuts, cashew nuts and walnuts but excluding betel nuts" and its retrospective effect.

Legislation cited

Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970s. Section 6
Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972s. Section 6
West Bengal Act XIX of 1974 (amendment)s. Schedule Item 4(u) substitution
West Bengal Edible Oil Seed Dealers Licensing Order, 1963

Subjects

entry taxgroundnutsnutsoil seedsstatutory interpretationexemptionpurpose of importWest BengalCalcutta Metropolitan Area

Judgment

STATE OF WEST BENGAL & ORS. ETC.
v. A
LAL CHAND AGARWALLA & ORS. ETC.
"(
' MARCH 24, 1987

i [M.P. THAKKAR AND B.C. RAY, JJ.] B

Taxes on Entry of Goods into Calcutta Metropolitan Area Act,
1970 as amended in 1972 and 1974, section 6 read with Item 4 of
-¥ Schedule thereto-Exigibility to levy of Entry tax-Words and phrases-
"Groundnut", whether a "nut'' within the description of the specified
-,_.,.... •. goods under the head "Class I-Articles of food and drink-" Edibles"
attract levy of duty-In case the purpose of importer is to extract only oil c
~
therefrom, whether exempt from the levy.

"-{' Section 6 of the Taxes on Entry of Goods into Calcutta Metropoli-
tan Area Act, 1970 provides for imposition of levy and collection of
taxes on the entry of every specified goods into Calcutta Metropolitan D
Area (for consumption, use or sale therein) from any place outside that
area at such rate not exceeding the rates specified in the corresponding
entry in Column 3 of the Schedule as the State Government may by
notification specify. Class specifies articles liable to tax grouped nnder
the caption of food and drink. Item 4(t) specifies "nuts excluding beetal
nuts" as one of the items on which the rate of entry tax has been E
~ specifically mentioned therein. Under the said Class-I in item No.4(u)
"oilman stores (except edible oils)" has beeu mentioned and iu Class-3
'- under heading (b), item No. 22 refers to oil seeds of Inedible oils as one
of the specified items for imposition of tax.

~. The respondeuts who are liceused dealers under the West Bengal F
Edible Oil Seed Dealers Licensing Order, 1963 challenged the imposi·
~ lion of entry tax on gronndnuts imported into Calcntta Metropolitan
Area for the pnrpose of manufacture of gronndnut oil under the provi·
sions of the Taxes on Entry of Goods into Calcutta Metropolitan Area
Act, 1970 on the ground that such importation of groundnuts as oil
seeds is not subject to any levy under the provisions of the said Entry G
Tax Act in as much as there is no specific provision for levy on ground·
nuts as oil seeds for manufacturing edible oil. The respondents prayed
for a mandate directing the appellants not to impose any entry tax on
~ the gronnd that they are edible nuts falling under specific entry of
edibles provided in the Schedule to the said Act, and with a further
prayer for refund of the taxes already imposed and collected by the H

621
622 SUPREME COURT REPORTS [1987] 2 S.C.R.

respondents. A learned Single Judge of the Calcutta High Court issued
A
a writ of mandamus as prayed for. The State appeal against the judg· -Y'
ment and order was dismissed and the judgment and order of the
learned Single Judge was affirmed. Hence the appeal by special leave.
~
Allowing the appeals, the Court,
B
HELD: 1. On a plain reading of the provisions of the Taxes on
Entry of Goods into Calcutta Metropolitan Area Act, 1970, it is clear
and evident that groundnuts which answer the description of nuts is
¥:
excisable to entry tax under the said Act. Once the goods answer the
description of the item exigihle to tax, under Item 4(1) the importer of -~-
such goods cannot escape liability depending on the use to which he
c pnts. No question of speculating about intention of the legislature arises 1'
when "nuts" are in term specified as goods which are exigihle to tax
and "groundnuts" fall under the description of "nuts". That ground· rt
nuts are nuts is not disputed nor disputable that it is not so. Groundnuts
are "nuts" whether the same are consumed as they are or whether they are
D crushed for extracting oil-they do not cease to he nuts. {626E-H; 627A·B]

