1984 (10) TMI 207 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether "sugar-candy" should be considered as "sugar" and thereby be exempt from sales tax.
2. The maintainability of the writ petition under Article 226 of the Constitution.

Issue-wise Detailed Analysis:

1. Whether "sugar-candy" should be considered as "sugar" and thereby be exempt from sales tax:

The petitioner, a dealer in sugar-candy, argued that "sugar-candy" should be exempt from sales tax as it falls under the definition of "sugar" as per entry No. 37 of List A (List of goods exempted from Orissa sales tax). Entry No. 37 defines "sugar" as per item No. 1 of the First Schedule to the Central Excises and Salt Act, 1944, which includes any form of sugar with more than ninety percent sucrose content. The petitioner supported this contention with several judicial decisions, including the Supreme Court's ruling in State of Gujarat v. Sakarwala Brothers and the Orissa High Court's decision in State of Orissa v. Satyabadi Sahu & Sons, which held that "sugar-candy" falls within the definition of "sugar" and thus is tax-free.

Opposite parties contended that "sugar" and "sugar-candy" are treated as separate items under different lists in the Sales Tax Act, with "sugar" being tax-free and "sugar-candy" taxable at 4%. They argued that the legislative intent was to treat these items differently, supported by recent decisions from the Andhra Pradesh High Court (Surana and Company v. State of A.P.) and the Madras High Court (Nemichand Parasmal and Company v. Deputy Commercial Tax Officer), which held that "sugar-candy" is a distinct commodity from "sugar" and thus taxable.

The court noted that during the relevant period, "sugar-candy" was included in List C (List of goods subject to sales tax) and was taxable. It acknowledged the petitioner's argument that "sugar" includes "sugar-candy" based on the definition in the Central Excises and Salt Act, 1944. However, it emphasized that the legislative intent, as evidenced by the separate listing of "sugar-candy" in List C, was to treat it as a distinct taxable commodity. The court referred to the Supreme Court's decision in State of Tamil Nadu v. Pyare Lal Malhotra, which clarified that each specified item in a tax list is considered a separate taxable commodity, even if made from the same substance.

The court concluded that "sugar-candy" is commercially a different product from "sugar" and thus subject to sales tax. The legislative competence to classify and tax "sugar-candy" separately from "sugar" was upheld.

2. The maintainability of the writ petition under Article 226 of the Constitution:

The opposite parties argued that the writ petition under Article 226 of the Constitution was not maintainable as an alternative remedy was available under the statute. The court did not explicitly address this issue in detail but proceeded to analyze the main contention regarding the taxability of "sugar-candy."

Conclusion:

The court held that "sugar-candy" is liable to sales tax under entry No. 86 of List C during the relevant period. The writ petition was dismissed, and no order as to costs was made. The decision was concurred by both judges.