ORDER
G.C. Bharuka, J.
1. The petitioners are engaged in the business of manufacturing beedies. They are registered as dealers under the provisions of Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979 (in short, “the Act”). They import tendu leaves also known as beedi leaves, into their respective local areas for the said manufacturing purpose. In these writ petitions they are aggrieved by various notices issued against them for assessing/reassessing tax on entry of tendu leaves. Their plea is that tendu leaves being the agricultural produce is exempt from levy of tax under the Act.
2. It is not in dispute that under the provisions of the Act, agricultural produces brought into local areas for being used as raw materials in manufacturing processes were not chargeable to tax. Therefore, the only question to be considered is whether beedi leaves can be held to be agricultural produce in an absolute sense without requiring any further evidence for holding so. The question whether a produce is an agricultural produce or not had fallen for consideration before the Supreme Court in the case of Commissioner of Income-Tax, West Bengal v. Raja Benoy Kumar Sahas Roy wherein it has been held that :
“In considering the connotation of the term ‘agriculture’ we have so far thought of cultivation of land in the wider sense as comprising within its scope the basis as well as the subsequent operations described above, regardless of the nature of the products raised on the land. These products may be grain or vegetables or fruits which are necessary for the sustenance of human beings including plantations and groves, or grass or pasture for consumption of beasts or articles or luxury such as betel, coffee, tea, spices, tobacco, etc., or commercial crops like cotton, flax, jute, hemp, indigo etc.
All these are products raised from the land and the term ‘agriculture’ cannot be confined merely to the production of grain and food products for human beings and beasts as was sought to be done by Bhashyam Ayyangar, J., in Murugesa Chetti v. Chinnithambi Gounden ITR 24 Mad. 421 or Sadashiva Ayyar, J., in Raja of Venkatagiri v. Ayyappa Reddi ILR 38 Mad. 738; AIR 1915 Mad. 781, but must be understood as comprising all the products of the land which have some utility either for consumption or for trade and commerce and would also include forest products such as timber, sal and piyasal trees, casuarina plantations, tendu leaves, horranuts, etc.”
3. After so holding, the apex Court has further clarified that products of land like timber, tendu leaves, etc., do not necessarily fall in the category of agricultural produce. It has been held that, whether the particular produce will fall in the category of agricultural produce or not will depend upon the activities carried on the land for raising or deriving the said produce. If for deriving a produce the primary operations like cultivation of land is undertaken in the sense of tilling of the land, sowing of seeds, planting and similar work done on the land, then only the produce can be termed as agricultural produce. This basic conception is the essential sine quo non for holding any produce of the land to be of agricultural in nature.
4. On the other hand, the products which grow wild on the land or are of spontaneous growth not involving any human labour or skill upon the land are not products of agriculture. Therefore, tendu leaves consumed by the petitioners may or may not be agricultural produce. It will be open for the petitioners to prove by bringing on record admissible and reliable evidence to show that tendu leaves brought into local area by them for consumption in their manufacturing process had been acquired by their vendors by undertaking agricultural operations as clarified by the Supreme Court in paras 101 and 102 of the Report in the case of Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy .
5. Further, section 28-A(1) of the Act provides that, for the purpose of assessment of tax under the Act the burden of proving that the goods brought into or caused to be brought into the local area or taken delivery of by a dealer are not liable to tax under the Act, shall be on such dealer. Accordingly, it is to be held that, the onus to substantiate their claim of exemption lies conclusively on the petitioners.
6. It has been brought to my notice that some circular has been issued by the Commissioner of Commercial Taxes stating therein that beedi leaves cannot be subjected to exemption since those are not agricultural produce. If any such circular exists, that cannot bind the assessing authorities. In such a case, it is for the dealers to prove to the satisfaction of the assessing authority that beedi leaves are agricultural produce as explained by the Supreme Court.
7. The writ petitions are accordingly disposed of reserving the liberty to the petitioners to comply with the notice already issued to them within such time as may be fixed by the concerned authority and lead such evidence as may be available to them to prove that the beedi leaves brought by them in the local areas are agricultural produce.
8. No costs.
9. Writ petitions disposed of accordingly.