2. The legislative intent to tax nuts being very clear there is no
room for considering whether groundnut is also oil seed used for
manufacturing edible oil, "why" it is imported and whether it is
exempt from entry tax on that account. Undoubtedly, nuts include ~
E groundnut also. Though the 1970 Act was replaced by the Taxes on
Entry of Goods into Calcutta Metropolitan Area, 1972 making identical ~
provisions for the imposition of entry tax on specified goods entering
into Calcutta Metropolitan Area, West Bengal Act XIX of 1974 specifi·
cally mentioned in Sl.No.4 item No. (u) for the words "nuts excluding J,
betel nuts" the words "nuts inclnding groundnuts, casbewnuts and
F walnuts hut excluding betel nuts" shall be, and shall be deemed
always to have been substituted. [627B·G]
~
'-

3. The words "nuts including groundnuts, casbewnuts and
Walnuts but excluding betel nuts" bas been substituted retrospectively
for the words "nuts excluding betel nuts" in item No. 4(u). This
G amendment is clarificatory in nature and makes explicit what was
implicit out of abundant cantion, and clearly puts an end to all con-
troversies as to whether groundnuts imported into Calcutta Metropoli- ~
~

tan Area from outside is liable to imposition of entry tax. It makes
patently clear that groundnuts as one of the "nuts" was always subject
to the imposition of entry tax under the said Entry Tax Act. Therefore,
H the contention that groundnut imported into Calcutta Metropolitan
STATE OF WEST BENGAL v. L.C. AGARWALLA [RAY, J.l 623

Area for the purpose of manufacture of groundnut oil which is one of
the edible oils and which is exempted from the imposition of levy of A
entry tax cannot be snstained any longer in view of the express provi-
sions of the Act. [627G-H; 628A-B)

Avadh Sugar Mills Ltd. v. Sales Tax Officer & Anr., [1973) (Vol.
31) STC 469 (SC), distinguished. B

~+ CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1387
of 1973.

) ..........,---. From the Judgment and Order dated 31.5.1973 of the Calcutta
4 High Court in Appeal from Original Order No. 612 of 1971.
c
WITH

CIVIL APPEAL NO. 4301of1984.

From the Judgment and Order dated 9.9.1981 of the Calcutta
D
High Court in Appeal from Original Order (F.M.A.) No. 459 of 1980.

Govind Das and Mr. G.S. Chatterjee for the Appellants.

D.N. Mukherjee forthe Respondents in C.A. No. 1387of1973.
E
A.K. Ganguli and Miss Mridula Ray for the Respondent in C.A.
No. 4301of1984.

The Judgment of the Court was delivered by

B.C. RAY, J. Civil appeal No, 1387173. This appeal by special
F
leave is against the judgment and order passed in appeal from Original
Order No.612 of 1971 dated May 31, 1973 by the Division Bench of the
High Court of Calcutta affirming the judgment and order of the
learned Single Judge made in Civil Revision Case No. 5805 of
1970. The respondents who are licensed dealers under the West
Bengal Edible Oil Seed Dealers Licensing Order, 1963 have cha!- G
lenged the imposition of entry tax on groundnuts imported into
Calcutta Metropolitan Area for the purpose of manufacture of ground-
nut oil under the provisions of the Taxes on Entry of Goods into
Calcutta Metropolitan Area Act, 1970 on the ground that such impor-
tation of groundnuts as oil seeds is not subject to any levy under the
provisions of the said Entry Tax Act in as much as there is no specific H
provision for levy on groundnuts as oil seeds for manufacturing edible
624 SUPREME COURT REPORTS [1987] 2 S.C.R.

oil. They have therefore prayed for a mandate directing the appellants
A
not to .IIllpose any entry tax on the ground that they are edible nuts ....,,...,.
r ' '
falling under specific entry of edibles provides in the Schedule to the
said Act. There was also a prayer or refund of the taxes already im-
posed and collected by the respondents.

