TMI Blog1972 (2) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of goods but on the provisions of section 6 read with entry No. 8, Schedule I of this Act "sugar" was exempted from the operation of this statute until the Schedule was amended by omission of the term "sugar" by section 13(a) of the Bengal Finance (Sales Tax) (Second Amendment) Act, 1955 (West Bengal Act 22 of 1955). On such amendment with effect from 25th September, 1955, sugar came under the incidence of the Sales Tax Act of 1941. It was so done obviously to bring it within the purview of the Sales Tax Act of 1954 by a notification issued under the provisions of section 25 of the said Sales Tax Act of 1954. The said notification was issued on the day following, that is, 26th September, 1955, and as a result of the aforesaid amendment and the notification "sugar" came to be taxable under the Sales Tax Act of 1954. In the background of this position on 24th December, 1957, a Central Act known as the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Act 58 of 1957) (hereinafter referred to as the said Additional Duties Act, 1957), came into force. By virtue of the provisions of section 3 of this Additional Duties Act, 1957, excise at the rate specified in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1954, specifying the rate of tax. Commodities in this notification are "all varieties of lozenges, including any item of lozenges made or processed in pan or cooker; hard-boiled sugar confectionery, toffees, caramels, chocolates, chocolate bars with brand names (e.g., Cadbury's chocolate, Sathe's chocolate) and without brand names, any gelatine product known as cough lozenges or jujubes and sweet gums such as chewing gums." The present dispute arose on the issue of the aforesaid notification. The petitioner carries on the business of manufacturing sugar candy at Siliguri. For the said manufacturing business he had to draw sugar on quotas issued by the Rationing Officer, Siliguri. On 21st February, 1967, the Commercial Tax Officer, Siliguri, issued a direction to the Rationing Officers that all varieties of lozenges and hard-boiled sugar confectioneries are notified under section 25 of the Sales Tax Act, 1954, and no quotas of sugar to the manufacturers of such commodities should any further be issued unless they are registered under the West Bengal Sales Tax Act, 1954. Though this direction of the Commercial Tax Officer on its face is in consonance with the notification issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of sales tax under either of the Acts above referred to. The petitioner has also prayed for a declaration that sugar candy is not assessable to sales tax under either of the two Sales Tax Acts or under the notification dated 6th February, 1967, and also for a writ in the nature of prohibition prohibiting the respondents from assessing the petitioner to sales tax in respect of sugar candy. The rule is being contested by the respondents and two affidavits have been filed-one by the Commercial Tax Officer and the other by the Rationing Officer. A supplementary affidavit has been filed by the Commercial Tax Officer in terms of this court's order dated 17th January, 1972. I shall refer to the relevant statements made in this affidavit hereinafter while considering the material issues but broadly the facts leading to the present writ petition are not in dispute. Mr. Ghose, appearing for the petitioner, has raised three points. In the first place, he contends that the term "sugar" in the notification dated 3rd March, 1958, under section 26 of the Sales Tax Act of 1954 includes within it sugar candy so that with effect from 14th December, 1957, sugar candy is no longer assessable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself assessed the petitioner to sales tax under the Sales Tax Act of 1941 for the period prior to 1967 evidently on the view that when sugar candy was made liable to taxation under the Sales Tax Act, 1954, from 1967 by virtue of the notification dated 6th February, 1967, for the period previous thereto such sugar candy must necessarily be liable to sales tax under the Sales Tax Act of 1941. When the petitioner is contending that neither of the two Sales Tax Acts authorises imposition of any sales tax on sugar candy, the aforesaid acts on the part of the respondents clearly furnish a cause of action for a writ petition as in the present case. In this view, the preliminary objection raised by Mr. Sengupta is overruled. The most important point for consideration in this case is the first point raised by Mr. Ghose. Section 26 of the Sales Tax Act, 1954, provides as follows: "If the State Government is at any time of opinion that it would be in the public interest so to do, it may, by notification in the Official Gazette, and from such date and subject to such terms and conditions as may be specified in such notification, exempt from the operation of this Act- (i) any notified c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y commerce. Reference may be made to the decision of the Supreme Court in the case of State of Gujarat v. Sakarwala Bros.