Case: Deputy Commissioner of Agricultural Income Tax and Sales Tax, Quilon Vs. Travancore Rubber and Tea Company

2. The facts on record are scanty. In the assessment order in respect of the assessment year, with which we are concerned, the Sales Tax Officer, Special Circle, Alleppey, determined the turnover of the assessee at Rs. 6, 14, 713.92, but did not discuss the question whether the assessee was a "dealer" or not within the Central Sales Tax Act. The Additional Appellate Assistant Commissioner of Agriculturalx and Sales Tax, in the appeal filed by the assessee, dealt with the point raised by the assessee that it was not a dealer, as follows :"My reading of the relevant definitions under the Act and the records and the rules issued thereon leads me to the conclusion that the officer has perfectly considered the aspect and the appellant is a dealer as defined in the Act and the sale effected by him is liable for tax."The Full Tribunal in the second appeal framed the question for consideration as follows :"Whether on the admitted facts of the case, namely, the appellants only selling rubber sheets produced by conversion of latex obtained from trees grown on lands belonging to them, they could be held to be dealer within definition in the Act ?"The Tribunal, following the decision of the Kerala High Court in Muhammed v. Stales Tax Officer, Kozhikode ([1962] 13 S.T.C. 54), held that the assessee was not a "dealer". It observedw the definition in the Central Sales Tax Act is the same as the definition in the General Sales Tax Act as it was before the amendment. It would follow therefore that applying the principles laid down in the decision quoted above the definition in the Central Sales Tax Act being what it is, the appellant cannot be held to be a dealer liable to be taxed. In this view we hold that the appellant is not liable to be taxed in respect of the sale by him of rubber sheets produced by conversion of latex collected from rubber trees grown by him."We may mention that the Kerala High Court in the above case had held that "the mere sale by a person of rubber sheets produced by conversion of latex collected from rubber trees grown by him is not sufficient to constitute him a dealer."        3. But the learned Judge, S. Velu Pillai, J., went on to observe :"But if, for example, in addition to rubber produced by trees grown by him, he collects or buys latex or rubber sheets from other growers or suppliers and sells them, he may be said to engage himself in the business of selling, depending on the nature of such activity; in other words, in addition to being an agriculturist, using that term in its wide and generic sense, and not as one growing what is agricultural produce as defined in the Act, he can be a dealer, as envisaged by the proviso above referred to, in the same commodity, but this is a question of fact."4. The only facts mentioned in the judgment of the High Court are as follows :(1) All that the company does is to convert the latex tapped from its rubber trees into sheets and effect a sale of those sheets to its customers;        (2) Latex is an opaque liquid resembling milk; the usual method of selling it is after converting it into sheets, and that the conversion is not manufacturing process but a process essential for the transport and marketing of the produce concernedOn these facts, the High Court held as follows :"We take the view that an agriculturist selling his own produce either as gathered or after subjecting it to the minimum requirements necessary for transport and marketing cannot be considered to be a person engaged in the business of selling. The sale which he effects, as we see it, is only the culmination of his agricultural operations; it is not separate and distinct from his agricultural avocation; and he cannot be considered to be a person carrying on a business of selling simply because he effects a sale of his own agricultural produce."The department had formulated the questions of law for decision by the High Court as follows :"(i) Whether a person who regularly sells rubber sheets produced by conversion of latex obtained from trees grown on his own lands is a dealer under section 2(b) of the Central Sales Tax Act, 1956 ?        (ii) Whether the sales of rubber sheets by such a person is a business carried on by him ?(iii) Whether the decision of the learned single Judge of this Honourable Court in Muhammed and Others v. Sales Tax Officer, Kozhikode and Another ([1962] 13 S.T.C. 54), lays down the correct law and whether the principles laid down in that decision require reconsideration ?"

Court's reasoning:
7. In the present case before me all that I find is that the plaintiff owns agricultural zirat land which he cultivates and from which he produced the goods. This is one operation. Now he cannot consume all the goods and he must sell the excess if he does not require all for his own consumption9. The High Court, in the present case, relied on Konduri Buchirajalingam v. The State of Hyderabad ([1958] 9 S.T.C. 397), but in our opinion the Supreme Court in that case only assumed but did not decide that the agriculturist was not a dealer, for at page 401, Sarkar, J., observed :"The learned Advocates contention is that the tax is by these sections really levied on a dealer, in respect of his turnover attributable to some of his transactions. He then referred to the definition of a dealer in the Act which is substantially that a dealer is a person engaged in the business of selling or supplying goods. He points out that an agriculturist is not a dealer because his business is not to sell or supply the agricultural produce but to grow them. We will for the purpose of this appeal assume that an agriculturist is not a dealer. We say assume, because it is conceivable that a producer of crops may also engage in business of selling or supplying and become a dealer within the ActWe pose the question in this form for, as observed by Shah, J., in State of Gujarat v. Raipur Manufacturing Co. Ltd. ([1967] 19 S.T.C. 1 at p. 11), "the burden of proving that the company was carrying on business of selling coal by upon the Sales Tax Authorities and if they made no investigation and have come to the conclusion merely because of the frequency and the volume of the sales, the inference cannot be sustained." We have already mentioned the facts found in this case. Apart from the facts that the assessee converts the latex tapped from its rubber trees into sheetsa process essential for the transport and marketing of the produce concernedand it sells these sheets, nothing else has been found. No effort has been made to find out the intention with which the assessee was formed, the selling organisation it had set up and other relevant facts. On the facts found in this case it seems to us that the department has not discharged the onus.The learnedl prayed that the case the remitted to the Sales Tax Officer to enable him to find fresh facts. We cannot accede to this request. No such request appears to have been made before the High Court, nor is there any mention of it in the statement of the case filed by the department. Mr. S. T. Desai, the learned counsel for the respondent, says that he has a number of points to be urged if this view point is allowed to be taken. Under the circumstances we do not allow this new point to be urged at this stage.