Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (9) TMI 515 - BOMBAY HIGH COURT

2016 (9) TMI 515 - BOMBAY HIGH COURT - TMI - Taxability - sale of bagasse - tax free sale - section 5 of the Bombay Act covered under schedule entry A-44 - Bombay Sales Tax Act, 1959 - co-operative society - manufacture of sugar - whether word sugarcane also include bagasse? - Held that: - so long as these are not identifiable and distinctly known goods to the commercial world, they cannot be brought to tax or if they are part and parcel of sugarcane or are a waste or a by-product when sugarcane .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eeks, according to the tribunal, opinion and answer by this court on a question of law. That question, as framed in the order of reference dated 24th November, 2006 in Reference Application Nos. 105 and 106 of 2006 reads as under:- Whether on the facts and the circumstances of the case, the Tribunal was justified in holding that the sale of 'bagasse' is a tax free sale under section 5 of the Bombay Act covered under schedule entry A-44? 2) Since this question is common to both these refe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

counts, 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 p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Commissioner of Sales Tax, U. P. Lucknow 1996 STC (Vol. 100) 434 has held that bagasee is a residue of sugarcane left after its processing and does not become a different commodity. The SLP against this judgment was rejected by the Hon'ble Supreme Court of India. 5) The Revenue, on the other hand argued that bagassse is a different commercial commodity. Once it is a different and distinct commodity known to the commercial world, then, the judgment and order of the Allahabad High Court would .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as Goods, the sale or purchase of which is free from all taxes . 7) As far as the U. P. Sugarcane (Purchase Tax) Act, 1961 is concerned, there, a specific exemption from tax on sugarcane was provided. While dealing with such an issue, the Allahabad High Court held that:- ..... The learned counsel for the assessee has argued on the 2nd point that the bagasee being the residue of the sugarcane should not be treated as a different commodity exigible to the sales tax but the learned Tribunal has co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

commodity different from sugarcane and as such it attracts sales 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 of sales tax on its sale, has not correctly followed the decision in the case of Deputy Commissioner of Sales Tax v. Pio Food Packers [1980] 46 STC 63. In my opinion, the finding recorded by the learned Tribunal that bagasse is a different commod .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

payable under this Act, anything contained in the U. P. Sales Tax Act, 1948 to the contrary notwithstanding. It is clear from bare provisions of section 13 that the U. P. Sales Tax Act does not apply to sugarcane and no tax either on sale or purchase of sugarcane is exigible under the U. P. Sales Tax Act. If tax on purchase of sugarcane has already been paid by the assessee under the U. P. Sugarcane (Purchase Tax) Act, 1961, the residue of the sugarcane if sold, cannot be subjected to sales tax. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ment, which was also rejected by the Supreme Court. There is no other decision of our High Court or any other High Court wherein contrary view has been taken than the view taken by the Allahabad High Court. Mr. Akhade was unable to satisfy us as to why the meaning of Baggasee explained by the Allahabad High Court should not be accepted, and as to why the same is not applicable in the context of the Bombay Act. It is our considered view that the Baggasee is a residue of the sugarcane lift after t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e levy of tax on the Baggasee is set aside, the appellant will be entitled for refund. On the basis of out of pocket theory, the appellant will be entitled for grant of remission in interest under section 36(3)(a) of the Bombay Act. 9) However, the Revenue contended that there is ground enough to refer the matter to this court for opinion and answer, because there are materials to indicate that bagasse is understood as different and separate commodity than sugarcane. The tribunal, however, did n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion. It has been pointed out on behalf of the revenue that in the case of M/s. Etikoppakka Cooperative Agricultural and Industrial Society Limited vs. Commercial Tax Officer (120 STC 608), it is held that sugarcane seedlings cannot be categorized as sugarcane. Factually, Sugarcane seedlings apparently are sugarcane which is cut into smaller pieces and sold as a seed for sugarcane. Even then considering the nature, characteristic and utility, the Andhra Pradesh High Court held that sugarcane seed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ppears that in the case of M/s. Madurantakam Co-op. Sugar Mills (38 STC 238), the Madras High Court, on the tax enhancement petition filed by the revenue against the Tribunal order held the sale of 'bagasse' of ₹ 16.84 lacs, as liable 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 upo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at 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 extracting cane juice and is used to produce steam and power fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ad High Court judgment can have no application for it is under a different enactment. Similarly, the observations of the Hon'ble Supreme Court of India in the latest judgment in the case of Union of India vs. DSCL Sugar Ltd. 2015 (322) E. L. T. 769 (S.C.) would have also no application. The Central Excise Act contemplates a levy or tax on manufacture and we are concerned with a different enactment, namely the BST Act. Before the Allahabad High Court, there was no evidence to show that in com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ate to hold that there is no material or evidence in this case. Therefore, all the judgments relied upon are distinguishable. 12) Mr. Nair has relied upon the following judgments:- (i) Union of India vs. DSCL Sugar Ltd., 2015 (322) E. L. T. 769 (S. C.). (ii) Motipur Zamindary Co. (Private) Ltd. vs. The State of Bihar and Anr., 1962 STC Vol. XIII 1. (iii) Sakthi Sugars Limited and Ors. vs. Deputy Commercial Tax Officer, Bhavani and Ors., 1969 STC Vol XIII 232. (iv) Ramavatar Budhaiprasad vs. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 broug .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

