Avadh Sugar Mills Ltd. Vs. The Sales
Tax Officer, Sitapur & ANR  INSC 32 (22 February 1973)
REDDY, P. JAGANMOHAN KHANNA, HANS RAJ
CITATION: 1973 AIR 2440 1973 SCR (3) 546 1974
SCC (3) 271
D 1987 SC1316 (3,5)
U.P. Sales Tax Act 1948-Purchase tax on
oilseeds-Groundnuts whether oilseeds.
The petitioner appellant purchased groundnuts
mostly from cultivators for the manufacture of oil. Relying on decisions of the
Madhya Pradesh and Punjab High Court he contended that groundnuts were not
oilseeds and thus not liable to be subjected to purchase-tax under the UP.
Sales Tax Act. The Allahabad High Court rejected the contention.
In appeal by certificate,
HELD : In finding out the true meaning of
term 'oilseeds' found in the Sales-Tax law in question the Court must refer not
to the, dictionary meaning but the meaning ascribed to the term in commercial
parlance. There can hardly be any doubt that in commercial articles ground nut
is dealt with as oilseed. The commercial journals refer to groundnuts as a
species of oilseeds, [547D-F] Commissioner of Sales Tax, Madhya Pradesh, Indore
v. Jaswant Singh Charan Singh, (19 S.T.C. 469), relied on.
A seed is one which germinates. It is not
disputed that the groundnut germinates. Hence it is undoubtedly seed. It is
mostly used for the manufacture of groundnut oil which is an edible oil. The
decision relied on by the appellant must accordingly be held to be wrong and
the appeal must be dismissed. [547F-G] Commissioner of Sales Tax, Madhya
Pradesh, Indore v. Bakhat Rai & Co. (18 S.T.C. 285) and Hans Rai Choudhri
v. J. S. Rajyana, Excise and Taxation Officer, (19 S.T.C. 489), disapproved.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1352 of 1970.
Appeal by certificate from the judgment and
order dated 7th day of August 1967 of the Allahabad High Court in Special
Appeal 'No. 94 of 1967.
M. C. Chagla, Suresh Sethi, R. K. Maheshwari,
Maya Krishan :and B. P. Maheshwari, for the appellant.
N. D. Karkhanisand O. P. Rana, for the
The Judgment of the Court was delivered by
HEGDE, J.-This is an appeal by certificate' The only question that arises for
decision is whether groundnut is oilseed. The High Court has come to the
conclusion that the groundnut is oilseed. The question is 'to the nature of
groundnut come up, for consideration in connection with the levy of
purchase-tax on the purchase of oilseed. The assessee in this case is a
manufacturer of oil and the assessee appears to have purchased groundnuts in
547 large quantity for the manufacture of oil. He contended before the
assessing authorities as well as before the High Court, unsuccessfully, that
groundnut is not oilseed. In support of that contention, he relied on the
decision of the Madhya Pradesh High Court in Commissioner of Sales Tax, Madhya
Pradesh, Indore v. Bakhat Rai & Co. (18 S.T.C. 285) and the decision of a
single Judge of Punjab & Haryana High Court in Hans Raj Choudhri v. J.S.
Rajyana, Excise and Taxation Officer (19 S.T.C. 489). These two decisions
undoubtedly 'support his contention. The learned Judge of the Allahabad High
Court have not accepted those decisions as laying down the law correctly and we
are in agreement with the view taken by the learned Judges of the Allahabad
The petitioner in his Writ Petition has
definitely stated that he purchased groundnuts mostly from cultivators for the
manufacture of oil. Hence there is no doubt that he purchased groundnut for the
purpose of manufacturing oil.
We shall now proceed to consider whether
groundnuts are seeds and further whether they are oilseeds. In finding out the
true meaning of term "oilseeds" found in the Sales-tax law in
question, we are not to refer to dictionaries. We are to find out the meaning
ascribed to that term in commercial parlance. See the decision of this Court in
Commissioner of Sales Tax, Madhya Pradesh, Indore v. Jaswant Singh Charan Singh
(19 S.T.C. 469). There can hardly be any doubt that in commercial. circles
Ground nut is dealt with as oilseed. The commercial journals and newspapers
while quoting the market price of oilseeds list groundnuts as one of the
species of oilseeds. From this, it is clear that in commercial circles
groundnut is treated as oilseed.
A seed is one which germinates. It is not
disputed that the groundnut germinates. Hence it is undoubtedly seed. The next
question is whether it is generally used for manufacture of oil. Here again,
there can hardly be any doubt that groundnut is Mostly. used for the
manufacture of groundnut oil which is used in the manufacture of Dalda and
other cooking media. Groundnut is one of the items which are mostly used in
this country for the manufacture of cooking media.
In our opinion, both the Madhya Pradesh High
Court and the Punjab & Haryana High Court 'were wrong in holding that'
groundnut is not oilseed.
For the reasons mentioned above, this appeal
is dismissed with costs.
G.C. Appeal dismissed.