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TMI Blog2016 (9) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... ese references, we would take the facts from Sales Tax Reference No. 6 of 2009. 3) The tribunal had before it two appeals being Second Appeal Nos. 558 and 869 of 2005. It delivered a common judgment therein on 24th February, 2006. 4) The Revenue sought a reference of the above question because, according to it, the respondent dealer is a co-operative society manufacturing sugar. It is duly registered under the Bombay Sales Tax Act, 1959 (for short "the BST Act"). The respondent has maintained books of accounts, which are duly audited. These books were produced in the assessment proceedings. No discrepancies were noticed. The assessing officer took the figures from the books of accounts and passed the assessment order. The tribunal was approached because there were two issues, on which the assessment order and the first appellate order was adverse to the dealer. The first one is of levying tax on the sales of bagasse at 13% and rejecting the contention that it is a tax free commodity. The only point before the tribunal was whether this levy on sales of bagasse at 13% is in accordance with law. The tribunal heard the rival contentions. The respondent dealer contended that it is ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tax on its sale under the Act. Therefore the substantial question arising for consideration is whether the bagasse will be treated as a different commodity exigible to sale tax under the Act. In support of his contention Mr. Bharat Ji Agarwal has cited a decision in the case of Commissioner of Sales Tax, U. P. v Parag Ice and Oil Mills [1991] 80 STC 403; 1991 UPTC 815 in which the honourable Supreme Court considered the nature of the residue of groundnut oil and held that the residue left after going through the process of the acids and chemicals, continues and remains to be the groundnut oil and is taxable at 1 per cent. He has further cited a decision of a division Bench of this Court in the case of Kisan Sahkari Chini Mills Limited, Gadarpur, Nainital v. State of Uttar Pradesh STI 1989 All. 294. In this case the specific question regarding nature of bagasse was considered and this Court has held that so far as bagasse is concerned, it is the residue from the milling process of the sugarcane. It consists of body, fibre, some unextracted juice and 40-50 per cent of the water. The learned Tribunal while holding that bagasse is a different commodity attracting liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tents are squeezed out of sugarcane. It is also rightly pointed out by Mr. Ghanekar that in the case of M/s. Kisan Sahakari Chini Mills Ltd. (STI 1989 All. 294), the Allahabad High Court held that so far as Baggasee is concerned, it is the residue from the milling process of the sugarcane. It consists of body fibre, some un-extracted juice and 40:50 percent of water. We have no hesitation to hold that this reasoning is quite applicable to our case. It does not appeal that the said reasoning is to be ignored only on the ground that it is under a different Act. In fact, the point is not with regard to interpretation of the particular provision as to why the particular commodity in question is tax free. Point is regarding understanding the nature of particular commodity, Once it is understood that the Baggasee is residue of sugarcane left after the processing and continues to be residue of the sugarcane, and it is not a different commercial commodity, then it will have to be treated as sugarcane for ascertaining whether it is exigible to tax or not. It is needless to say that once it is held as residue of the sugarcane, then it is certainly goes under the description of the sugarcane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to tax. Now as there is no direct judgment of our high court on the present issue and as there is a possibility of different view than expressed by the Hon'ble Allahabad High Court in the matter of Dhampur Sugar Mills Ltd. (100 STC 434) relied upon by the appellant, it will be in the fairness of things to refer the matter to the Hon'ble High Court for consideration. The purpose would be served by referring question No. (1)." 10) It is conceded that the above question has been referred in these circumstances. Mr. Nair learned special counsel appearing for the revenue would submit that whether section 5 of the BST Act is covered under Schedule Entry A-44, means that bagasse is tax free or not and that is the question. He would submit that from the order passed by the tribunal, both on the second appeals and the reference applications, it would be apparent that the bagasse is leftover of sugarcane after crushing and cannot be called as sugarcane. Mr.Nair submits that bagasse is known to the commercial world as distinct and different. It has different uses. It is used as fuel and raw material for manufacture of paper. It is a fibrous residue from the sugarcane after extrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited vs. Commissioner of Sales Tax, U. P. Lucknow, 1996 STC (Vol. 100) 434. 13) On the other hand, Mr. Thakar appearing for the dealer would submit that the tribunal has seriously erred in referring this matter for it is not a question of law. It was a mixed question and was clearly covered by the judgment of the Allahabad High Court. There is no justification for reference of this question as there is no material which was placed before the tribunal or even earlier before the first appellate authority to indicate that the market and the commercial world understand the product or the commodity distinctly. Once it is sugarcane, then, there is no question of it being brought to tax. 14) We have perused the entire paper book with the assistance of the both counsel. We find much substance in the contentions of Mr. Thakar and for the reasons indicated hereinbelow. 15) Motipur Zamindary Co. (Private) Ltd. (supra) was a decision on the point whether sugarcane falls within the "green vegetable" and is, therefore, exempted from sales tax under the exemption given by notification dated 28th August, 1947 issued under section 6 of the Bihar Sales Tax Act, 1947. The Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are placed in trenches and merely covered with soil. They begin to sprout in about two weeks and the crop is harvested in 10 to 20 months. See Chambers' Encyclopaedia. Thus sugar-cane can be conveniently classified as a genus of which sugar-cane sett is a specie. But yet it would be commercial and etymological perversity if sugar-cane setts are to be equated and understood as sugar-cane itself. Sugar-cane setts are botanical seeds from which spring sugar-cane. The physical and chemical properties of sugar-cane setts are entirely different from sugar-cane. The sucrose content in both varies. The physical appearance is different. The use to which one can be put is totally different from the use to which the other can be put. Even more, in mercantile contracts it cannot be said that sugar-cane sett is a substitute for sugar-cane in the matter of performance or discharge of contracts involving supply or delivery of the one or the other of the commodities. If sugar-cane is asked for, can sugar-cane setts be supplied by a merchant and discharge by performance thus pleaded? It cannot be. No light is thrown in the Act as to what sugar-cane is. But the same being a word which is common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical sense nor from the botanical point of view but as understood in common parlance. Having not been defined, it must be assigned the same meaning as is ordinarily understood, namely, "class of vegetables which are grown in a kitchen garden or in a farm and are used for the table". 20) Thus, the issue was considered in distinct factual background. Before us, it is not disputed that section 5 of the BST Act refers to and covers such goods on which there arises no liability to pay tax. The sales and purchase of certain goods free from tax is what is provided by section 5. Therefore, so long as the conditions or exceptions, if any, set out against each of the goods specified in column 3 of the Schedule 'A' are satisfied, no tax shall be payable on the sales or purchases of the goods specified in that Schedule. What we have before us is the BST Act and we have definition of the term "goods" appearing in section 2(13). "Goods" means every kind of movable property (not being newspapers, or actionable claim or money, or stocks, shares or securities), and includes growing crops, grass, and trees and plants (including the produce thereof) and all other things attached to or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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