Case: Hindustan Lever Ltd Vs. Commissioner of Sales Tax, Gujarat

1. This appeal by special leave from the judgment and order of a Division Bench of the High Court of Gujarat concerns the classification of cut and dried chicory roots.2. It is the case of the appellant assessees that these chicory roots fall either under Entry 8 or Entry 23 of the First Schedule of the Gujarat Sales Tax Act, 1969, as it then stood. It is the case of the Revenue, on the other hand, that they fall under the residuary entry, Entry 13 of the Third Schedule of the said Act. Entries 8 and 23 of the First Schedule read thus:"8. Fresh vegetables and edible tubers.* * *23. Flower, fruit and vegetable seed; seeds of lucerne grass (Rajka) and of sann hemp; bulbs, tubers and plants other than orchids."3. That chicory roots are a "tuber" is not disputed. The question is whether the chicory roots, as cut and dried, are a commodity different from the tuber itself.4. The appellants manufacture coffee. Chicory is an ingredient in the manufacture of coffee. The appellants entered into agreements in similar terms with cultivators whereunder the cultivators grew chicory and the appellants purchased the same. Clause (1) of the agreement stated that the cultivators would grow chicory in stated acreages of their farms under the supervision of the appellants officers. The chicory that was to be grown would be subject to sample surveys by the appellants. The cultivators were required to"deliver to the Company such quantity of the chicory yields grown in the fields with the seeds supplied by the Company as will meet the Companys total demand or requirement ...."After harvesting, the cultivators were required to wash the chicory roots, cut off at least half an inch of the roots below the crown and slice the roots into lengths varying from half inch to two and a half inches, as instructed by the appellants officers. The cultivators were also required to arrange for drying of the chicory roots to the standard stipulated by the appellants.5. Upon the basis of the agreement aforesaid, the Tribunal took the view that the chicory roots could not be said to be edible tubers which were normally used in the like manner as fresh vegetables. It also took the view that the dry chicory roots could not be said to be tubers fit for the growing of fresh plants therefrom. Therefore, the dry chicory roots fell outside the scope of both Entries 8 and 23. The High Court applied the popular parlance test and concluded that the dry chicory roots could not be said to be tubers within the meaning of the two entries.

Reasoning: 8. An analysis of the agreement, it seems to us, shows that what the appellants required the cultivators to grow and then sell to them were chicory roots. That, before delivery to the appellants, the cultivators were required to cut, slice and dry the roots was not of great significance. It was, clearly, only to provide convenience in delivery. The essential character of the chicory roots did not change by reason of the cutting, slicing and drying.9. With this in mind, let us turn to the relevant entries. We will assume at the outset that Entry 8 is inapplicable because it refers to edible tubers and there is no material on record to show that dried chicory roots are edible.10. The contention of the Revenue in regard to Entry 23 is that it refers to that which may germinate. It is said that the entry refers to the seeds of flowers, fruits, vegetables, lucerne grass and hemp; and bulbs fall in the same category. There is no doubt that this is so, but the entry also goes on to mention "tubers and plants other than orchids". Plants, as such, do not germinate. Tubers are linked to plants in the entry and must be similarly construed. Therefore, there being no dispute that chicory roots are tubers, they would, in our view, fall within the ambit of Entry 23 and must be subjected to tax accordingly.