TaxTMI 
TaxTMI 
TaxTMI 
1980 (12) TMI 169
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....are taxable at the rate of two per cent. As per section 6, goods specified in the Second Schedule are totally exempt from tax. As regards goods which are in none of the three schedules, the rate is five per cent as mentioned in section 6. Therefore, the various classes of goods are taxable at the rate of 10 per cent, or at the rate of five per cent, or at the rate of two per cent and there are some goods which are totally exempt. Amongst the goods which are totally exempt as specified in the Second Schedule is to be found "sugar and molasses" which is entry No. 9. The question whether misri and batasha are exempt depends on whether they can be treated to be sugar for the purposes of the Act. The questions of law which have been referred to us are as follows: "(1) Whether, on the facts and in the circumstances of the case, the Financial Commissioner was right in holding that under entry No. 9 of the Second Schedule appended to the local Act 'sugar' meant any form of sugar containing more than 90 per cent of sucrose? (2) Whether misri and batasha are 'sugar' within the meaning of entry No. 9 of the Second Schedule appended to the local Act?" In order to determine the answers to t....
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....s held that misri and batasa were not merely sugar and the fact that sales tax had not been paid on sugar is no reason for not levying sales tax on these articles made from sugar. In State of Gujarat v. Sakarwala Brothers[1959] 10 S.T.C. 270., the Supreme Court dealt directly with the question whether patasa, harda and alchidana came within the definition of "sugar" as occurring in entry No. 47 of Schedule A to the Bombay Sales Tax Act and hence their sale was exempt from the payment of sales tax. It was held that the word "sugar" in entry No. 47 was intended to include within its ambit all forms of sugar and the decision of the Gujarat High Court was affirmed. As it happens, entry No. 47 of Schedule A to the Bombay Sales Tax Act reads "sugar as defined in item No. 8 of the First Schedule to the Central Excises and Salt Act, 1944". The definition in the Central Excises and Salt Act read "sugar means any form of sugar containing more than 90 per cent of sucrose". It was not disputed that patasa, harda and alchidana contained more than 90 per cent of sucrose, so the court considered whether these items were forms of sugar. The court observed: " 'Patasa', 'harda' and 'alchidana' are....
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....ggery is defined in A. 07.05 as having total sugar content not less than 60 per cent. In A. 07.06 cube sugar is defined as sugar in the form of cubes or cuboid blocks with not less than 99.8 per cent sucrose content. In A. 07.09 icing sugar is defined as sugar with or without edible starch. The total of starch and sucrose not less than 99.0 per cent. It, therefore, appears from the definitions of various types of sugars above, that the market knows of a number of different kinds of sugar. The question for our consideration is whether the exemption specified in entry No. 9 of the Second Schedule is confined only to one of these types of sugar, i.e., crystallised and refined sugar or to other sugars also. The point of view that has prevailed with the Madhya Pradesh High Court and in the other judgments referred to therein is that if a person goes to the market to buy sugar, he will not be satisfied with obtaining misri or batasha or any such like product. But the real question which has to be posed is whether misri and batasha are sugar or not. If there is a product made entirely of sugar which has 98.5 per cent purity as per the definition, it may be distinguishable from ordinary ....
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....ether a thing is sugar or not can be more conveniently made by asking the question whether the article in question can be used as a substitute for the factory product. If you have to sweeten a cup of tea, it seems quite plain that you can do it just as easily with misri and batasha as with ordinary powdered sugar purchased from the shopkeeper. Merely because these articles misri and batasha are in a different form do not mean that they cease to be sugar. It is quite clear from what has been explained to us that misri and batasha are prepared from ordinary sugar and they do not contain any additional article. Therefore, it is merely sugar made into another shape. In the case of misri, the sugar is made into a lump and no longer remains powdered. In the case of such lumps, it appears that the same can be preserved for long periods. In the case of batasha, the sugar is converted into a hollow marble shaped mass. Sugar in this form is generally used for religious offerings. It appears that sugar used in this form cannot be anything but sugar because there is no conversion except in the shape. It would, therefore, appear that misri and batasha being pure sugar with no additional mixture....
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.... continues as follows: "It is, however, argued that if it was intended by the legislature that sugar in whatever form it may be must be included in the term 'sugar' used in Schedule V, the legislature would have expressed so in clearer terms. It would have used the expression 'sugar in all its forms'. But as we have already noticed, having regard to the historic background and the expression used in the Central Act, we do not think there can be any clear context evidencing the intendment of the legislature that the expression 'sugar' used was not confined to sugar in its ordinary form but covered sugar in all its forms provided the sugar element is wholly predominant and that sugar-candy is undoubtedly such form of sugar." We do not see any reason to hold any differently from what is observed above. It appears to us that the exemption provided to sugar and molasses was intended to cover all items which could be so described and not only to sugar as used in the English language. The exemption was in the interest of the public and there is no reason why the exemption should apply to some types of sugar and not to others. Then there is a decision of the Allahabad High Court reporte....
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....re not covered. In other cases we have referred to, the court has held that the word "sugar" should be given a restricted meaning. As has been analysed above, there is no real difference between various types of sugar. They are all produced from the juice of sugarcane which is the principal source of sugar in this country. In some cases, greater refinement leads to a greater percentage of sucrose. The refined product is normally more costly. The mere fact that it is produced in a factory and khandsari sugar and bura sugar may be produced by hand machines, does not mean that the end-product is very much different from the other. The natural juice of the sugarcane when dried produces gur which has comparatively low percentage of sucrose. This may not be sugar as generally understood. All the other products such as refined sugar, cane-sugar, khandsari and bura sugar are products of the juice after it has been subjected to various types of refinement and exclusion of non-sucrose element. The fact that they had to be differently prepared does not mean that they are different items. They are really all different types of sugar. Misri and batasha, which we are dealing with, are produced f....
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....ion of which it was called upon to prepare a list of sales of icing sugar. A statement was prepared on 30th December, 1967. According to that statement, the dealer had sold icing sugar locally to the tune of Rs. 2,396.45 during the assessment year. The dealer had contended that the sales of sugar were exempt from taxation, as sugar fell under entry No. 9 of the Second Schedule to the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi. The Sales Tax Officer, however, took the view that as starch was mixed with icing sugar it became a different commodity and the sales attracted taxation at 5 per cent. The dealer felt aggrieved by the order and-went in appeal which was disposed of by the Appellate Assistant Commissioner by his order dated 2nd May, 1970. The appeals against the assessments were dismissed. Revisions preferred to the Commissioner were disposed of by an order dated 3rd December, 1971. The Commissioner held that icing sugar was not sugar under entry No. 9 of the Second Schedule to the aforesaid Act. However, commenting upon the contents of icing sugar and importing the definition of "sugar" as given in the Central Act, it was observed that in....