[1967] 19 S.T.C. 24 (S.C.). In this case, Patasa, harda and alchidana were held to fall within the above definition of sugar. Sugar candy also has been held to fall within the above definition in the case of Abdul Malik Co. v. Commercial Tax Officer[1963] 14 S.T.C 214. and Vasantha Co. v. State of Madras[1963] 14 S.T.C. 696. In my view, therefore, if it be established that in sugar candy the basic material remains the same and its sucrose content remains ninety per cent., it would still be sugar within the meaning of the Central Excises and Salt Act, 1944. It is nothing but sugar in a different form. In paragraph 2 of the writ petition, the petitioner has set out the process in which the sugar candy is being manufactured by him. He has further categorically stated that sugar candy so produced is nothing but refined , sugar in another form containing more than ninety per cent. of sucrose in it. The statement is not denied by the Commercial Tax Officer. The Rationing Officer in paragraph 8 of his affidavit no doubt has stated that sugar candy is prepared from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugar candy. The notification further specifies that in respect of sugar on which additional duties of excise under the Additional Duties Act, 1957, had not been paid, the dealer claiming exemption must make a lump payment. All these clearly establish that the term "sugar" in the notification has been used in the same sense as it bears in the Additional Duties Act, 1957. To ascribe any other meaning to the term "sugar" in that notification would bring in inconsistency. The same conclusion would be reached if we consider the matter from another standpoint. It is not in dispute that the notification of exemption from the operation of the Sales Tax Act, 1954, dated 3rd March, 1958, was issued when the State Government participated in the central pool of additional duties realised on sugar under the said Additional Duties Act, 1957. The Second Schedule to this Act clearly lays down that no State could participate in a party of this pool or share all the contributions therefrom if it continues to impose sales tax on sugar. The object of the said Additional Duties Act, 1957, further clearly sets out that the additional excise duty was being imposed in replacement of sales taxes levied by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification issued by the State of Madras in the case of Vasantha and Co. v. State of Madras[1963] 14 S.T.C. 696. as also by the Mysore High Court in the case of Abdul Malik and Co. v. Commercial Tax Officer[1963] 14 S.T.C. 214. Mr. Ghose rightly relies on the Supreme Court decision in the case of State of Gujarat v. Sakarwala Brothers[1967] 19 S.T.C. 24 (S.C.). In the case before the Supreme Court a question had arisen as to whether tax was payable on the sales of Patasa, sukkar (sugar candy), bura sugar, harda and alchidana in view of the exemption granted by entry No. 47 of Schedule A to the Bombay Sales Tax Act, 1959. The Deputy Commissioner of Sales Tax held that bura sugar would come within the exemption but not the other items. The Commissioner of Sales Tax revised the order of the Deputy Commissioner and held that sukkar (sugar candy) being sugar in one form was exempted from tax liability under the said entry No. 47 but not the other items. Then the matter went over to the Gujarat High Court for consideration whether patasa, harda and alchidana would come within the exemption as sugar in some form. The High Court accepted the contention that these articles also come within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of G. C. Panda v. Commercial Tax Officer(1963) 67 C.W.N. 1102. in contending that notwithstanding the fact that sugar and sugar candy are basically the same material, yet commercially they are different and what was exempted by the notification dated 3rd March, 1958, was sugar as is known in ordinary commerce and not sugar candy. No doubt, the decision relied on by him well supports his contention but I am unable to accept the same on the reasons given hereinbefore and particlurly on the authority of the Supreme Court decision in the case of Sakarwala Bros.[1967] 19 S.T.C. 24 (S.C.). On my conclusions as above, I must uphold the contention of Mr. Ghose that on the notification dated 3rd March, 1958, under section 26 of the Sales Tax Act, 1954, sugar including sugar candy is exempted from the operation of the Sales Tax Act, 1954. Necessary consequence would be that it is also exempted from the Sales Tax Act, 1941, as when it was initially brought under the purview of the Sales Tax Act, 1954, under section 25 it was excluded from the Sales Tax Act, 1941. The second point raised by Mr. Ghose is also of some substance. There is no dispute that attempt to impose sales tax on sugar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x on such sugar candy but at a rate above the one prescribed by section 15 of the Central Sales Tax Act, 1956. But once he succeeds to show that sugar candy is sugar, he succeeds on the first point and the commodity is totally beyond the purview of the incidence irrespective of the rate. Mr. Ghose, however, is right in his contention that if it be held that the notification dated 6th February, 1967, imposed sales tax at the rate so prescribed on any commodity which may come within the definition of sugar as defined by the Central Excises and Salt Act, 1944, then the prescribed rate of 5 per cent. infringes the prohibition imposed by section 15 of the Central Sales Tax Act. Therefore, the third point raised by Mr. Ghose does not really arise for consideration. On the conclusions as above, this application succeeds. A question now arises what should be the relief to be granted to the petitioner on this writ petition. He is certainly entitled to a declaration that sugar candy manufactured by him, so long it answers the description of sugar as defined in the Additional Duties Act, 1957, and so long as the notification dated 3rd March, 1958, under section 26 of the West Bengal Sales T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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