B The learned single Judge who issued the rule after hearing both
the parties held that though under SI. No. 4, item No. (t) of the
Schedule to the said Act, 'nuts' was a specified item for purposes of
imposition of entry tax as shown in corresponding column No. 3 in the
1•.
said Schedule yet the learned Judge held that since groundnut is oil
seed for manufacturing edible oil which is not subject to entry tax, the
~~-(
;
groundnut imported for the purpose of extracting oil as oil seed by the .J<-
c dealers was not subject to the imposition of entry tax. It was further
held that the term groundnut might answer the description of being )it.
nuts used as edibles as also oil seeds for edible oils. The legislature
intended to impose levy on 'nuts' imported as edibles and not to cover
such nuts imported as oil seeds for edible oils. The rule was made
D absolute with costs and a writ of mandamus was issued directing the
appellants herein not to impose any levy under the provisions of the
said Act. There was also a further mandate upon the appellants herein
directing them to refund all taxes realised under the said Act on
groundnut imported by the petitioners, respondents herein into +-
i
Calcutta Metropolitan Area.
E
Against this judgment and order the appellant State of West
Bengal preferred an appeal. This appeal was 'dismissed and the judg-
ment and order of the learned single Judge was affirmed. It was
held that the intention of the legislature was that edible oil or oil seeds
_.
would not be liable to tax. The Court referring to the decision in
F Avadh Sugar Mills Ltd. v. Sales Tax Officer & Anr., [1973] (Vol. 31) ~
'
,_
STC 469 (S.C.) held that in commercial circle 'groundnut' was treated
as 'oil seed' for manufacture of oil. It did not refer to 'nuts' as such,
and as such groundnut did not fall with the ambit of entry tax as
provided in the said Entry Tax Act. Against this judgment and order
the instant appeal on special leave was filed.
G
The sole question that poses itself for consideration in this appeal
is whether groundnuts falling within the description of 'nuts' in ~
Schedule in Class-I, item No. 4(1) is liable to be taxed under the Taxes
on Entry of Goods into Calcutta Metropolitan Area Act, 1970 in case
the purpose of importer is to extract oil therefrom. It has been urged
H on behalf of the respondents that oil seeds or edible oils are not
STATE OF WEST BENGAL v. L.C. AGARWALLA [RAY, J.] 625

y--r specified items for the purpose of imposition of entry tax under section A
6( 1) of the said Act. The importation into Calcutta Metropolitan Area
' of groundnuts by the respondents for the purpose of manufacturing
groundnut oil is exempt from the levy of entry tax according to them.
It is necessary to quote here the relevant provisions of the Schedule for
the purpose of determining this question.
B

Serial No. Specified goods Rates of tax
I 2 3

,. _,,- - x
4. Edible,;-
x x x Class I-Articles of food and drink

x x x x c
t. nuts, excluding betal nuts 6 percent ad valorem
u. oilman stores (except (112 percent ad valorem
edible oils) . for dry fruits)
-do-
x x
Cla.Ss-111. Articles for industrial use
x • x •
D
and articles used for fuel,
lighting, washing and poli~hing.

A.- Articles for industrial use and
articles used for fuel.
x x x
E
16. Mineral oils of all sorts-

x x x
(xii) Turkey red oil, bye-products 2 paise .per litre
of mineral oils
x • x x
F
(b) Crude oil 1 paise per litre

(c)· grease, petroleum jelly 2 percent ad valorem
B. -Articles used for lighting.
x x x x
22. Oilseeds for inedible oils 50 paise per 50 kHograms
G
.....(_ Section 6 of the said Act provides for imposition of levy and
collection of taxes on the entry of every specified goods into Calcutta
Metropolitan Area (for consumption, use or sale therein) from any
place outside that area at such rate not exceeding the rates specified in
the corresponding entry in column No. 3 of this Schedule as the State H
626 '
SUPREME COURT REPORTS [1987] 2 S.C.R.
'·

Government may by notification specify. The State Government speci-
A
fied the goods entry of which into Calcutta Metropolitan Area will be 1~
liable to tax under this Act at the rate specified in corresponding
column No. 3 of the Schedule. On a reading of the aforesaid Schedule
it is clear and evident that .Class-I specifies articles liable to tax
grouped under the caption of food and drink. Item No. 4(t) specifies
B nuts excluding betel nuts as one of the items on which the rate of entry
tax has been specifically mentioned therein. Under the said Class-I in
item No. 4(u) oilman stores (except edible oils) has been mentioned
and in Class-3 under heading (B) item No. 22 refers to oil seeds of
inedible oil as one of the specified items for imposition of tax. It has
r
- ..4.._ ~
been urged on behalf of the respondents that a edible oils are exemp- ·--
ted from imposition of tax under the said Act groundnut which is
c imported by the respondent dealers from outside the State into
Calcutta Metropolitan Area for the purpose of manufacture of ground-