le Supreme Court of India found that the meaning of the word vegetable in taxing statute is to be understood in common parlance denoting class of vegetables which are grown in a kitchen garden or in a farm and are used for the table. Seen in this light, the word vegetable cannot cover or include sugarcane. 16) We do not see how these observations of the Hon'ble Supreme Court of India can be seen de-hors the context and the facts brought for consideration. Similarly, in the case of Sakthi Sug .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ver in sugarcane setts, which according to the Revenue was wrongly exempted from being brought to tax in the earlier order. 17) The Madras High Court held that the main point urged is one on facts. However, for the exercise of revisional jurisdiction and to consider the facts or factual point if lacking, then, the taxing authorities would not be able to assume jurisdiction. It is in that context the Madras High Court held thus:- What is the jurisdictional fact that confronts us in this case? It .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y small, rather silky and rarely viable - See Van Nostrand's Scientific Encyclopaedia. It is said that sugar-cane seeds are so small that nearly 100 sugar-cane seeds would be required to equal the weight of a single wheat grain (Encyclopaedia Britannica). Therefore, propagation of sugar-cane is by cuttings 8 to 10 inches long known as seeds , made from the upper joints of old canes. They are placed in trenches and merely covered with soil. They begin to sprout in about two weeks and the crop .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the imposition of sales tax or purchase tax on the sale or purchase of goods have to satisfy the cardinal test that the goods enumerated as subjects of taxation are those which are commercially and popularly understood as such. An arbitrary and naked attempt on the part of the revenue to rope in goods and commodities having a special signification of their own in commerce, into the net of taxation as if they are goods enumerated in the Schedules to the Act without establishing a substantial nex .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

distinct ways. Thus, we find that sugar-cane setts are not classifiable as sugar-cane and therefore the respondent had no jurisdiction to issue the impugned notices and pass the impugned assessment orders. Even so the order of the Board of Revenue in T. C. No. 2 of 1968 is unsustainable. 18) It is in these circumstances and when sugarcane setts were attempted to be equated with sugarcane and noticing their usage, the Division Bench found that if sugarcane is asked for, sugarcane setts cannot be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nse 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 purc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

onable 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 forming part of the land which are agreed to be severed before sale or under the contract of sale. It is common ground that sugarcane is used to manufacture sugar. Therefore, ordinarily, the word goods as defined in section 2(13) would cover and include sugarcane. In the circumstances, whether bagasse is sugarcane or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version