Delhi High Court

M/S. Shriram Coconut Products (P) ... vs Uoi & Ors on 3 September, 2013

Author: Valmiki J. Mehta

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI
+                           W.P.(C) 19975/2005
%                                                         03.09.2013

M/S. SHRIRAM COCONUT PRODUCTS (P) LTD.          ..... Petitioner
                  Through Mr. Yash Srivastava, Mr. Milanka
                  Chaudhary, Mr. Sarojawand Jha, Advocates

                   versus

UOI & ORS                                           ..... Respondents

Through Mr. Neeraj Chaudhary, Advocate for respondent No.1/UOI.

Ms. Biji Rajesh, Advocate for Mr. Gourang Kanth, Advocate for respondent Nos. 2 & 3.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not? Yes

VALMIKI J. MEHTA, J (ORAL)

1. By this petition, challenge is laid by the petitioner to the impugned

order of the respondent No. 2-Employees' Provident Funds Appellate

Tribunal dated 27.7.2005. The Appellate Tribunal by the impugned order

has held that petitioner's industry which makes products from desiccated or

dry/brown coconuts is covered under the entry "Fruit and Vegetable

Preservation Industry" as found in Schedule-I of the Employees' Provident

Fund and Miscellaneous Provisions Act, 1952 (for short the "EPF Act").

2. The only issue before this Court is as to whether coconut is or is not a

fruit. Before adverting to this aspect, it must be noted that coconut is sold in

various forms. As a green coconut it is sold for its water and its kernel, as a

dry coconut it is used as an offering to God as also for using as supplement

or addition to various cooked dishes. Coconut so far as the petitioner's

industry is concerned is being used in desiccated form i. e dry/dehydrated

coconut and converted to either shredded form or grinded/powdered form.

The issue is whether this work and industry falls within the expression

"fruit" industry as found in the relevant entry under Schedule I of the EPF

Act.

3. The expression "coconut" has been interpreted differently with

respect to different statutes i. e Sales Tax or Commercial Tax etc. etc. We

are concerned with EPF Act in this case, and with respect to which Act, this

aspect has not been decided before as to whether dry coconut is or is not a

fruit.

4. In my opinion, so far as the industry in which the petitioner is

engaged, the same cannot be said to be a fruit industry as coconut is not a

fruit. Useful reference in this behalf can be drawn to para 5 of the judgment

of the Supreme Court in the case of Shri Bharuch Coconut Trading Co.

And Ors. vs. The Municipal Corporation of the City of Ahmedabad and

Ors, AIR 191 SC 494 which reads as under:

5. In P.A. Thillai Chidambara Nadar v. Addl. Appellate Asstt. Commissioner, Madurai and Anr. [1985] 60 STC 80this Court was to consider whether ripend coconut which is none other than watery coconut is an exempted article as vegetable under the Tamil Nadu General Sales Tax Act (1 of 1959). This Court held that fresh fruits and vegetables being household articles of everyday use for the table, these will have to be construed in the popular sense, meaning the sense in which every householder will understand them. Viewed from this angle, the most apposite test would be an answer to a simple question: Would a householder when asked to bring home some 'fresh fruits' and some 'vegetables' for the evening meal, bring coconut too? Obviously the answer is in the negative. Accordingly this Court held that ripend coconut is neither a fresh fruit nor vegetable. The watery coconut is no doubt a ripend coconut used for several purposes like offerings to a deity in a Hindu temple being broken or used on auspicious occasions or used in preparation of the daily table food or in confectionary like biscuits or in the extraction of oil when it is fresh or dried kernel. When a person in the commercial market goes and asks for coconut no one will consider brown coconut to be vegetable or fresh fruit, much less a green fruit. No householder would purchase it as a fruit. No doubt in some English Dictionary, coconut is called a fruit or nut but it is to be understood in its ordinary commercial parlance. In Sri Krishna Coconut Co. v. Commercial Tax Officer, Amalapuram, [1965] 16 STC 511 the Andhra Pradesh High Court was to consider whether fully grown coconut with well developed kernel containing water i.e. watery coconut could be called tender or dried coconut. In that context considering the scope of an explanation to Schedule III of the A.P. General Sales Tax Act, 1957 which exempted tender coconut from the sales tax under the Act, it was held that in a tender coconut, the kernel is hardly formed or is only in the initial stages of formation. In a dried coconut the kernel has formed and

fully developed and further the water inside the coconut has dried up leading to the drying of the kernel also. But a fully grown coconut with a well developed kernel, which contains, water cannot be called either a tender or a dried coconut. This is well-known that coconut is used for culinary purposes and on auspicious occasions and as part of the offerings in temples. It was held in that case that the watery coconuts are fully developed coconuts and they are exigible to sales tax. In Kunchi Rajeshwara Sastry & Sons and Anr. v. Asstt. Commnr. of Commercial Taxes, Kakinada, and Ors. [1976] 37 STC 399 the division Bench of the Andhra Pradesh High Court was to consider whether Copra is an oil-seed within the meaning of item

