Sugar exemption covers sugar candy where state notification is aligned to the central fiscal scheme.

State exemption notifications issued to align with the central fiscal scheme for declared goods had to be construed consistently with that scheme. Because the Central excise law treated sugar broadly as covering sugar in any form, the expression "sugar" in the notifications included sugar candy. On that construction, sugar candy qualified for exemption from sales tax and levy on its sale was unsustainable.

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Issues: Whether sugar candy fell within the expression "sugar" in the State exemption notifications issued under the Madras General Sales Tax Act so as to attract exemption from sales tax.

Analysis: The exemption notifications were issued to bring the State law into conformity with the scheme of the Additional Duties of Excise (Goods of Special Importance) Act, 1957, which treated sugar as a declared good and made State participation in the excise distribution conditional upon exemption of local tax on sale or purchase of sugar. The statutory definition of sugar under the Central excise law was broad enough to cover sugar in any form, and the State notifications were framed with that central legislative purpose in view. In that context, the expression "sugar" in the exemption notifications could not be read narrowly to exclude sugar candy, which was a form of sugar and was covered by the central excise scheme.

Conclusion: Sugar candy was included within the exemption granted for "sugar", and the tax levied on its sale was not sustainable.

Ratio Decidendi: Where a State exemption notification is issued to implement a central fiscal scheme governing a declared good, the exempted commodity must be construed in light of that scheme and will include forms of the commodity covered by the central legislation.

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