D
nut oil is exempted from the imosition of entry tax. It has been further
urged in this connection that a very negligible quantity of groundnuts
is used for edible purposes. The ground nuts are generally used as oil
seeds for the purpose of manufacturing edible oil i.e. groundnut oil. It
"
has been submitted that though groundnut is included within nuts in
item No. 4(t) yet it was rightly held by the Courts below that ground
nuts used as oil seeds for the purpose of manufacture of groundnut oil
is free from imposition of entry tax and as such the appeal should be
dismissed. This contention of the learned counsel on behalf of the
.,.
I

E respondents cannot be sustained in as much as 'nuts' has been speci-
fied as one of the items liable to be taxed under 4(t) for im;msition of
tax at the rate mentioned in corresponding column No. 3. So on a plain
reading of the said provisions it is clear and evident that groundnuts
which answer the description of nuts is excisable to entry tax under the -~
said Act. It is unnecessary to go into the questio~ ,JS to whether
F groundnut is also used for the purpose of extracting edible oil. The
observations of this Court in the case of Avadh Sugar Mills Ltd. v.
A
Sales Tax Officer & Another (supra) wherein groundnut has been
taken as oil seed for the purpose of U .P. Sales Tax Act. This has no
bearing for the purpose of imposition of entry tax under the said Entry
Tax Act, 1970 as it has been mentioned already hereinbefore that
G under item No. 4(t) 'nuts' has been specifically mentioned as one of
the specified goods for the imposition of entry tax. Once the goods _A.,
answer the description of the item exigible to tax, the importer of such
goods cannot escape liability depending on the use to which he puts.
No question of speculating about intention of the legislature arises
when 'nuts' are in term specified as goods which are exigible to tax and
H 'groundnuts' fall under the description of 'nuts'. That groundnuts are
STATE OF WEST BENGAL v. L.C. AGARWALLA [RAY, J.] 627

nuts is not disputed nor disputable that it is not so. An extract from
Encyclopaedia Britannica also leaves no room for doubt on this score A
and even the contention of the respondents is not that groundnuts are
not 'nuts' but that when same are imported for extracting oil the
same are not exigible to tax. Groundnuts are 'nuts' whether the same
are consumed as they are or whether they are crushed for extracting
oil-they do not cease to be nuts. The relevant extract is appended B
below as appendix "A".

The legislative intent to tax nuts being very clear there is no
room for considering whether groundnut is also oil seed used for
manufacturing edible oil 'why' it is imported and whether it is exempt
from entry tax ou that account. Undoubtedly, nuts include groundnut
also. The contention of the respondents in our considered opinion is c
totally devoid of any merit and as such it is overruled. It is very rele-
vant to mention here that the Taxes on Entry of Goods into Calcutta
Metropolitan Area Act, 1970 was replaced by the Taxes on Entry of
Goods into Calcutta Metropolitan Area Act, 1972 {West Bengal Act V
of 1972). In the said Act identical provision bas been made for the D
imposition of entry tax on specified goods entering into Calcutta
Metropolitan Arca', at the rates specified in cQrresponding column
No. 3 of the items mentioned in the Schedule. Class I, item 4(u)
specifies edible nuts excluding betel nuts as was in the previous Act of
1970. In Entry No. 22 under Class IV oil seeds of vegetable oils other
than mustard, rape, groundnut etc. was mentioned. In item No. 24 of E
the said Class IV vegetable oils, other than mustard oil, groundnut oil
etc. has been specifically mentioned. So this Act of 1972 also specifi-
cally mentions 'nuts' as one of the goods entry of which into Calcutta
Metropolitan Area is subject to the levy of entry tax. This Act of 1972
was further amended in 1974 by West Bengal Act XIX of 1974. By the
-~. said Act it has been specifically mentioned in the Schedule to the F
Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972 in
SI. No. 4, item No. (u) for the words 'nuts excluding betel nuts' the
words 'nuts including groundnuts, cashewnuts ai1d walnuts but exclud-
ing betel nuts' shall be, and shall be deemed always to have been,
substituted. In other words, the words 'nuts including groundnuts.
cashewnuts and walnuts but excluding betel nuts' has been substituted G
retrospectively for the words 'nuts excluding betel nuts' in item No.
4{u). This amendment is clarificatory in nature and makes explicit
what was implicit out of abundant caution, and clearly puts an end to
all controversies as to whether groundnuts imported into Calcutta
Metropolitan Area from outside is liable to imposition of entry tax. It
makes patently clear that groundnut as one of the 'nuts' was always H
628 SUPREME COURT REPORTS [1987] 2 S.C.R.

