Case: Commissioner of Sales Tax, Lucknow Vs. D. S. Bist and Others

The assessee-respondent owns some tea gardens in the State of U.P. The tea-leaves grown by the respondent in his gardens are sold in the market after being processed and packed. The stand taken on his behalf before th e taxing authorities was that the tea-leaves sold by the respondent are agricultural produce grown by himself and, therefore, the sales were not exigible to sales-tax. The contention of the assessee was not accepted and the final Revising Authority made four references in respect of the four periods to the High Court on the following question of law:-"Whether on the facts and circumstances of this case the article ceased to be an agricultural produce and whether t he tea produced by the assessee would be exigible to sales tax?"The High Court has answered the reference in favour of the assessee and against the revenue. Hence these appeals by the department.The primary facts as extracted by the High Court from the order of the Revising Authority are the following:-(1) "The tea-leaves were first of all subjected to withering in shadow in rooms on a wooden floor for about 14 hours."        (2) "then they were crush ed-by hand or foot and were then roasted for about 15 minutes."        (3) "Later they were roasted on mats for about 15 minutes."        (4) And then they were "covered by wet sheets for generating fermentation. During this process the colour of leaves was changed from green to yellowish."        (5) "the leaves were then subjected to grading with sieves of various sizes. Fanning machines are also used in completing the grading process."        (6) "The produce was then finally roasted with charcoal for obtaining suitable flavour and colour."        (7) "It is this final product which was eventually sold by the assessees."

Reasoning:
Unlike many agricultural products tea-leaves are not marketable in the market fresh from the tea gardens. No body eats tea-leaves. It is meant to be boiled for extracting juice out of it to make tea liquor. Tea-leaves are, therefore, only fit for marketing when by a minimal process they are made fit for human consumption. Of course, the processing may stop at a particular point in order to produce inferior quality of tea and a bit more may be necessary to be done in order to make it a bit superior. But that by itself will not substantially change the character of the tea-leaves, still they will be known as tea-leaves and sold as such in the market. I n my opinion all the six processes enumerated above from the primary findings of fact recorded in the order of the Revising Authority were necessary for the purpose of saving the tea-leaves from perishing, making them fit for transporting a nd marketing them. The process applied was minimal. Withering, crushing and roasting the tea-leaves will be surely necessary for preserving them. The process of fermentation or final roasting with charcoal for obtaining suitable flavour or colour and also the process of grading them with seives were all within the region of minimal process and at no point of time it crossed that limit and robbed the tea-leaves, the agricultural produce, of their character of being and continuing as such substantially. In my opinion, therefore, the view expressed by the High Court is quite justified and sustainable in lawIt would thus be seen that the tea-leaves as plucked have got to pass through stages of processing of one kind or the other in order to make them fit for human consumption, as in the case of paddy and many other commodities dehusking in the case of former and some other kind of process in regard to the latter has got to be done in order to make them marketable and fit for consumptionThere are two decisions of the Madras High Court in The State of Madras v. R. Saravana Pillai(1) and N. Deviah Gowder v. Commercial Tax Officer, Coimbatore(2) where a similar question arose with respect to arecanuts. At page 544 of the first case which was followed in the second occurs a passage which may be usefully quoteds we have pointed out, it was common ground that there is no market in Coimbatore or elsewhere for arecanuts as they are when plucked from the trees, and it should be remembered they are gathered when they are still unripe. The proviso to section 2(i) of the Act is obviously conceived in the interests of agriculturists. It excludes from any tax liability under the Act sale of agricultural and horticultural produce, the primary condition to be satisfied being that it must be produce of the land which either belongs to the seller or of the land in which he has an interest as specified by section 2(i). To restrict that concession to sale of arecanuts, for instance, only if those arecanuts are sold in the state in which they are immediately on being gathered from the trees, would render the statutory exclusion meaningless."I approve of this decisionHence only a part of the income was held to be taxable. In the instant case the proble m is quite distinct and different.Here we are concerned with the question whether the commodity which the assessee sold as tea was his agricultural produce or. He had not sold his tea-leaves from his gardens to any manufacturing tea company. He had himself applied some indigenous and crude manufacturing process in order to enable him to sell his tea in the market. In such a situation I have no difficulty in holding that the sale was of his agricultural produceIn the instant case I have held that the commodity which was sold was not different from the commodity which was produced in agriculture.The view expressed by the Allahabad High Court in the judgment under appeal which is reported in D. S. Bist &Sons, Nainital v. Commissioner of Sales Tax, U.P.(3) is on the lines of the preponderance of views expressed by different High Courts in relation to different commodities.