(vi) of the list of declared goods mentioned in Section 14 of the Central Sales Tax Act, 1956, and whether it is eligible to sales tax under the Andhra Pradesh Sales Tax Act, 1957. In that context it was held that Copra is an oil-seed and it is a declared good within the meaning of Central Sales Tax Act, 1956. The watery coconuts are made liable to tax at the point of last purchase and that, therefore, Copra would be taxed till that period at the point of last purchase and the coconut of all varieties would include Copra also. Therefore, it is a declared goods. The Division Bench while considering whether Copra is an oil-seed held thus:

Coconut is understood in several forms, namely, tender " coconut, watery coconut, dried coconut and Copra, and all these come under the expression coconut. Except in the case of tender coconut from which oil cannot be extracted, in all other cases, oil can be extracted and all of them are regarded in common parlance as oil-seeds.

In Sri Lakshmi Coconut Industries v. The State of karnataka and Anr. [1980] 46 STC 404 the Division Bench of the Karnataka High Court was to consider whether desiccated coconut falls within the entry coconut, which is one of the declared goods Under Section 14 of the Central Sales Tax Act, 1956 and is also included at entry 5 of the Fourth Schedule to the Karnataka Sales Tax Act, 1957. In that context the meaning of the word oil-seeds was extensively examined by the Division Bench and held that desiccated coconut is a coconut and a declared good Under Section 14 of the Central Sales

Tax Act, 1956, In Deputy Commissioner of Agrl. Income-tax and Sales-tax, Kerala v. A.P. Raman, [1960] 11 STC 263 the Kerala High Court also took the same view. In Commissioner of Sales-tax v. Ram Kumar Nand Kumar, [1973] 31 STC 321 the Allahabad High Court also held that coconut is an oil-seed within the definition of Section 3-AA(1)(vi) of the U.P. Sales Tax Act, 1948."

5. In my opinion, the observations of the Supreme Court in the case of

Shri Bharuch Coconut Trading Co. and Ors. (supra) that we must interpret

expression "coconut" and "fruit" in the layman's language have to be

applied even with respect to interpreting the relevant entry in the EPF Act

because when a person in the market goes and asks for coconut, no one will

consider the brown coconut to be a vegetable or a fruit, and definitely not a

green fruit. More importantly, the Supreme Court in the case of Shri

Bharuch Coconut Trading Co. And Ors. (supra) observed that no

householder would purchase the brown coconut as a fruit. Therefore, in my

opinion, taken in the layman's meaning, the dry brown coconut cannot be

said to be a fruit and that meaning has to be taken for interpretation of the

relevant entry of the EPF Act. The issue in this case is not free from

difficulties because coconut is a natural product which is sold in different

forms and for different purposes, as stated above, however in my opinion, a

dry brown coconut definitely is not a fruit as it is not so understood in

common parlance and which meaning has to also apply for interpretation of

the relevant entry in the EPF Act.

6. Learned counsel for the respondent Nos. 2 and 3 to contend that

coconut is a fruit placed great reliance upon para 30 of the judgment of the

Supreme Court in the case of Maharashtra State Co-operative Bank

Ltd.Vs.The Assistant Provident Fund Commissioner, 2009 (10) SCC 123

and which para reads as under:

"30. Since the Act is a social welfare legislation intended to protect the interest of a weaker section of the society, i.e., the workers employed in factories and other establishments, it is imperative for the courts to give a purposive interpretation to the provisions contained therein keeping in view the Directive Principles of State Policy embodied in Articles 38 and 43 of the Constitution. In this context, we may usefully notice the following observations made by Krishna Iyer, J. in Organo Chemical Industries v. Union of India (1979) 4 SCC 573:

The pragmatics of the situation is that if the stream of contributions were frozen by employers' defaults after due deduction from the wages and diversion for their own purposes, the scheme would be damnified by traumatic starvation of the Fund, public frustration from the failure of the project and psychic demoralisation of the miserable beneficiaries whey they find their wages deducted and the employer get away with it even after default in his own contribution and malversation of the workers' share. "Damages" have a wider socially semantic connotation than pecuniary loss of interest on non-payment when a social welfare scheme suffers mayhem on account of the injury. Law expands concepts to embrace social needs so as to become functionally effectual."

7. In my opinion, the aforesaid para cannot help the Provident Fund

Commissioner/respondent Nos. 2 & 3 inasmuch as unless and until it was

the ratio of the Supreme Court in Maharashtra State Co-operative Bank

Ltd.Vs.The Assistant Provident Fund Commissioner (supra) that an entry

under the EPF Act should be interpreted in the most wide manner by

ignoring the normal meaning assigned to that term, I do not think that the

observations of the Supreme Court in any manner helps the respondent No.2

for arguing that a dry brown coconut is a fruit and the products made

therefrom are fruit products. Any interpretation which will cause a strained

interpretation has to be avoided unless the legislature in unmistakable

language indicates so.

8. In view of the above, writ petition is allowed. The impugned order of