A subject to the imposition of entry tax under the said Entry Tax Act.
The contention that groundnut imported into Calcutta Metropolitan -y~
Area for the purpose of manufacture of groundnut oil which is one of
the edible oils and which is exempted from the imposition of levy of
entry tax cannot be sustained any longer in view of the express provi-
sions of the Act.
B
Considering all these facts and circumstances as well as consider-
ing that nuts excluding betel nuts being one of the specified goods ~-
mentioned in the Schedule to the said Act clearly bring within its field
groundnut; so groundnut imported into Calcutta Metropolitan Area _~.__ ._
is liable to the imposition of entry tax under the said Entry Tax Act. ,-
C We therefore allow this appeal and set aside the judgment and order
passed in Appeal from Original Order No. 612 of 1971 without any
order as to costs. The writ petition giving rise to the appeal will stand ~
dismissed.

In Civil Appeal No. 4301 of 1984 the respondent made a similar
D challenge that groundnut which the petitioner imported from outside
the State into Calcutta Metropolitan Area could not be subjected to
the levy of entry tax as the same is used as oil seed for manufacturing
edible oil i.e. groundnut oil which is exempted from the incidence of
entry tax under the said Act. This challenge was made in 1974 when
, the Taxes on Entry of Goods into Calcutta Metropolitan Area Act,
E 1972 as amended by the Amendment Act (West Bengal Act XIX of
1974) came into operation. We have already-mentioned hereinbefore
that in the Schedule to the Taxes on Entry of Goods into Calcutta
Metropolitan Area Act, 1972 in SI. No. 4, item (u) for the words 'nuts·
excluding betel nuts' the words 'nuts including groundnuts, cashew-
nuts and walnuts but excluding betels' shall be deemed always to have
F been substituted. In other words, this amendment has been given re-
trospective effect and groundnut being specifically mentioned in SI.
No. 4(u) of the Schedule to the said Act, there is no scope for any
controversy that 'groundnuts' imported into Calcutta Metropolitan
Area are liable to entry tax under the provisions of the said Act.

G In this view of the matter this judgment will also govern Civil
Appeal No. 4301of1984 wherein identical questions have been raised. ~-
This appeal is also allowed without any order as to costs. The writ
petition giving rise to the appeal will stand dismissed with no order as
to costs.

H S.R. Appeals allowed.
, APPENDIX "A" A

BookName: ENCYCLOPAEDIABRITANNICA
Volume 16 Napoleon I to OZonolysis
(Page 797 Nusaybin-NUT) Edition 1768

NUT, generally any seed or fruit consisting of a kernel. usually oily, surrounded B
by a hard or brittle shell. Most edible nuts, e.g., walnut. brazil nut, peanut, etc., are
well known as dessert nuts. Not all nuts, however, are edible; some are used as sources
of oil or fat and may be regarded as oil seeds (see Oil Plants); others are used for
ornaments. The botanical definition of a nut, based on morphological features, is more
restrictive: a hard, dry, one·called one seeded fruit that does not split open at maturity.
Among the nuts that fit both the botanical and popular conception are the acorn,

- {"-
chestnut and filbert; other so·called nuts may be botanically seeds (Brazil nuts), le·
gumes (peanuts) or drupes (almond, coconut, pecan and walnut), In this article the
term nut will be used in its broadest sense unless otherwise indicated.
C

-

629